1. The assessee-company in this reference under section 256(1) of the Income-tax Act, 1961, is a private limited company which was incorporated on May 30, 1970 for the manufacture of knitted fabrics. We are concerned for the assessment year 1972-73, for which the corresponding previous year is the 13 months period ending June 30, 1971. In the year of account the assessee purchased an olf building for Rs. 3,26,425. This is the figure mentioned in the statement of case, though in the order of the Income-tax Officer, annexure 'A', it is stated that the total consideration of land and building purchase by the assessee-company was Rs. 3,10,000. We were informed at the bar that the difference of Rs. 16,425 represented the charges for registration of the conveyance. This is made clear in the order of the Appellate Assistant Commissioner. On August 21, 1970, the assessee installed newly purchased machinery and thereafter claimed relief under section 80J of the Income-tax Act, before the Income-tax officer. The Income-tax officer found that the building which the assessee had purchased was used previously for carrying on some other business and invoked the Explanation to section 80J to reject the claim made by the assessee as according to him the value of the building used in some other business previously was more than 20% of the value of the buildings, plant an machinery used in the new industrial undertaking. According to his view the land under the building was very much part of the building and for the purposes of considering the Explanation the value of the superstructure as well as the value of the land underneath it had to be considered and if so considered the assessee was not entitled to relief under section 80J of the Act.
2. The assesee took the matter in appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner found that the assessee had installed new machinery worth Rs. 7,62,421. He determined the value of the superstructure purchased by the assessee at Rs. 1,60,780. Before the Appellate Assistant Commissioner two alternative contentions were raised. The second point urged was that the building referred to in the Explanation would mean only the superstructure and not the land underneath the same. Regarding the first submission the Appellate Assistant Commissioner decided the matter against the assesse on the ground that the language of section 80J(4)(ii) was different from the language used in section 15C(2)(i) of the Act of 1922. On the second issue, however, the Appellate Assistant Commissioner considered the dictionary meaning of the word 'building' as also the decision of the Supreme Court in Commissioner of Income-tax v. Alps Theatre : 65ITR377(SC) . Accordingly, he aggregated the cost of the superstructure with the cost of the superstructure against the cost of the new undertaking, it was determined that the value of the second-hand building, i.e. Rs. 1,65,645 referred to the new industrial undertaking was less than 20% of the total value of the building and machinery of the assessee and accordingly the assessee was held entitled to deduction under section 80J of the Act.
3. The department thereupon took the matter in second appeal to the Tribunal. The only question canvassed before the Tribunal was whether the expression 'building' occurring in the Explanation to section 80J of the said Act could be construed as meaning only the superstructure or whether the 'building' would include the superstructure and the land underneath it. In the statement of case it is mentioned specifically that at the stage of the appeal before the Tribunal there was no dispute with regard to the valuation either of the Superstructure or of the land on which it was erected. On behalf of the assessee it was contended before the Tribunal that the decision of the Supreme Court in Alps Theatre'e case : 65ITR377(SC) construed and interpreted then word 'building' not for the purpose of depreciation alone and that such interpretation was required to be given whenever the word 'building' occurred in the Income-tax Act. It was further urged that since the value of the old asset had to be considered, there was no question of the land underneath the superstructure being old or new, and accordingly the superstructure alone would be required to be considered at the time of applying the Explanation. Finally it was submitted that if there was any difficulty in choosing the meaning of or interpretation to be given to the word 'building' the one more favorable to the assessee should be adopted. The Tribunal found the issue not completely free from doubt. However, having regard to the decision of the Supreme Court in Alps Tbeatre's case : 65ITR377(SC) and bearing in mind the nature of the relief claimed, the tribunal was inclined to take the view that the building referred only to the superstructure and not to the land beneath it. The Tribunal also referred to the dictionary meaning of the word 'building' which supported it. It accordingly upheld the decision of the Appellate Assistant Commissioner and held that the assessee was entitled to relief under section 80J of the Act. On these facts the following two questions have been referred to us under section 256(1) of the Income-tax Act, 1961 :
'1. Whether, on the facts and in the circumstances of the case, the tribunal considered in interpreting the Explanation to section 80J of the Income-tax Act, 1961, and thereby holding that the assessee was entitled to relief under section 80J of the Act
2. Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the cost of the holding occurring in the Explanation to section 80J of the Act means only superstructure and not the site on which the superstructure stands
4. It may be pointed out that only one point was canvassed before the Tribunal as stated but it in its order and in the statement of case, and that this aspect of the matter which alone can be said to arise from the order of the tribunal is brought out by question No. 2 and if that question answered one away or the other, it becomes unnecessary to answer question No. 1. If the word 'building' occurring in the Explanation to section 80J meant only the superstructure, then the Tribunal, s interpretation of the Explanation of section 80J is correct. If, however, we hold that the word 'building' mean the superstructure as also the land underneath the superstructure, i.e. the land which is married to the superstructure, then the Tribunal's interpretation of the Explanation to section 80J of the Income-tax Act, 1961, would have to be regarded as erroneous. Thus, although two questions have been referred to us, they are merely two ways of putting only one question which alone arises from the order of the Tribunal against which a complaint is made by the commissioner.
