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Commissioner of Income-tax Vs. Bharat Earth Movers Limited - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberIncome-tax Reference Case Nos. 298 and 299 of 1978
Judge
Reported in[1985]156ITR269(KAR); [1985]156ITR269(Karn)
ActsIncome Tax Act, 1961 - Sections 32 and 32(1)
AppellantCommissioner of Income-tax
RespondentBharat Earth Movers Limited
Appellant AdvocateK. Srinivasan and ;H. Raghavendra Rao, Advs.
Respondent AdvocateK.P. Kumar, Adv.
Excerpt:
.....interpretation and that, in the guise of interpretation, it is not open to a court to legislate and that there was no warrant for allowing initial depreciation on 'co-operative stores building' as a canteen as claimed by the assessee......to initial depreciation under section 32(1)(iv) of the i.t. act, on the cost of the co-operative stores building 2. whether, on the facts and in the circumstances of the case, the appellate tribunal was right in law in holding that the assessee was entitled to depreciation allowance on the cost of preparation and reproduction of drawings, specifications and other technical information paid to the foreign collaborator, on the basis that they are plant within the meaning of section 32 3. whether, on the facts and in the circumstances of the case, the tribunal was right in disallowing the assessee's claim for deduction of rs. 27,64,811 relating to the earth-mover division on amortisation basis ?' 2. we first proceed to examine questions nos. 2 and 3 and then question no. 1. 3. in.....
Judgment:

Puttaswamy, J.

1. In these cases, the Income-tax Appellate Tribunal, Bangalore Bench, Bangalore (Tribunal), at the instance of the assessee and the Revenue had stated a case and has referred the following questions of law for the opinion of this court :

'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee is entitled to initial depreciation under section 32(1)(iv) of the I.T. Act, on the cost of the co-operative stores building

2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee was entitled to depreciation allowance on the cost of preparation and reproduction of drawings, specifications and other technical information paid to the foreign collaborator, on the basis that they are plant within the meaning of section 32

3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in disallowing the assessee's claim for deduction of Rs. 27,64,811 relating to the earth-mover division on amortisation basis ?'

2. We first proceed to examine questions Nos. 2 and 3 and then question No. 1.

3. In I.T.R.C. Nos. 70 to 73 of 1978 (CIT v. Bharat Earth Movers Ltd. : [1985]155ITR321(KAR) decided on January 18, 1985, a Division Bench of this court consisting of Jagannatha Shetty and Hakeem JJ., had occasion to examine questions Nos. 2 and 3 between the same parties for the previous assessment year. For the very reasons stated in I.T.R.C. Nos. 70 to 73 of 1978, we consider it necessary to decline to answer question No. 2. As regards question No. 3, the assessee had obtained relief for the previous year in I.T.R.C. Nos. 70 to 73 of 1978 (CIT v. Bharat Earth Movers Ltd. : [1985]155ITR321(KAR) . Hence, question No. 3 no longer survives for consideration. We, therefore, hold that it is unnecessary to examine and answer question No. 3 which no longer survives for consideration.

4. What remains is to examine question No. 1 for which it is necessary to notice the facts that are not in dispute.

5. For the assessment year 1970-71 relevant to the accounting year ending on March 31, 1970, among others, the assessee had constructed a 'co-operative stores building' for the benefit of its employees on which it claimed initial depreciation allowance on the cost of construction of that building amounting to Rs. 33,940 under s. 32(1)(iv) of the I.T. Act of 1961 ('the Act'). On an examination of the said claim, with which only we are concerned, the ITO disallowed the same on the ground that the same did not fall under s. 32(1)(iv) of the Act. But on an appeal filed by the assessee, the Tribunal has accepted the same and has allowed it as an admissible depreciation allowance, the correctness of which is disputed by the Revenue.

6. Sri K. Srinivasan, learned senior standing counsel appearing for the Revenue, contends that on the plain language of s. 32(1)(iv) of the Act, a 'co-operative stores' cannot be treated as a 'canteen' for which reason, the initial depreciation claimed on the construction of the same was inadmissible.

7. Sri. K. P. Kumar, learned counsel appearing for the assessee, refuting the contention of Sri Srinivasan sought to support the view expressed by the Tribunal.

8. In accepting the claim of the assessee, the Tribunal, referring to the dictionary meanings of 'canteen', has held that a 'co-operative stores' was a canteen.

Section 32(1)(iv) of the Act specifying certain types of buildings used for the purpose of residence of persons employed in the business or where the building is used solely or mainly for the welfare of the employees like 'a hospital, creche, school, canteen, library, recreational centre, shelter, rest room or lunch-room' and not to any other purpose and does not use them in a technical meaning but uses them as the people of this country use or understand them or are accustomed to use and understand them. Whatever their meanings are in other countries or their meanings in the various dictionaries, 'a co-operative stores building', though constructed as a welfare measure for the employees, is never treated as a 'canteen' in our country. A co-operative stores building is never treated as a canteen building or a canteen stores building. The purposes for which they are constructed and the use for which they are intended and put to are entirely different and distinct. We are of the view that the Tribunal has unnecessarily strained the simple language of the words that do not admit of any ambiguity at all. We are also of the view that the Tribunal in placing its construction on the words had ignored the oft-quoted classical statement of Rowlatt J. in Cape Brandy Syndicate v. IRC [1921] 1 KB 64, which reads thus (p. 71) :

'In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.'

9. We have no doubt that if the Tribunal had kept before it these and other well settled rules of construction like where the language is plain, there is hardly any scope for interpretation and that, in the guise of interpretation, it is not open to a court to legislate and that there was no warrant for allowing initial depreciation on 'co-operative stores building' as a canteen as claimed by the assessee.

10. In the result, we answer the questions referred to us as hereunder :

1. Question No. 1 : In the negative, in favour of the Revenue and against the assessee.

2. Question No. 2 : Decline to answer.

3. Question No. 3 : Does not survive and, therefore, not examined and answered.

11. In the circumstances of the cases, we direct the parties to bear their own costs.


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