TaxTMI 
TaxTMI 
1993 (4) TMI 307
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....the Factory consists of buildings wherein the machinery was installed, Godown, Electrical rooms, Workshop, Sub-station, Laboratory, Time Office, Security Post and other buildings. The total area actually occupied by the factory and the buildings above mentioned and utilised for the said purpose is of an extent of 2431.99 Square metres. However, third respondent determined the assessment at 12 paise per square metre on the entire land of Ac.30-02 cents which comes to ₹ 14,582-40 ps. and issued a notice of demand to the petitioner to pay the same. The demand also included an additional sum of ₹ 5,395-50 ps. towards cess calculated at 37 paise on the amount of assessment. 3. It is further stated in the affidavit that the petitioner-company approached Mandal Revenue Officer to direct the Mandal Revenue Inspector to visit the factory premises and fix the assessment in accordance with the provisions of the A.P. Non-Agricultural Lands Assessment Act, 1963 (hereinafter referred to as 'the Act') on the land occupied by the factory. As nothing came out of it, the petitioner filed an appeal before the Mandal Revenue Officer - 2nd respondent herein, which was dismissed as ....
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....e Hon'ble Chief Justice for obtaining necessary orders in that regard. That is how the writ petition came up before us. 7. The point that has been referred to the Full Bench is as under: "Whether non-agricultural land assessment is leviable only on the non-agricultural land which is actually used for the purpose mentioned in the Act or not?" 8. In the present case, the petitioner applied for and obtained assignment by way of alienation of an extent of Ac.30-02 cents of non-agricultural land covered by S.No. 440/A3 situate at Kanakadripalli, H/o Itikala Village, Kolimigundla Mandal, Kurnool District for the purpose of establishing a Cement Factory. The alienation was affected by the Collector, Kurnool in his proceedings Nc.Rc.B.469935/84 dated 8-6-1985. According to the petitioner, an extent of 2,431-99 square metres alone is being actually used for industrial purpose which is covered by structures and the rest of the land is not being used at all for any non-agricultural purpose, muchless industrial purpose. Therefore, the extent of the said area which is not being actually used at all for any purpose cannot be the subject-matter of levy of non-agricultural land as....
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....reamble to the Act. According to the learned Government Pleader, the entire extent of Ac.30-02 cents was alienated by the Collector on the request of the petitioner-company for industrial purpose viz., to establish a cement factory and therefore, irrespective of the fact whether the entire area was actually used for industrial purpose or not, the entire extent is liable to be assessed and non-agricultural land assessment can be levied at the rates applicable for the land used for industrial purpose. 10. To appreciate the rival contentions, it is necessary to refer to the relevant provisions of the Act. According to the preamble of "the Act" it is "An Act to provide for the levy of assessment on lands used for non-agricultural purpose". Section 2 contains the definitions. "Non-agricultural land is defined in Section 2(g) which is as under: ""non-agricultural land" means land other than the land used exclusively for the purpose of agriculture, but does not include the land used exclusively for- (i) cattle sheds; (ii) hay-ricks:" "Agriculture" is defined in Section 2(a) which is as under: "agriculture means- (i) the ra....
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....this section, in the case of non-agricultural 1 and in a local area with the population specified in column (1) of the Schedule, the Government shall levy and collect from the owner of such land each fasli year commencing from the first day of July, an assessment, at the rate specified in column (2) where the land is used for any industrial purpose and at the rate specified in column (3) where the land is used for any commercial purpose and finally at the rate specified in column (4) where the land is used for any non-agricultural purpose including residential purpose. Schedule gives the rates at which the assessment is to be levied on the non-agricultural land used for (1) industrial purpose (2) for commercial purpose and (3) for any other non-agricultural purpose in Columns (2), (3) and (4). Column (1) prescribes the local area with reference to population. 13. In the present case, it is admitted that the population of the local area of the main village including hamlet is only 3,000. If the non-agricultural land in question is used for industrial purpose, then alone the land in question will be liable for levy of assessment. 14. Two more definitions are relevant for deciding t....