5. it may be pointed out that we are concerned with the provisions of section 80J as they stood prior to the changes made therein by section 12 of the Finance Act, 1975, with effect from 1st April, 1976. Section 80J, as it then stood, pertained to deduction or allowance to be given to an assessee in respect of profits and gains from newly established industrial undertakings or ships or hotel business in certain cases. Certain conditions in the case of industrial undertaking, were required to be fulfilled, which conditions required to be fulfilled for ships are to be found in sub-section (5) and for hotel in sub-section (6). Sub-section (6) is followed by an Explanation which is material for our purposes. We may, therefore, set out sub-section (4)(ii) and the Explanation for it is with reference to these statutory provision that the word 'building' occurring therein will be required to be considered and construed :
'(4) -. This section applies to any industrial undertaking which fulfills all the following conditions, namely :- ....
(ii) It is not formed by the transfer to a new business of a building (not being a building taken or rent or lease), machinery or plant previously used for any purpose,...
(6) This section applies to the business of any hotel, where all the following conditions are fulfilled, namely :- ......
Explanation. - Where -
(a) in the case of an industrial undertaking, any building machinery or plant, or any part thereof previously used for any purposes or,
(b) in the case of the business of a hotel, any building, or any part thereof, previously used as a hotel, or any machinery or plant, or any part thereof, previously used for any purpose, is, in either case, transferred to a new business, and the total value of the building, machinery or plant or part so transferred does not exceed twenty percent of the total value of the building, machinery or plant used in the business then for the purposes of clause (ii) of sub-section (4) and clause (a) of sub-section (6) the condition specified therein shall be deemed to have been complied with and the total value of the building, machinery or plant or part so transferred shall not be taken into account in computing the capital employed in the industrial undertakings or the business of the hotel.'
6. The Tribunal in its order placed great reliance for the ultimate conclusion which it found acceptable on the decision of the Supreme Court in Commissioner of Income-tax v. Alps Theatre : 65ITR377(SC) . That was an appeal from the decision in Commissioner of Income-tax v. Alps Theatre . In order to understand the decision of the Supreme Court a brief reference to the decision of the Punjab High Court will be required to be made. The Punjab High Court and the Supreme Court were considering the question whether the cost of land is entitled to depreciation under the schedule to the Income-tax Act along with the cost of the building standing thereon. The Punjab High Court answered the question in the affirmative observing that the land underneath the building has to be treated as the building for purposes of the Act and only the land not under the building but appurtenant to it which has to be treated seperately. The Punjab High Court placed great reliance on the decision of the Privy Council in Corporation of the City of Victoria v. Bishop of Vancouver Island  2 AC 384, To which we shall refer later on as also certain observations in Corpus Juris Secundum, volume 12, at page 380 (reproduced at page 197 in . According to these observations, 'the term 'building'; is not always limited to the structure itself, it sometimes includes the land on which the building, stands, and the land within the enclosure belonging to the building and appropriate to its use'. According to the Punjab High Court, therefore, it was clear that the word 'building' will have to be construed in the context of the statute in which it is used.
7. When the matter was carried in appeal by the department to the Supreme Court, Sikri J. (as he then was), speaking for the court, considered the statutory provisions under discussion and observed that 'building' clearly meant the structures and would not include the site. Accordingly, the Supreme Court, set aside the judgment of the Punjab High Court and answered the question in the negative and against the assessee.
