V.S. Desai, J.
1. The questions raised on this reference relate to the assessment made upon the assessee company for the assessment year 1952-53, the previous year for which was the calendar year 1951. The assessee at the material time was a private company, doing business of publishing several dailies, weeklies etc. It had for its business owned certain buildings, machinery, plant etc. At the commencement of the relevant account year, the actual cost of the building owned by it stood at Rs. 17,92,625 which included cost of certain constructions and installations of part of machinery subsequent to 31st March, 1948. In the month of January 1951, construction of certain additional buildings was completed at a total cost of Rs. 16,90,972. The buildings including the new buildings were used for the purpose of its business by the assessee, till the end of October, 1951, when all of them were sold to the Bharat Insurance Company for a certain consideration. In the assessment proceedings for the assessment year 1952-53, the assessee claimed a depreciation of Rs. 3,17,058 on the new buildings constructed in 1951, under the provisions of section 10(2) (vi) and 10(2) (via) of the Act. The claim for this depreciation allowance, however, was negatived by the income-tax authorities. The Income-tax Officer, under the provisions of section 10(2) (vii) read with the second proviso thereto also brought to tax the profit of Rs. 10,20,607 resulting from the sale of the buildings. It may be mentioned that Rs. 33,245 out of this amount of Rs. 10,20,607 represented the profits under section 10(2) (vii) attributable to the additions to buildings, plant, machinery etc., after 31st March, 1948. In disallowing the assessee's claim for the deduction of the amount of Rs. 3,17,058 on account of depreciation under section 10(2) (vi) and 10(2) (via), the Appellate Assistant Commissioner had taken the view that the said claim could not be allowed in view of section 10(4B) which was inserted by sub-section (2) of section 7 of the Finance Act of 1958, giving it a retrospective operation. The view taken by the Appellate Assistant Commissioner was also confirmed by the Tribunal. As to the sum of Rs. 10,20,607 which was computed by the income-tax authorities as profit resulting from the sale of buildings, under the second proviso to section 10(2) (vii), the assessee's contention was firstly, that the second proviso had no application to the present case because no allowance was claimed by the assessee under the substantive part of the said clause; and secondly that the word 'such' occurring in section 10(2) (vii) referred only to such buildings as were covered by section 10(2) (via), i.e., new constructions erected after 31st March, 1948, and consequently, if the second proviso had any application to the present case, a sum of Rs. 33,245 could be regarded as the profit under the said proviso, since that was the amount which was attributable to the profit made on sale of construction subsequent to 31st March, 1948. This contention was negatived both by the Appellate Assistant Commissioner as also by the Tribunal. The Tribunal, at the instance of the assessee, drew up a statement of the case and referred to this court the following two questions :
'1. Whether the assessee's claim for deduction of depreciation allowance of Rs. 3,17,058 under section 10(2) (vi) and 10(2) (via) for the assessment year 1952-53 in respect of building 'B' is governed by the provisions of section 10(4B)
2. Whether the depreciable assets referred to in section 10(2) (vii) are only such assets as referred to in section 10(2) (via) or those referred to in the substantive part of section 10(2) (vii) read with 10(2) (iv) ?'
2. It may be mentioned that the building 'B' in the first question refers to the new building whose construction was completed in the month of January, 1951.
3. Sub-section (2) of section 7 of the Finance Act, 1958, made the following amendment in section 10 of the Income-tax Act :
'7. Amendment of section 10. - In section 10 of the Income-tax Act, - ......
(2) After sub-section (4A), the following sub-section shall be inserted and shall be deemed always to have been inserted, namely :-
'(4B). Nothing in clause (vi) or clause (via) of sub-section (2) shall be deemed to authorise the allowance for any previous year of any sum in respect of any building, machinery, plant or furniture sold, discarded, demolished or destroyed in that year.''
