VEERASWAMI J. - This matter pertains to the assessment year 1960-61 and involves the question whether development rebate allowed by the Tribunal, differing from the revenue, is correct. The assessee, the Pandyan Bank Limited, Madurai, a public limited company carrying on banking business, owned a building with a total floor space of 34,398 sq. ft. The whole of it was air-conditioned. The total cost of the machineries for air-conditioning was Rs. 2,31,279. The assessee in its return claimed both depreciation and also development rebate in respect thereof. The income returned by the assessee was under the three heads, interest, business and property. In a part of the premises of an extent of 1,300 sq. ft. there were two tenants, one the Airlines Corporation Ltd., and the other the standard Vacuum Oil Company Limited, both of which were, under the terms of the tenancy, entitled to air-condition facilities. The claim for development rebate was disallowed by the Income-tax Officer with whom the Appellate Assistant Commissioner of Income-tax agreed, on the ground that the assessee had let out portions of the premises and that, therefore, the air-conditioning machinery or plant was not wholly used for the purpose of the business carried on by the assessee. The Tribunal reversed that order. In its view, the plant was one whole serving the entire premises, that it would not be possible to make it serve portions separately and that if the plant was to serve the bank, it would naturally have to serve other portions had been let out. On that basis it considered that the plant had been used wholly for the purpose of the business. At the instance or the Commissioner of Income-tax, this reference come before us under section 66(1) of the Indian Income-tax Act, 1922, on the following question :
'whether, on the facts and in the circumstances of the case, the assessee was entitled to the development rebate of Rs. 57,821 ?'
The assessee is not represented before us. But Mr. V Balasubrahmanyan, for the revenue, has in his usual way, presented to us almost all aspects of the question in order to enable us to come to a proper conclusion. The statutory provision which governs the matter, and as it stood at the relevant time, says that the Profits or gains of business shall be computed after making, among other allowances, allowance 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 of the business carried on by the assessee, sum by way of development rebate in respect of the year of installation equivalent to twenty-five per cent. of the actual cost of such machinery or plant to the assessee. The proviso to this Provision is to the effect that allowance should not be granted unless the particulars prescribed for the purpose of section 10(2)(vi) have been furnished by the assessee in respect of such machinery. Clause(vi) has reference to allowance in respect of depreciation of machinery or plant among other things. For the revenue the approach is that the conditions for allowance of development rebate ought to be strictly compiled with, that unless the words employed by the legislature for the purpose are squarely met by facts on which the claim for rebate is founded, no allowance can be made and that, therefore, their is no room for extraneous considerations like equity or reasonableness or even justice form any point of view. Learned counsel says that, in a matter of allowance of rebate, strict construction, rather than liberal, ought to be applied, and this more especially so because of the legislative object and policy in providing for allowance of rebate for machinery. From this point of view it is said that it suffice not that the plant is used in respect of the entire premises but what is required is that it should be used and wholly used for the purposes of the business which the assessee carried on. Applying that proposition to the facts, we are told that letting a portion of the premises - be it only a small portion when it is compared with the total area - is not and cannot be said to be a business which the assessee carried on.
The Tribunal noticed that one of the clause in the memorandum of association of the assessee was 'to sell, improve, manage, develop, exchange, lease, mortgage, dispose of or turn to account, or otherwise deal with all or any part of the property and right of the company' as amount its objects. This object is almost similar to section of the Banking Companies Act. It would appear to have been argued for the assessee before the Tribunal that, in view of this clause in the memorandum of association and the statutory Provision just mentioned, the letting of a portion of a premises should be regarded as part of the assessees business which it carried on. We do not find from its order that the Tribunal accepted this proposition. At any rate, it is not clear from its order what precisely its view was on this aspect. The Banking Companies Act, 1949, defines 'banking' as the accepting, for the purpose of lending or investment, of the deposits of money from the public repayable on demand or otherwise and withdrawals by cheques, draft, order or otherwise. Part II of the Act deal with business of banking companies and section 6 is concerned with forms of business in which banking companies may engage. Clause of sub-section of section 6 resemble, as we mentioned, the clause referred to in the memorandum of association of the assessee. An examination of sub-section shows that the from of business contemplated therein are those associated with and as an addition to the main business of banking. Amount the forms, we find, is acquisition, construction, maintenance and alteration of any building or works, necessary for the purposes of the company. That is a pointer to what exactly the legislature had in mind in enacting sub-section of section 6. Statutorily, even such enterprises are regarded as from of business in addition to the business of banking but that is only, as we are inclined to think, for purposes of the Banking Companies Act. In that sense the assessees letting of a portion of its premises may be regarded as in the nature of a business carried on by it in addition to the banking business. But, whether it can be regarded so, for purposes of the Income-tax Act. is a different question which we have got to consider.