8. A Division Bench of the Bombay High Court had an occasion to consider the decision in Alps Theatre's case : 65ITR377(SC) in Commissioner of Income-tax v. Colour-Chem Ltd. : 106ITR323(Bom) , where it was observed that it was in the context of the claim of depreciation that the supreme court had held that the word 'building' occurring in the relevant provisions of section 10(2) of the Indian Income-tax Act, 1922, meant 'structure' and did not include the site (see page 327 of the report).
9. In Colour-Chem Ltd's case : 106ITR323(Bom) , it is made clear that the expression 'building' will have to be construed and given a meaning having regard to the context of the particular subject-matter dealt with by the relevant provision of the Act. It would follow, therefore, that the decision in Alps Theatre's case : 65ITR377(SC) must be regarded as having been given in the context of the provision pertaining to depreciation and cannot be accepted as colouring the meaning to be given to the word 'building' throughout the Income-tax Act.
10. Mr. Joshi on behalf of the revenue urged very strenuously that the word 'building' as used in ordinary language or in its ordinary grammatical sense, or to put it differently in its ordinary meaning as used in popular language, would include not only the actual fabric of the building, i.e. the superstructurre, but the soil upon which it stands. He referred in this connection to the decision of the Privy Council in Corporation of the City of Victoria v. Bishop of Vancouver Island  2 AC 384. The judgment of their Lordships of the Privy Council were delivered by Lord Atkinson. The decision turned upon the true interpretation of section 197 of the Municipal act c. 52 of the statutes of British Columbia,. 1914, whereunder exemption was given from municipal, rates and taxes, inter alia, to every building set apart and on use for the public workship of God. There were six other exemptions. Lord Atkinson first enunciated the ordinary rule of construction, viz, that in the construction of statues the words must be interpreted in their ordinary grammatical sense, unless there be something in the context or in the object of the statute in which they occur, or in the circumstances with reference to which they are used, to show that they were used in a special sense different form their ordinary grammatical sense. He reaffirmed the principle of an earlier decision given by Lord Esher in Reg. v. Judge of the City of London Court and Payne  1 QB 273, which was to the effect that they must be followed even though they lead to a manifest absurdity. Lord Atkinson then considered the various exemptions provided for by section 197 and observed that the word 'building' in these exemptions must be given the same meaning as used in ordinary languages as comprising not only the fabric of the building but the land upon which it stands (page 390). This is reaffirmed at page 391, where it is obsered :
Taking section 197 by itself, their Lordships are clearly of opinion that, if rationally and justly construed, the word 'building' must receive the same meaning in sub-sections (1), (3), 6) and (7) that is its natural and ordinary meaning including the fabric of which it is composed, the ground upon which its walls stand, and the ground embraced within those walls.'
11. Various arguments were then advanced to suggest to the Privy Council that this meaning ought not to be given and these arguments were considered and rejected in the light of the statutory provisions under consideration. What is important to be noted for our purposes is that the decision speaks of the ordinary and popular meaning of the word 'building' as including the site on which the superstructure stands generally and not in context of the statutory provision is considered only after stating the ordinary meaning and finding that applying the ordinary meaning does lead to any absurdity, inconsistency or redundancy or surplusage. The case, therefore, would seem to be a judicial authority for the purpose of laying down the ordinary popular meaning of the word 'building' and for the purpose of interpretation that in ascribing a meaning and contracting the statues, the words must be interpreted in their ordinary grammatical sense unless there be something in the context, or in the object of the statute to show that they were used in a special sense different from their ordinary grammatical sense.
