1. This is a reference by the Income-tax Appellate Tribunal, Madras Bench, under Section 66(1) of the Indian Income-tax-Act, 1922. The Assessment year is. 1959-60; and the accounting period, the twelve months ended on 3140-1958. The question referred is :
'Whether, when assets are commonly used for the-production of both tea and coffee, the assessee is entitle to proportionate development rebate under Section 10 (2 (vi-b) of the Indian Income-tax Act, 1922?'
2. The assessee, the Ouchterlony Valley Estates (1938) Limited, is engaged in the cultivation of tea and coffee. It contended that it was entitled to development rebate in respect of certain assets which were used not merely in the cultivation of tea but also in the cultivations of coffee. The contention was upheld by the Appellate Tribunal and the question mentioned above was referred) to this Court in pursuance of an application by the Commissioner of Income-tax, Kerala, Ernahulam.
3. In order to earn the rebate the conditions provided by Section 10(2) (vi-b) of the Indian Income-tax Act,. 1922, have to be fulfilled. Sub-section (1) of Section 10 says that income-tax shall be payable by an assessee under the head 'Profits and gains of business, profession' or vocation' in respect of the profit or gains of any business, profession or vocation carried on by him; and the relevant portion of Sub-section (2) is :
'(2) 'such profits or gains shall be computed after making the following allowances, namely :-- (vi-b) In respect of machinery or plant being new, which has been installed after the 31st day of March, 1954, and which is wholly used for the purposes cf the business carried on by the assessee, a sum by way of development rebate in respect of the year of installationequivalent to twenty-five per cent of the actual, cost ofsuch machinery or plant to the assesses:'
4. It is common ground that the rebate granted by the Appellate Tribunal under Section 10(2) (vi-b) of the Indian Income-tax Act, 1922, is justified, provided the assets concerned were 'wholly used for the purposes of the business carried on by the assessee'. According to the Tribunal they were soused; and according to the Department they were not. In other words the controversy is as to the true meaning and scope of the words 'wholly used for the purposes of the business carried on by the assessee'.
5. Rule 24 of the Indian Income-tax Rules, 1922, provides that 'Income derived from: the sale of tea grown and manufactured by the seller in the taxable territories shall be computed as if it were income derived from business, and 40 per cent, of such income be deemed to be income, profits and gains liable to tax' under the Indian Income-tax Act, 1922. There is no similar provision regarding coffee; and as a result income derived from the sale of coffee grown and manufactured by the seller in the taxable territories has to be considered as agricultural income exempt from taxation under that Act.
6. The contention of the Department is that the income from the coffee cultivation of the assessee being only agricultural income without any statutory provision directing that income to be considered as an income from business, the user of the assets concerned in the earning of that agricultural income also, will negative the claim for rebate under Section 10(2) (vi-b) of the Indian Income-tax Act, 1922. In order to uphold the contention we must accept the submission that the word 'wholly' is synonymous with the word 'exclusively'. We do not think that there is any justification to do so.
7. The expression in Section 10 (2) (vi-b) Is 'wholly used for the purposes of the business carried on by the assessee' and not 'exclusively used for the purposes of the business carried on by the assessee'. That the Legislature is familiar with the expression 'wholly and exclusively' and uses that expression when necessary is clear from another clause of the same sub-section, Clause (xv) of Section 10(2) which was in force when Section 10(2)(vi-b) was inserted by the Finance Act of 1955. In view of this we think we must attribute a meaning to the word 'wholly' which is different from that of the word 'exclusively', in other words assets 'wholly used for the purposes of The business carried on by the assessee' must mean something different from assets 'exclusively used for the purposes of the business carried on by the assessee'.
8 If assets 'wholly used' do not mean assets 'exclusively used', then the only meaning that can be attributed to the former expression is that of assets 'used in their entirety'. It is not disputed that all the assets concerned were used in the cultivation of tea. It was only when they could be spared from the cultivation of tea that they were used in the cultivation, of coffee. It is also agreed that if those assets were left idle when they were not being used in the cultivation of tea, then the rebate would have been admissible. What disentitles the rebate, according to the Department, is only the use of the assets in the cultivation of coffee, or in other words the disruption of the exclusive character of the user in the cultivation of tea.
9. In these circumstances--the assets being used in their entirety in the cultivation of tea--we are not(prepared to say that the Tribunal was wrong in the conclusion that it reached, and must answer the question referred in the affirmative, that is, in favour of the assessee and against the Department. We do so; but without any order as to costs.
10. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be forwarded to the Appellate Tribunal as required by Sub-section (5) of Section 66 of the Indian Income-tax Act, 1922.