1985 (6) TMI 24 - HC - Income Tax

Court denies initial depreciation claim on cooperative stores building, distinguishing from canteen.

The court ruled against the assessee, denying the claim for initial depreciation on a cooperative stores building under section 32(1)(iv) of the Income ... Initial depreciation - building used solely or mainly for the welfare of employees - statutory interpretation of taxing statute - ordinary meaning in domestic contextInitial depreciation - building used solely or mainly for the welfare of employees - construction of co-operative stores - statutory interpretation of taxing statute - entitlement to initial depreciation under section 32(1)(iv) on the cost of the co-operative stores building - HELD THAT: - The Tribunal allowed initial depreciation treating the co-operative stores building as a 'canteen' within the list of buildings eligible under section 32(1)(iv). The High Court reversed this approach. The Court held that the words in the taxing provision admit of a plain meaning and must be read in the sense in which they are commonly understood in this country. A co-operative stores building, though provided for employees' welfare, is not treated in India as a 'canteen' and serves different purposes; consequently the Tribunal's construction strained the ordinary language of the provision. The Court invoked the settled rule that in a taxation statute nothing should be read in or implied where the language is plain, and that a court must not, under the guise of interpretation, legislate. Applying these principles, the claim for initial depreciation on the co-operative stores building does not fall within section 32(1)(iv).Claim for initial depreciation on the co-operative stores building disallowed; question answered in the negative in favour of Revenue.Question of law referred - reference to prior decision - entitlement to depreciation on cost of preparation and reproduction of drawings, specifications and other technical information (question referred by Tribunal) - HELD THAT: - The Court declined to answer this referred question because an earlier Division Bench decision in I.T.R.C. Nos. 70 to 73 of 1978 between the same parties had already examined the point for the previous assessment year and the present Court considered it appropriate to follow that precedent and not answer the question afresh.Question declined to be answered.Question rendered infructuous by prior relief - claim for deduction relating to the earth-mover division on amortisation basis (question whether it survives for consideration) - HELD THAT: - The Court recorded that the assessee had obtained relief for the previous year on this point in I.T.R.C. Nos. 70 to 73 of 1978; consequently the present question no longer survives and need not be examined or answered.Question does not survive and was not examined.Final Conclusion: The Court held that the co-operative stores building is not a 'canteen' within section 32(1)(iv) and disallowed initial depreciation (answered against the assessee and for the Revenue); the second question was declined to be answered in view of the earlier decision between the parties; the third question was held not to survive and was not examined. Parties to bear their own costs. Issues:1. Entitlement to initial depreciation on the cost of a cooperative stores building under section 32(1)(iv) of the Income Tax Act.2. Entitlement to depreciation allowance on the cost of preparation and reproduction of technical information paid to a foreign collaborator.3. Disallowance of a claim for deduction relating to the earth-mover division on an amortization basis.Analysis:The judgment dealt with three main issues raised by the Income-tax Appellate Tribunal regarding depreciation and deduction claims. The court first addressed questions 2 and 3, which had been previously examined in a different case for the same parties. Referring to a prior judgment, the court declined to answer question 2 and stated that question 3 was no longer relevant for consideration due to relief obtained in a previous year. Moving on to question 1, the court examined the case of a cooperative stores building constructed by the assessee for its employees, claiming initial depreciation under section 32(1)(iv) of the Income Tax Act. The Income Tax Officer had disallowed the claim, but the Tribunal accepted it. The court considered the arguments presented by both parties, where the Revenue contended that a cooperative stores building cannot be treated as a canteen, thus making the depreciation inadmissible. The court analyzed the provisions of section 32(1)(iv) and emphasized that the language used should be interpreted plainly without room for implication. It concluded that a cooperative stores building does not fall under the category of a canteen as specified in the Act, rejecting the Tribunal's interpretation. The court highlighted the distinction in purpose and use between a cooperative stores building and a canteen, emphasizing that the Tribunal had erred in its decision. Consequently, the court answered question 1 in the negative, in favor of the Revenue and against the assessee. The court also directed the parties to bear their own costs in the circumstances of the cases.