12. We were referred to by the learned counsel for the assessee to the portion in the order of the Tribunal (para 8) which refers to the definition of the word 'building' in Chambers Twentieth Century Dictionary. We were also given the definition of the word 'building' in Webster's Universal Dictionary and Shorter Oxford English Dictionary. These definitions emphasize the structural aspect of the concept of the building and it was contended that in construing the word 'building' occurring in sub-section (4) of the section 80J. 'building' must be given the dictionary meaning and not a wider meaning as including the land to which a superstructure was married. It is now well settled that in case of difficulty or ambiguity a reference to a dictionary would be permissible. It is difficult, however, to determine the interpretation of the word with reference to dictionary meaning where we have the highest authority and the Privy Council in Corporation of the City of Victoria v. Bishop of Vancouver Island  2 AC 384, in which at three separate places Lord Atkinson, speaking for the Judicial Committee of the Privy Council, has clearly indicated the popular and ordinary meaning of the word. The question will be whether there is anything in the statutory provision from which it can be clearly suggested that the ordinary and popular meaning of the word 'building' is to be abandoned in preference to the more restricted meaning as referred only to the superstructure which meaning is canvassed by the learned advocate on behalf of the assessee. In Colour-Chem Ltd's case : 106ITR323(Bom) , , it has been observed that, even in the context of section 10(2)(vi), considering the word 'building' as equivalent to structure or superstructure having walls and roof over it must be regarded as restricted meaning. The word 'restricted' would seem to imply something narrower as contrast with the ordinary meaning or the proper meaning. The question then which will arise for determination is whether there is an occasion for preferring this narrower or restricted meaning of the word 'building' in the context of the statutory provision with which we are concerned, viz., section 80J(4) and the Explanation which has been set out earlier. It was submitted by the learned counsel for the assessee that in section 80J(4) and the Explanation there was sufficient internal evidence to justify the adoption of the narrower meaning and of restricting the word 'building' to the superstructure. It was submitted that Explanation (b) uses the phrase 'any building or any part thereof' for the purposes of hotel business and it was building can only refer to the part of the superstructure of a building and can have no reference to the land underneath the superstructure. The argument has plausible attractiveness, but if it is relished that the Explanation contains a workable rule of thumb for the purposes of the allowing relief to an assessee who would be disentitled to such relief by the conditions prescribed under sub-section (4) and (6), it would be relished that even a part of a building can be valued the valuation can be made by reference to either the portion of the superstructure itself or by the portion of the superstructure in conjunction with the value of the land occupied by that portion of the superstructure in conjunction with the value of the land occupied by that portion of the superstructure. If the latter concept is considered and found acceptable, then it would not necessarily follow that the part of the building referred to in Explanation (b) is only the part of the superstructure and the land below the entire structure is totally excluded from the concept of valuation of that part.
13. Similarly, it was contended that under section 80J(4)(ii) transfer of a building previously used for any purpose in the new industrial undertaking would be a fact disentitling the assessee from the allowance, but by reason of the bracketed words, the buildings, taken on lease or rent, were excluded. An example was given of a building on leasehold land and it was contended that if such a building is purchased by the assessee, the assessee would be entitled to claim advantage of the application of the bracketed portion if the land on which the building stood were to be included in the concept of building as the land would be leased. the argument has not appealed to us. When the building previously used for any purpose is purchased, merely because the land on which it stand s is held on the lease, would not be equivalent to the building being taken on tent or lease. In such a case, for the purpose of having advantage of the bracketed portion both the superstructure and the land to which the superstructure is married must be taken on rent or leased by the assessee. Of course, the assessee may take the structure or portion thereof on lease without acquiring any right in the land and he could still take the benefit of the provision by reason of the bracketed portion.
14. It was then submitted that there are a number of section in the Income-tax Act where the legislature has clearly distinguished between 'land' and 'building' and if these were considered it would be clear that the legislative intention was to restrict the word 'building' to the superstructure or structure only and exclude the land on which the structure stood. We were referred to in this connection to the following sections :
