Walter Salis Schwabe, K.C., C.J.
1. The question referred for the opinion of the Court is whether the assessee is entitled to the deduction from the annual profits of what in fact is a loss made by him by the sale of certain machinery or plant. He carried on various businesses two of which consisted of rice-mills. He sold those mills and wishes to bring into account the difference between the purchase price of the machinery at those mills and the sale price, giving credit for the amounts, if any, allowed to him in previous years for depreciation. Whether he can do so or not turns on the proper interpretation of Section 9 of the Income Tax Act VII of 1918, Sub-section (2), Clauses (vi) and (vii). Certain specified allowances are thereby made which may be taken into account in arriving at the profits of the business. While the machinery is being used, Clause (vi) allows a certain annual depreciation on such machinery, the practice being, we are told, to consider that the machinery has a life of 15 years, and therefore to allow an annual depreciation as a general rule of 6 1/4 per cent. Clause (vii) deals with cases where the machinery has been sold or discarded as obsolete, and in that case, the assessee is entitled to deduct from his profits the difference between the original cost, reduced by the annual allowances for depreciation added together, and the amount for which the machinery is actually sold or its scrap value. It was contended in this case that the assessee who had got rid of these two mills by sale had sold them as obsolete, There was no finding of fact as to this in the original case referred to this Court and for that reason we sent it back to the Commissioner. Evidence has been taken before him and he has found as a fact that the machinery was sold as not obsolete. It appears that, so far as one of the mills is concerned, the machinery had been allowed to get into a very bad state of repair, and required the expenditure of a considerable sum to put it in proper working order. Evidence has also been given that it had been put in proper working order by the purchaser and is being used for its proper purposes, namely the milling operations. On that the Commissioner has found the fact that the machinery was not obsolete, and I cannot see how we can say that he was wrong in so finding.
2. It is then argued that, on the true construction of Clause (vii), all sales of machinery are included irrespective of whether they are sold by reason of their being obsolete in other words, that the words ' as obsolete ' govern the word ' discarded ' appearing immediately before them, and not the word ' sold. ' The phraseology of this clause is not very happy because it is obvious that the words could bear either meaning but the Statute has been punctuated, and we must take the punctuation marks as part of the Statute. If it was intended to read the words ' as obsolete ' as governing ' discarded ' only and not as governing ' sold ' one would expect to find a comma after the word ' sold.' There is none, the comma being put after the word ' obsolete. ' Further, it does not seem probable that the legislature meant to provide a deduction for losses on such sales of machinery by manufacturing concerns, without at the same time providing for the bringing into account as profits any profits that might be made on such sales. Sales of machinery are sales of part of the capital of a concern of this kind and the resulting profit or losses on such sales are dealt with quite apart from this section. Without this clause at all, the Commissioner, can and does consider whether or not realised profit or realised loss on such a sale is to be brought into account or not, and the answer depends on whether the sale is in fact part of the ordinary business operations of the concern.
3. On these grounds I think the answer to the question referred to us is that the assessee is not entitled to the deduction claimed.
4. The question originally referred to us was ' Is an assessee disentitled from claiming from out of his income from business an allowance under Section 9 (2) (vii) in respect of a rice mil! machinery when the assessee has ceased to derive profits from rice mill business though he earns profits from other parts of his business? ' That question does not arise as we find that he is not entitled to an allowance under Section 9 (2) (vii) because the machinery was not sold or discarded as obsolete. We are told that the assessee came here originally believing that the point he had to argue was whether the fact that he ceased to derive profits from his rice mill business when he earned profits from other parts of his business prevented Section 9 (2) (vii) applying, and he understood from the wording of the reference that the whole case was going to proceed in this Court on the basis that he would be entitled to an allowance under Section 9 (2) (vii) but for the fact that he ceased to carry on the rice mill business and that this was admitted. I think there is a good deal in what he says, and that he could not have had any idea from the terms of the reference that he was going to be called upon to argue the question whether or not the sale of his business machinery had been because that machinery had become obsolete and that therefore he was not entitled under Section 9 (2) (vii) in any event, In these circumstances, I think that there must be no costs of this reference.
5. I agree. I have nothing to add.