The Income-tax Act, 1922, does not define 'business' except by saying that it includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. But the Act classifies 'income' under six head which include profits and gain of business, profession or vocation as a head and also income from property as another head. Where the property forms part of stock-in trade of a business, how the income derived therefrom will be regarded dose not fall for consideration. But where a property is owned by an assessee and it derives income therefrom, while it carries on also a business in the very property, such income will not be treated as income from business, but only from property. Would it make any difference if instead of the assessee using it, lets out and derives income; can it character be anything different from income from property We can conceive of no proper reason to think that it would for purposes of income taxation. Section 9 in the fact makes this view quite plausible. That section shows that income from property is chargeable to tax under that head on the basis of the annual letting value of the property whether it is owner-occupied or tenanted. The head of income 'profits and gains of business, profession or vocation' is separately dealt with in section 10 in contrast with section 9 dealing with 'property income' and each of these sections reflects as to how the income under relevant head is to be computed. It is under the head of 'business' the question of allowance for development rebate becomes relevant. Notwithstanding, therefore, the fact that, for purposes of the Banking Companies Act, the letting of a portion of the assessees premises may be regarded as part of its business, under the provisions of the Income-tax Act, income from any such letting will be regarded as income from property and not from business.
On that view it should follow that the letting of a portion of its premises by the assessee cannot be regarded as part of the business carried on by the assessee so that the air-conditioning plant could be regarded as having been wholly used for the purpose of such business. It may be that the machinery or plant has been so designed that its working could not be compartmentalised but would extend to the entire premises. We do not think that on that ground we can legitimately reach a different result, for, the requirement always is that the plant, in order that it may be eligible for development rebate, should wholly be used for purposes of the business which assessee carries on. The test is not whether the plant is one whole and as such is serving the entire premises. The test. if we may repeat, is whether, even as such a whole the machinery is used wholly for the business which the assessee is carrying on.
At one stage of the discussion before us, it looked attractive to take the view that the principle of de minimis non curat lex could be applied. Having regard to the total extent of the floor space of the premises which was huge, the portion that was let out to two tenants was comparatively negligible, the space let out working out to about 3 per cent. of the total area. Another view may be, why not construe the word 'wholly' in a substantial sense or from the standpoint of the principle that the law takes no notice of trifles. Commissioner of Income-tax v. Ouchterlony Valley Estates made a third approach, which, on facts, appears to be even a stronger case for the revenue. That was a case of an assessee who cultivated tea and coffee, using the assets for the cultivation of both, and claimed development rebate Notwithstanding rule 24 of the Indian Income-tax Rules, 1922, which provided for the computation of income from tea alone, the Kerala High Court was inclined to the view that the assessees claim should be allowed in its entirety. The reasoning was this : 'All the assets were used in their entirety in the cultivation of tea and it was only when they could be spared from the cultivation of tea that they were used in the cultivation of coffee. The user of the assets in the cultivation of coffee also would not disentitle the assessee from claiming the rebate.'
Assets 'wholly used' do not mean 'exclusively used'. The meaning that can be attributed to be the expression 'wholly used' is 'used in their entirety'.
With respect, whatever may be said in favour of that view in the context of the particular facts, we are unable to hold that the ratio of that case is applicable to the situation before us. There is nothing in the record to show that the use of the air-conditioning plant could not be confined wholly to the area occupied by the assessee excluding the portion under tenancy. Quite apart from that, we are of opinion that the words 'wholly used' must be given their full scope as a condition to an allowance of development rebate. The words do not appear to mean that, when not required for particular business purposes, they can or have to be used for other purposes having regard to continuance or nature of their structural built in set up, and still development rebate can be claimed. If that were the position, we fail to understand the significance of the word 'wholly'. It dose not mean wholly but qualified by circumstances. Obviously, when the machinery or plant is used for business, what is contemplated is, it would be used wholly for the purpose to the extent such user was made. 'wholly' has no reference to the extent or nature of the business but to the extent of the user must be with reference to and only for the purposes of the business carried on by the assessee.
We have carefully considered whether the doctrine of substantial compliance or he principle of de minimis non curat lex could invoked in the application of section 10(2)(vib). Rowlatt J. in Cape Brandy Syndicate v. Inland Revenue Commissioners observed :
'.....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.'
We think that is a safe and correct process of interpretation of a taxing statute. 'wholly' should mean really wholly and nothing more and nothing short of it. Once we depart from that rule, where to draw the line will pose greater problems than otherwise. We are of the view, therefore, that the question referred to us should be answered in favour of the revenue with costs. Counsels fee Rs. 250.