R.L. Sangani, Judicial Member - (1.)THIS para is not reproduced here as it involves minor issue.]
(2.)We shall first deal with the departmental appeal for assessment year 1981-82. Ground No. 1 is a general ground. Grounds 2 to 4 relate to the claim for depreciation, investment allowance, and additional depreciation on machinery which had been received under Norwegian Aid. The fact that the abovementioned allowances are allowable is not in dispute. The only dispute is the amount on which the said allowances should be calculated. The assessee has claimed the above allowances of Rs. 9,99,611. The details are as under :
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The Income-tax Officer has allowed the abovementioned allowances on Rs. 3,23,275 which is the total of item Nos. 2 and 3 above. According to the ITO the assessee was not required to pay any price for the said plant and machinery which had been received under the Norwegian Aid and as such the CIF value of Rs. 6,76,336 should not be taken into consideration for computing the above-mentioned allowances. The plea of the assessee was that the said amount should be taken into account for calculating the above-mentioned allowances. The assessee went in appeal before the CIT(A). The CIT(A) has held that the above amount was liable to be taken into account for calculating the abovementioned allowances. He relied on Explanation 2 to Section 43(1) of the Income-tax Act, 1961. The department is now in appeal before us and grounds 2 to 4 relate to this controversy.

We have heard the parties. Copy of agreement between the assessee and Govt. of India is at pages Nos. 1 to 22 of the paper book. This agreement is for construction of one Exploratory Fishing Vessel (Training version) and one Exploratory Fishing Vessel (Survey version) for the Govt. of India. This agreement is dated 1-12-1977. It is mentioned in this agreement that earlier the Govt. of India had signed an agreement dated 22-11-1975 on Boat Building Programme with the Govt. of the Kingdom of Norway for development of fisheries in India and that under the said agreement the Govt. of Norway had undertaken to provide technical and financial assistance including supply of equipments and materials for the yard and for the vessels for the implementation of Boat Building Programme of the Govt. and for this purpose the assessee Goa Shipyard Ltd. had been selected as one of the Building Yard where two large fishing vessels to be used for exploratory fishing, charting of fishing grounds, evaluation of fishing methods and gear as well as training of personnel would be constructed initially under this contract. It is further mentioned that the vessels which were to be constructed would be delivered to the Govt. for operation by the Exploratory Fishery Project, Bombay and Central Institute of Fisheries, Cochin. It was further mentioned in the said agreement that the Govt. of Norway, being responsible for the administration of the programme, was desirous of getting built Exploratory Fishing Vessel (Survey version) and Exploratory Fishing Vessel (Training version) and that the assessee had undertaken to construct the vessels at their Shipyard in Goa. It was also mentioned in the said agreement that as a first step towards the implementation of Boat Building Programme the Govt. of the Kingdom of Norway had agreed under the agreement dated 22-11-1975 to supply free of cost to the Govt. the equipment and machinery required for strengthening the facilities in the Contractors yard for the construction of the vessels and that the said machinery and equipment would belong to the contractors. A list of said equipments and machineries to be supplied for that purpose was set out in annexures to the agreement.

(3.)IT is under the above agreement that plant and machinery with which we are concerned was given to the assessee. As per the terms of the agreement the said plant and machinery was to belong to the assessee. IT is obvious that the said plant and machinery was received by the assessee as gift from the Norwegian Govt. through the Govt. of India towards implementation of Boat Building Programme. IT is on this plant and machinery that the abovementioned relief have been claimed. Whether we treat it as gift from Government of India or gift from Government of Norway, the legal position regarding cost to the assessee would be the same.