1. Section 35D - (Amortisation of certain preliminary expenses)
2. Section 54D - (Capital gains on compulsory acquisition of land and building not to be charged in certain cases).
3. Section 280ZA - Explanation.
15. It is true that in these provisions the legislature has used the words 'land' and 'building' separately, but the reason for this is obvious, namely, that a unit or undertaking may have large portions of vacant land over portions only of which buildings or structures may have been constructed. The word 'lands' would be required to be used in the statutory provisions to include these lands within the ambit of the legislation and no inference can be drawn from the separate or distinct use of the word 'building' as such, nor would any comment to the effect that the land under the building would be doubly covered, be proper comment. Arguments of this nature had been considered by Lord Atkinson in Corporation of the City of Victoria v. Bishop of Vancouver Island  2 AC 384 and rejected; and, with respect, we agree with the process of reasoning indicated in the said decision. Similarly, reliance was placed on behalf of the assessee on rule 19A which provides for the computation of capital employed in an industrial undertaking or ship or the business of a hotel for the purposes of section 80J. It was submitted that if sub-rule (2)(i) of this rule is looked at it would indicate that only the superstructure is to be considered. Sub-rule (2)(i) does provide for the assets which are entitled to the depreciation provided for the sub-rule (2)(ii) and sub-rule (2)(iii) and we fail to see how an argument can be raised only on the provisions of sub-rule (2)(i) ignoring what is provided by sub-rule (2)(ii) and sub-rule (2)(iii).
16. This brings us to an argument advanced on behalf of the assessee based on the principle of favorable construction. This was to the effect that if two meanings are possible or can be given, the meaning to be given to a statutory provision like the Income-tax Act must be the one which is in favour of the assessee, one which reduces the burden of tax as against that which will be favorable to the revenue and which will enhance the levy of tax.
17. In connection with this argument we were referred to Commissioner of Income-tax v. Asbestos, Magnesia & Friction Materials Ltd. : 106ITR286(Bom) , which is a decision of the Bombay High Court in which two earlier decisions of this court in Commissioner of Income-tax v. Gaekwar Foam and Rubber Co. Ltd. : 35ITR662(Bom) and Capsulation Services Pvt. Ltd. v. Commissioner of Income-tax : 91ITR566(Bom) were referred to. In Commissioner of Income-tax v. Gaekwar Foam and Rubber Co. Ltd. : 35ITR662(Bom) , it was observed that the exemption provisions in section 15C of the Act must, as far as possible, be liberally construed and in favour of the assessee, provided that in doing so no violence was being done to the language used. This was reiterated in Capsulation Services Pvt. Ltd. v. Commissioner of Income-tax : 91ITR566(Bom) . These observations were made in the context of the section 15C which did not contain any provision in the nature of Explanation to be found under section 80J. The court in all the three cases was considering the satisfaction by the assessee of the prescribed conditions and held in connection with the proper interpretation of the conditions prescribed that these requirements had to be reasonably construed and if there were possible constructions, the one favorable to the assessee was required to be adopted as the consequence of adopting the other construction would be to make the assessee disentitled to the exemption. We are afraid that these observations can be of little use in construing the proper meaning to be ascribed to the word 'building' in sub-section (4) of the section 80J or in the Explanation.
18. One final argument, on behalf of the asessee, may now be disposed of. It was submitted that there was or could be no previous user of the land and it was only the superstructure which could be considered to have been previously used. it was submitted that if this is the only possible view then the phraseology employed in the section 80J(4) would clearly indicate that the word 'building' must refer only to the superstructure or the structure and not to the land on which the superstructure or the structure stands. We find that there is an inherent fallacy in this argument. When a person uses the entire structure on the land or a portion of the structure, he cannot be said to be not using the land beneath that structure though in the latter case the user of the land (if any valuation is to be made) may have to be regarded as not the full user but a partial or a pro tanto user. There are observations to this effect to be found in the decision of our high Court in Colour-Chem Ltd's case : 106ITR323(Bom) , which we have referred to earlier in this judgment.
19. The matter does not call for more elaborate discussion. We have before us the ordinary and popular meaning of the word 'building'. Keeping the statutory provisions before us, viz., the language and the intention of the legislature as deducible from the language used, is there any warrant for not ascribing the word 'building' in the statutory provision its ordinary and popular connotation as indicated by Lord Atkinson and restricted connotation as canvassed on behalf of the assessee. Our attention has not been drawn to any requirement of law or logic which would require the narrower meaning to be preferred over the popular meaning. If that is so, the question will have to be answered in favour of the revenue and against the assessee.
20. In the result, question No. 2 is answered as follows : In our opinion the cost of the building occurring in the Explanation to section 80J of the Act would not mean only the superstructure but would also include the cost of the land married to the superstructure on which the superstructure stands. As indicated earlier this is the only question arising from the order of the Tribunal and answer to question No. 1 is indicated by answer to this question. Accordingly, question No. 1 is not separately answered. The assessee will pay the costs of the reference to the revenue.