1. This is a departmental appeal and it is directed against the order of the Commissioner (Appeals), Visakhapatnam, dated 16-3-1984, disputing the grant of two reliefs, viz., the relief of investment allowance under Sections 32A and 80J of the Income-tax Act, 1961 ('the Act') on Tug No. IV. The Dredging Corporation of India, which is the assessee, for the first time was incorporated with effect from 29-3-1976 and the Government of India transferred 11 dredgers including Tug No. IV to the assessee-corporation but of the dredger pool which the Transport Ministry had with effect from 31-3-1976 afternoon for being used in its business of dredging operations. The first year of business for which the income-tax assessment was made was for the assessment year 1977-78 and the previous year commenced from 31-3-1976 and ended on 31-3-1977. Originally, investment allowance was not granted to 10 out of 11 dredgers transferred in favour of the assessee-corporation. So also Section 80J relief was not granted to them in the original assessment. Subsequently, it came to light that Tug No. IV was acquired by the assessee-corporation with effect from 31-3-1976 afternoon itself and was used as such in its business. The claim of investment allowance under Section 32A would be available to such ships or dredgers acquired from 1-4-1976 and in respect of ships acquired prior to that date, the IAC felt that they were entitled only to initial depreciation under Section 32(1)(vi) of the Act. The IAC held that inasmuch as Tug No. IV was acquired and installed before 1-4-1976, the assessee-corporation was not entitled to investment allowance and the said allowance granted in the original assessment should be disallowed. The assessee-corporation by its letter dated 11-3-1983, on the other hand, contended that the investment allowance already granted was justified for reasons more than one : (i) It is contended that the Government of India transferred the ship, with effect from 31-3-1976, the same could be used in business with effect from 1-4-1976 only and it cannot be said that the ship was acquired on 31-3-1976 itself pursuant to the notification issued by the Ministry of Transport.
(ii) In the case of movables, the date of possession was relevant for determining the issue of acquisition and in this case possession could be taken not on the date of notification of the Government of India but a date later to it.
(iii) The Shipping Corporation of India was informed that the income earned from 1-4-1976 only should be credited to the assessee-corporation and this would clearly show that the tug was acquired by the assessee, with effect from 1-4-1976, but not on any date earlier to it.
However, the IAC held in the reopened proceedings that Tug No. IV is deemed to have been acquired on the date when the notification of the Government of India was made, i.e., on 3-13-1976 (afternoon). According to him the word 'acquired' connotes the meaning of proper title conferring all rights in the property or ownership rights pursuant to the perfected title. The assessee-corporation became the de jure and de facto owner of Tug No. IV from 31-3-1976. The IAC held that the contention that unless possession of the asset was taken over, there cannot be said to be any transfer of an asset in this case had no basis. He held that it was very difficult to take physical possession of the tug wherever it was and, hence, the date of transfer should be taken to be the date of notification by the Government and that date was the crucial factor of time at which the assessee-corporation acquired ownership of the tug. Similarly, the argument that the income from the tug in question was credited to the assessee-corporation from 1-4-1976, does not alter the date on which the assessee became the owner, generation of income from the asset does not have any relevance for determining the date on which the asset has been transferred. When the deployment particulars of the tug in question before April 1976 was asked as clarification by way of telex message was obtained by the assessee-corporation, which showed that the tug was used by the Shipping Corporation of India in its operations from 29-3-1976 to 12-4-1976. From the above clarification, the IAC felt that the tug was second-hand ship at the time when it was acquired by the assessee and, therefore, the learned IAC felt that the assessee was not entitled to initiate depreciation or investment allowance. In view of the conclusion, the learned IAC arrived at, namely, that on the date of acquisition, Tug No. IV was second-hand in the hands of the assessee-corporation, the IAC also held that the value of such second-hand ship cannot be allowed to enter into capital computation.
Therefore, he withdrew the Section 80J allowance of Rs. 8,58,000 previously granted under Section 80J to this corporation. Thus, the IAC had completed the reopened assessment under Section 143(3) read with Section 147 of the Act by his reassessment order dated 23-3-1983 relating to the assessment year 1977-78.
2. Aggrieved against the reassessment order, the assessee took up the matter in appeal before the Commissioner (Appeals). When the matter was pending before the Commissioner (Appeals), the assessee took up an additional ground claiming initial depreciation on the cost of the tug, under Section 32(1 )(vi). Before the learned Commissioner (Appeals), the decision of this Tribunal which emanated from the original assessment for 1977-78, wherein it was held that the dredgers used by the Government before their acquisition by the assessee-corporation were held to be new dredgers within the meaning of the Explanation to Section 32(1)(vi) was brought to his notice. As per the said finding given by the Tribunal, it was contended before the learned Commissioner (Appeals) that the IAC was not justified in rejecting the claim of initial depreciation under Section 32(1)(vi) on the ground that Tug No.IV was a secondhand one, as the same was used by the Government of India before acquisition by the assessee-corporation was not justified.