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....judgments to the extent they laid down that only the land actually used for non-agricultural purpose is subject to levy of non-agricultural land assessment later. In some of the decided cases, the word "used" has been held to be susceptible of wider interpretation. 18. In Income-tax Commissioner, Bombay v. V.B. Sathe, AIR 1937 Bom. 493, interpretation of the word "used" in Sub-Clause (iv) in Section 10(2) of the Income-tax Act, 1922 came up for consideration. In the said case, the assessee owner of ginning factory, by virtue of being a member of pool was under an obligation to keep his gin and machinery in good repair and condition and in working order to entitle him to a share of profits made by the pool. As per the agreement, the assessee kept the machinery ready for use at any moment. Question arose whether in such a case, the assessee is entitled to claim depreciation under Section 10(2)(vi) of Income-tax Act, 1922. On a combined reading of Section 10(2)(iv) and Section 10(2)(vi), the learned Judges came to the conclusion that "such" machinery, plant or furniture means the machinery, plant or furniture used for the purpose of business as indicated....
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....ss in the said case consists of plying motor trucks and lorries on hire. After referring to several cases, the learned Judges observed as follows: "Though the business consists of putting trucks into motion it cannot be said that a truck is used in the business only when it is in motion and not when it is kept stationary, capable of being put into motion and is available for being, or waiting to be put into motion. A truck which is put into motion for transporting goods on hire from time to time or periodically is as much used for the purposes of the business when stationary as a truck continuously in motion. In the words of Lord Sumner in Birendra Kumar Ghosh v. Emperor (AIR 1925 P.C. 1), "They also serve who only stand and wait". Though a telephone is meant for receiving sound from a distance, it is said to be used by a person even though the person is not actually receiving any sound with its help. A burglar alarm can be said to be in use at a given moment even though there is no burglar in the premises and the alarm is not ringing at the moment. An article which is meant for yielding acertain result and which yields the result not continuously but periodically a....
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....t." The learned Judges held that the word "used" is susceptible of wide interpretation and that if the trucks are capable of being put into motion or waiting to be put into motion, though not actually in motion, it can be said that the trucks are being used for the purpose of business. The illustrations given by the learned Judges are apposite. 20. The above two mentioned cases as well as several other cases were considered by a Division Bench of the Delhi High Court in Capital Bus Service (P) Ltd. v. Commissioner of Income-tax, New Delhi, . In the said case, the facts are - that the assessee for its business maintained a fleet of 20 buses. Fifteen buses were maintained against twelve permits for running on regular routes, and the other five buses were maintained for being run on contract basis on temporary permits such as for marriages, private tours and the like. Out of these five buses, one bus was never used and it had been taken off from the road. The other four buses were also not actually employed by the assessee for more than 30 days on account of lack of demand therefor. The contention of the assessee was that these buses were earmarked for contract purpos....
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.... department went in appeal before the Supreme Court. The Supreme Court had to consider whether the buildings belonging to the Proprietors of the factory will get the benefit of exemption from taxation under Section 4 of the Act. In that connection, the learned Judges had to consider the words "all buildings and lands used for the purpose of factory" occurring in Rule 18 of the Punjab Urban Immovable Property Tax Rules, 1941. The learned Judges while considering the said question held as under: "It is neither necessary nor desirable to attempt to define what amounts to "use for the purpose of a factory". That the Legislature left this undefined is a good indication that the intention of the Legislature was to have the question decided, in any case where controversy arises over it, on a consideration of the facts of the case. It appears to us to be reasonable to think, however, that two principles will be easy of application in the solution of the problem in the majority of cases. One is that where the building is used for a purpose which the factory law requires must be fulfilled in order that the factory may function, that will be user for the purpose of a....