4. Now, the building 'B' in respect of which the depreciation allowance to the extent of Rs. 3,17,058 was being claimed by the assessee under section 10(2) (vi) and section 10(2) (via) in the assessment year 1952-53, was sold by the assessee during the previous year relating to the said assessment year, and under section 10(4B) no depreciation allowance could be claimed for the same. The argument advanced by the assessee, however, was that section 10(4B) would have no application to its case. This contention was urged before the Appellate Assistant Commissioner and the Tribunal on the basis that although by the Finance Act of 1958, section 10(4B) was introduced retrospectively in the Income-tax Act, 1922, it was not so introduced in the Finance Act of 1922, that must govern the assessee's assessment for the assessment year 1952-53, and since the Income-tax Act at that time did not contain a provision of section 10(4B) the assessee's assessment for the assessment year 1952-53 cannot be affected by the said provision. In out opinion, there is no substance in this contention and it was rightly negatived by the Appellate Assistant Commissioner and the Tribunal. The amendment introduced by the Finance Act of 1958 being expressly retrospective must be deemed to have been in the Income-tax Act ever since it came on the statute book in 1922. Therefore, even in 1952, section 10(4B) must be deemed to have been in existence and thus contained in the Income-tax Act the whole of which was made applicable by the Finance Act of 1952. Moreover, at any rate, when the assessee's appeal was pending before the Appellate Assistant Commissioner the provision of section 10(4B) with its retrospective effect had come into existence and the Appellate Assistant Commissioner was bound to give effect to the said provisions even at the stage of the appeal.
5. Mr. Palkhivala, learned counsel appearing for the assessee, has raised two other contentions relating to the application of section 10(4B) which were not raised before the income-tax authorities or before the Tribunal. His first contention is that the provision of section 10(4B) which has been introduced retrospectively by the Finance Act of 1958 is ultra vires as it leads to discrimination between the assessee similarly placed. His second contention is that at any rate in order to avoid a challenge to the provision on the ground of unconstitutionality this provision has to be so construed as to give it restricted operation. According to Mr. Palkhivala in cases of assessments for years prior to four years of the coming into operation of the said provision, the provision should be construed as having on operation.
6. Now so far as the first contention is concerned, we do not think that it can be entertained in the first contention reference. It has not been raised before the Tribunal and it does not arise out of its order. It is also not involved in the question referred to us by the Tribunal because the said question does not relate to the constitutionality of the provision but only to its application to the assessee's case. The present reference is at the instance of the assessee and no question as is sought to be raised appears to have been asked for by the assessee in its application for reference. A contention as to the constitutionality of an enactment of Parliament cannot be entertained unless it is properly raised and notice thereof has been given to the Attorney-General. Since no such steps have been taken by the assessee it cannot be allowed to be raised at the present stage.
7. The second contention, if it is to proceed on the basis that the provision of section 10(4B) in its natural and plain meaning is ultra vires on the ground of discrimination and must therefore be given an artificial and different meaning to avoid that vice, cannot be entertained because the said basis is not open to examination in the present case for the reasons we have already stated. If it does not proceed on any such basis but is simply this that the provision even as it is worded reads reasonably to the meaning which is sought to be given to it, we find it difficult to see how such a meaning can be extracted from it. It is needless however to discuss the contention any further because even if it was good it cannot help the assessee because the assessment of the assessee was completed only in the year 1957 and even on the interpretation which is sought to be put on the provisions it will apply to the assessee's case.
8. Since none of the contentions raised by Mr. Palkhivala with regard to the first question can help him our answer to the said question must be in the affirmative. We answer accordingly.
9. Coming now to the second question, the first contention raised before the Tribunal appears to have been that the second proviso will not apply, since no allowance was claimed by the assessee under the substantive part of clause (vii) of section 10(2). It is difficult to understand this contention. Both the main provision and the second proviso deal with consequences which follow when a depreciable asset is sold but the consequences dealt with by them are opposite of each other. The main part of clause (vii) relates to cases where buildings, machinery, plant have been sold, discarded, demolished or destroyed, and the written down value is more than that what is obtained on such sale or disposal of the building, machinery, plant, etc. The second proviso provides for converse cases where the building, machinery or plant is sold, and the sale proceeds exceed the written down value. It is clear that the case to which the second proviso will apply will never fall under the main provision. The contention therefore that unless the main provisions is applicable the second proviso can have no operation is a contention which has no substance whatsoever and Mr. Palkhivala has made no attempt to support it. He has however argued the other alternative argument which was also urged before the Tribunal, viz., that the expression 'such' occurring in clause (vii) has reference only to such buildings etc. as are referred to in the immediately prior sub-section, viz., section 10(2) (via), and therefore only to buildings erected after 31st March, 1948. We are unable to accept this contention also. Section 10(2) provides the mode of computation of the profits and gains of the business. It allows certain deductions in computing the said profits. Under