The learned Commissioner (Appeals) accepted this contention and held following the finding of this Tribunal that the Government does not answer the description of 'person' resident in India. He also held that Tug No. IV was not a second-hand asset merely because it was used by the Shipping Corporation of India at Mangalore port, from 29-3-1976 to 12-4-1976. The learned Commissioner (Appeals) by his letter dated 17-1-1984 elicited information on the income earned by the crafts used by the Shipping Corporation of India for commercial exploitation. The Shipping Corporarion of India furnished the information as per its letter dated 6-2-1984. In the said letter, it is stated that the dredgers including dredger No. 4 were never used by the Shipping Corporation of India for commercial exploitation at any time. The dredgers were always owned by the Government of India. Only the maintenance, management and operation of dredgers was entrusted to the Shipping Corporation of India, as per the agreement enclosed to the letter between the Government of India and the Shipping Corporation of India. According to the terms of the agreement, the Shipping Corporation of India was collecting charges for dredging work at the rate specified by the Government and also incurred expenditure in consultation with the ^.Government from time to time as an agent of the Government on its account. Periodical statement of income and expenditure were being furnished to the Government of India and Shipping Corporation of India was being paid service charges for the services rendered by it. Therefore, under the circumstances, the Shipping Corporation never used the dredgers of the Government of India for any commercial exploitation or earned any income in respect of such dredgers. The gross income as well as expenditure incurred to earn the said income are credited and debited to the account of the Government of India. The service charges received by the Shipping Corporation of India arc in the nature of remuneration for services rendered by acting as an agent of the Government. From 1-4-1976, the Shipping Corporation of India started operating the dredgers as an agent of the assessee-corporation, on the same terms and conditions on which it acted as an agent to the Government of India as advised by the Government of India in its letter dated 24-9-1976. The description of the dredgers which were to be under the custody of the Shipping Corporation of India and the copy of the agreement were all furnished at pages 9 to 29. The board of directors of the assessee-corporation passed a resolution on 25-8-1977. Item No. 12 of the agenda which came for discussion before the board was as follows : Agency arrangement with Shipping Corporation of India for operation of MOT crafts during the year 1976-77 The Board considered the agenda Item and noted that the agency arrangement came to a close with effect from 31st March, 1977. The Board accorded post facto approval for the terms and conditions of payment under the agency arrangement between DCI and SCI for operation of the floating crafts of the corporation during the year 1976-77.
A copy of the resolution is furnished at page 53 of the paper compilation filed before us. Accordingly, the Shipping Corporation of India operated Tug No. IV from 1-4-1976 and the income earned from 1-4-1976 was credited to the assessee-corporation whereas the income earned before 1-4-1976 was continued to be credited to the Government of India. It is no doubt true that" under Section 32A(2)(a) conditions for granting investment allowance was that a new ship or a new aircraft should have been acquired after 31-3-1976. The learned Commissioner (Appeals) found that the important word for which interpretation is needed is the word 'acquired'. According to the Concise Oxford Dictionary the word 'acquired' means : 'gain by oneself and 'for oneself; come into possession of. He held that it is a matter of fact that the assessee-corporation came to possess the ship sometime in April, in the sense that it has sought to actually run the ship under its control somewhere later in the month. In the letter dated 20-4-1976, the Government of India intimated the Shipping Corporation of India that 'the income on account of service charges for the period 1-4-1976 onwards may not be deposited in the Government account but kept separately with the Dredging Corporation of India'. The learned Commissioner (Appeals) felt that if the intention of the Government was that it handed over the tug on 31st March, it would have clearly stated that the income from 31st March should be credited to the assessee-corporation. The IAC mentioned, inter alia, Tug No. IV was used by the Shipping Corporation of India from 29-3-1976 to 12-4-1976 in Mangalore Port. That shows that the income from 29th March to 31st March was credited to the Government account and the income from 1st April onwards was deposited into the account of the assessee-corporation. According to the learned Commissioner (Appeals), this fact conclusively establishes that the acquisition or possession of the ship by the agent of the assessee-corporation took place only from 1-4-1976. The word 'acquire' according to the learned Commissioner (Appeals) means 'possess' and not mere transfer of nominal title by notification. The learned Commissioner (Appeals) further found that the crucial words under Section 32A(1) are 'which is owned by the assessee and is wholly used for the purposes of the business carried on by him".