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....used or occupied for those purposes? That is the question. Their Lordships are of opinion that it was used for those purposes. Counsel for the City council submitted that an owner of land could not be said to use the land by leaving it unused; and that was all that had been done here. Their Lordships cannot accept this view. An owner can use land by keeping it in its virgin state for his own special purposes. An owner of a powder magazine or a rifle range uses the land he has acquired nearly for the purpose of ensuring safety even though he never sets foot on it. The owner of an island uses it for the purpose of a bird sanctuary even though he does nothing on it, except prevent people building there or disturbing the birds. In the same way this hospital gets, and purposely gets, fresh air, peace and quiet, which are no mean advantages to it and its patients." 24. Let us also consider the position if a restrictive meaning is given to the word "used" for industrial purpose. It is stated in the affidavit that the area on which the buildings are raised, consist of buildings in which the machineries are installed, godown, electrical rooms, workshop, sub-station, Laborat....
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.... the word "used" in the Act with reference to the purposes should be given a wider meaning. In the context it is susceptible of wider meaning. The word "used" means not only "actually used", but it also means any land meant to be used or set apart for being used. The definitions of "industrial purpose" and "commercial purpose" also lend support to the wide meaning given to the word "used". "Industrial purpose" means any purpose connected with industrial undertaking. Likewise, "commercial purpose" means the purpose connected with the undertaking in trade,commerceorbusiness. The definitions do not say that the non-agricultural land should be actually utilised for an industrial or commercial activitiy, but it is enough if the land is kept for use for a purpose connected with industrial or commercial undertaking. 26. Learned Government Pleader relied upon the decision of the Supreme Court in Income-tax Commissioner, Gujarat v. Cellulose Products of India Ltd., , for the proposition that recourse can be had to liberal construction so as to effectuate the object of statute in interpreting the taxing statutes....
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.... colour from the context in which it is used and the said expression in the context suggests something done positively, e.g., utilisation or disposal. Mere "non-use" is not included in the word "used". 30. We are of the opinion that this decision is not helpful in construing the word "used" occurring in taxing statute i.e., "the Act". We must remember that the learned Judges of the Supreme Court were considering in the said judgment the word "used" in the context of prosecution launched against the accused. In such a case a literal and strict meaning will have to be given to the word "used" since the accused is liable to be convicted and sentenced under the provisions of the Order for criminal liability. Moreover, the context in which that expression occurs is also quite different. Therefore, the said decision, in our view, is not helpful in construing the word "used' in the present case. 31. Learned counsel for the petitioner in support of his contention relied upon a judgment of a Division Bench of this Court in Associated Cement Companies Limited v. Government of Andhra Pradesh (supra 1). This decision is no ....
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....n be levied only on the land over which mining operations are carried on. While dealing with the said contention, the learned judges had to consider the import of the word "used" occurring in the charging Section 3. Learned Judges held that "when the land is not put to a non-agricultural purpose and it is a waste land, then the question of imposing tax on it treating it as non-agricultural land does not arise." This interpretation of the word "used" is relied upon by the learned counsel for the petitioner, Sri T. Bali Reddy in support of his contention. In the said case, there is no detailed discussion with regard to the interpretation of the word "used". The Division Bench has not considered the object and intendment of the Act and the context in which the word "used" is occurring. In fact, this particular question was not debated in detail. We do not find any reasoning on this aspect. Everybody seems to have proceeded on the basis that the word "used" occurring in the charging section as well as in the schedule etc., means only the land actually used for industrial purpose. 33. Having regard to what is stated above and ....
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.... the rate of assessment to be levied on the non-agricultural land, we look to "purpose". If this is kept in view, the intention and ambit of the impost will be very clear. The context in which it was used as stated in the afore-mentioned paras also indicate, having regard to the above relevant extract of the charging section, actual use of the land is not decisive. 37. In view of what is stated above, the judgment of the Division Bench of this Court in Writ Petition No. 290 of 1965 and batch dt.22-4-1970 to the extent it held that the charging section contemplated levy of assessment only on lands which are actually used for one or the other purposes specified therein and not on vacant and waste lands or their potential for industrial, commercial and other purposes, is not correct. To that extent, the said judgment of the Division Bench is also overruled. 38. Further, in the said judgment of the Division Bench, the question as to the meaning to be given to the word "used" was not specifically debated. The main point which was debated before the Division Bench was regarding the constitutional validity of the Amending Act, 1974. 39. Learned Government Pleader al....