section 10(2) (iv) provisions is made for deduction in respect of insures against risk, damage or destruction of buildings, machinery, plant, furniture, stocks, stores used for the purpose of business, profession or vocation. In the clauses following thereafter, namely, (v), (vi) and (vii), further deductions in respect of buildings, machinery, plant, furniture used for the purpose of business, profession or vocation, have been provided. In these clause, viz., clauses (v), (vi) and (vii), the expression 'such' has been used before 'buildings, machinery, plant, furniture referred to in these clauses are such as are referred to in the earlier clause (iv) that is buildings, machinery, plant and furniture used for the purpose of business, profession or vocation. Under clause (vi) depreciation is provided for buildings, machinery, plant, etc., and the depreciation provided is of two types - normal depreciation and initial depreciation. Clause (vii) deals with cases where building, machinery, plant etc. are sold, discarded, demolished or destroyed, and provides that in cases where what is realised by the sale or disposal is less than the written down value, a further allowance will be allowed to the assessee; while in cases where the disposal yields more than the written down value, the difference will be treated as profit earned by the assessee. In the year 1949, clause (via) was introduced in between clauses (vi) and (vii) providing for additional depreciation in respect of the buildings, which were constructed after 31st March, 1948. It is the insertion of this clause which has enabled the assessee to raise the contention that since after this insertion the expression 'such' occurring in clause (vii) has a meaning and connotation different from what it had up to that time and it now means such buildings, etc., as are referred to in the immediately preceding clause (via) that is buildings, etc., constructed or installed after 31st March, 1948. So long as clause (via) was not there, there was no doubt whatsoever that the expression 'such' in clause (vii) (which it may be mentioned was introduced in the year 1946) had the same connotation as the expression 'such' in clauses (v), and (vi) and by the said word was meant, buildings, machinery, plant, furniture used for the purpose of business, profession or vocation as mentioned in clause (iv). Clause (vii) including the expression 'such' along with other clauses (iv), (v) and (vi) was in existence since must before the insertion of clause (via) which came into existence only in 1949, and the meaning which the expression 'such' in clause (vii) had was also clear and unambiguous till that time. The newly introduced clause (via) was a provision for providing yet another type of depreciation in addition to the two depreciations which were provided in clause (vi), namely, normal and initial depreciation. Clause (via) therefore, was a further part of clause (vi) which dealt with the subject of deduction for depreciation. Clause (vii) does not deal with the subject of depreciation as such. It only provides as to what is to happen when the assets are sold either at a value more or less than the written down value. There is no reason why the expression 'such' occurring in clause (vii) simply by reason of a new sub-clause having been introduced as clause (via), have its connotation changed, when the new provision introduced by clause (via) has nothing to do with the subject dealt with in clause (vii). The only argument for this change in the connotation or meaning of the expression 'such' occurring in clause (via). The ordinary meaning of the word 'such' is 'of the kind or degree already described or implied or intelligible from the context or circumstances' (see the Concise Oxford Dictionary). The word 'such' in clause (vii) therefore may either mean 'as already described' in clause (iv), (v) or (vi) or 'as already described' in clause (via) and whether the former or the latter is the true meaning to be given to the word will have to be decided from the nature of the provision, the scheme of the section, and the context in which it occurs. The nature and purpose of the provision is to allow a balancing allowance if the assets of the kind described is discarded or demolished and the price at which it is sold or its scrap value is less than the written down value of the assets and to make an addition to the profit in case the sale price or scrap value is in excess of the written down value. The scheme of the provisions or the intention in enacting the same therefore is that the assessee should be allowed to recoup himself to the extent of the entire capital cost of the assets but only to that extent and not in excess thereof. In view of these circumstances there does not appear any good reason why the operation of the clause (vii) should be confined merely to the assets constructed or installed after the 31st March, 1948. The provisions of the several clauses of sections 10(2) deal with separate items of deductions and although the clauses (vi) and (via) deal with the allowance by way of depreciation and clause (vii) with the final position arising on the disposal or abandonment of the asset there is no other connection between these clauses by which the interpretation of either of them may be influenced. The clauses (via) and (vii) are not enacted even at the same time, the latter clause having existed from much earlier time, nor is there any vit a connection between the two provisions so that from the content or circumstances in which the new provision of clause (via) has been inserted a different meaning or interpretation of the provision of clause (vii) can be regarded as implied or rendered intelligible. The mere circumstance of the proximity of the provision of clause (vii) to clause (via) is not therefore in our opinion sufficient to warrant the conclusion that the introduction of clause (via) has the effect to bringing about a change in the connotation of the word 'such' occurring in clause (vii) of section 10(2) of the Indian Income-tax Act, 1922.
10. Our answer to the second question, therefore, is that the assets referred to in section 10(2) (vii) are those referred to in the substantive part of section 10(2) (vii) read with section 10(2) (iv) and not only such assets as are referred to in section 10(2) (via).
11. The assessee will pay the costs of the department.
12. Reference answered accordingly.