The cumulative impact of the words italicised only indicates that the word 'acquired' in Section 32A(2)(a) indicates only possessive ownership and putting the ship into use for the purposes of business.
Both the learned Commissioner (Appeals), who decided the appeal from the original assessment and the Tribunal which decided the second appeal from the original assessment made it clear that the previous use of dredgers and tugs in territorial waters did not disqualify the assessee from the benefit of 'investment allowance'. The learned Commissioner (Appeals) presumed that from the afternoon of 31st March, Tug No. IV might have been put to use only in territorial waters by the Shipping Corporation of India which after 1-4-1976 became the agent of the assessee-corporation. In this view, the learned Commissioner (Appeals) felt that Tug No. IV was acquired only on 1-4-1976 and, therefore, the assessee-corporation is entitled to investment allowance. He felt that according to his finding, the assessee-corporation was entitled to investment allowance and there is no need to give effect to initial depreciation granted under Section 32(1)(vi). He further held that the assessee-corporation is automatically entitled to Section 80J relief and that the IAC is not correct in disallowing the said relief. Thus, the learned Commissioner (Appeals) by his impugned orders dated 16-3-1984 granted not only investment allowance but also Section 80J relief.
3. The correctness and the legality of the grant of these two reliefs by the learned Commissioner (Appeals) in his impugned orders are being questioned in the second appeal before this Tribunal. The ground on which the revenue disputes the correctness of the grant of investment allowance under Section 32A is as follows : The Commissioner (Appeals) erred in holding that the Government of India cannot be considered as a person residing in India for purpose of relief under Section 32A.On the same reason, it also disputed the correctness of Section 80J relief granted.
4. We have also considered this aspect fully and completely in our previous orders in IT Appeal No. 691 (Hyd.) of 1980 dated 31-10-1983 [Since reported in Dredging Corporation of India Ltd. v. ITO  7 ITD 739 (Hyd.)]. The learned counsel for the assessee Shri B.V.Subramanyam argued before us in the appeal that the phrase 'person resident in India' is a technical phrase on the tax statute. He further argued that the dictionary meaning cannot be glibly assigned so as to enlarge the meaning. Authorities from Maxwell, Craes and Bindra's the Interpretation of Statutes were cited for our commendation. Contextual rule also pointed out to the previous owner being a resident assessee, argued the learned counsel. The Government of India cannot be taken to be a 'person' contemplated under the Act, inasmuch as, the person contemplated under the Act should be governed by the provision of the Act as is evident from the test of 'residence' going with it. At page 10 of the Law & Practice of Income-tax by Shri Kanga and Palkhivala, it is said that "[The Income-tax] Act does not bind the Government ; the Government can claim immunity in respect of income received by it as well as in respect of its income received on its behalf by a Government servant in the course of his official duties. ..." When the Act does not bind the Government, the question of definitions under the Act applying to the Central Government does not arise. It is significant that Section 2(31) of the Act includes the local authority and every artificial juridical person and not the Central Government. If the Legislature intended to include the Central Government within the definition of person, it would have included the same along with local authority under the definition. We have accepted this argument advanced by the learned counsel for the assessee-corporation and we hold that we find it difficult to accept the argument of the revenue could be treated as a person resident in India'. Ultimately, we held that the investment allowance is barred only where the purchase is from a person resident in India and that the Government of India is not a person and at any rate such person. The purpose of restricting the allowance only to purchase of ships from person other than 'person resident in India' is said to avoid the grant of such allowance on a ship more than once.
In other words, it should not be possible for the same ship to get the allowance more than once by mere change of hands. Prior use in inland waters by itself is no bar. The object is obviously to encourage shipping industry. Ultimately, we found 'we, therefore, find that this allowance to the assessee even in respect of acquisition from Government of India is quite in accord with the intention of the statute'. Therefore, we granted investment allowance subject to the ITO's satisfaction regarding the other conditions like creation of reserve, etc. We also granted Section 80J relief and we directed that this claim should be considered afresh. What we have held with regard to the other 10 crafts of dredgers which are considered as ships for purposes of investment allowance as well as Section 80J relief, equally apply to Tug No. IV which is the subject-matter of the reassessment and the appeal thereunder. We, therefore, hold that in view of our previous order, which we intend to follow while disposing of this appeal, there are no grounds to disallow the investment allowance as well as Section 80J relief, with regard to Tug No. IV. Both the reliefs were correctly granted according to us by the learned Commissioner (Appeals) and, therefore, there are no grounds to interfere with his order.
5. In the result, the departmental appeal is dismissed as it is found without substance.