Full Judgment Text
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PETITIONER:
C.I.T., BOMBAY
Vs.
RESPONDENT:
GWALIOR RAYON SILK MANUFACTURING CO. LTD.
DATE OF JUDGMENT29/04/1992
BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
KASLIWAL, N.M. (J)
CITATION:
1992 AIR 1782 1992 SCR (2)1017
1992 SCC (3) 326 JT 1992 (3) 158
1992 SCALE (1)1000
ACT:
Income Tax Act 1961 : Section 32.
Income Tax (Fourth Amendment) Rules 1983.
Depreciation allowance-Nature and object of.
Roads and drains-Land within factory premises-Necessary
adjuncts to factory buildings-Treated as ‘building’ for
purposes of depreciation.
Statutory Interpretation :
Taxing statutes-Provision for deduction, exemption or
relief-to be construed reasonable and in favour of
assessee.
Administrative Law :
Subordinate legislation-Rules validly made have same
force as sections of Act.
Practice and Procedure
Interpretation consistently given over years-Accepted
and acted upon by department-Normally not to be upset-Even
though different view of law reasonably possible unless
perceptions and circumstances warrant fresh look.
Words and Phrases-Meaning of ‘building’-Section 32
Income-tax Act 1961.
HEADNOTE:
The assessee-respondent in the appeal Civil Appeal No.
2916(NT) of 1980 claimed depreciation on the written down
value of roads constructed by it as forming part of the cost
of the factory building and also claimed development rebate
on industrial transport used for transporting raw materials
and finished goods within the factory premises
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The Income-tax Officer having disallowed the aforesaid
claims, the assessee appealed to the Appellate Assistant
Commissioner who dismissed the appeals.
On further appeal the Tribunal allowed the claims and
depreciation on the roads as well as development rebate in
regard to the transport viz., tractor, trailer etc.
The Revenue filed an application under Section 256(1)
of the Income-tax Act, 1961 but the same having been
dismissed by the Tribunal, filed an application under Section
256(2) in the High Court, which accepted the application in
regard to the question of development rebate, but rejected
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it with regard to the depreciation on roads.
The Revenue filed Special Leave Petition against the
orders of the High Court in this Court, contending that the
word ‘building’ in its connotation is referable to
something that has been constructed as a structure or super-
structure on land with walls and roof, and since the Income-
tax Act did not give a definition of its own, the dictionary
meaning of the word ‘building’ has to be adopted, and that
this was made manifest by the subsequent amendment to
Appendix I under the Income-tax, 4th Amendment Rules, 1983
which came into force with effect from 2nd April, 1983 which
includes roads.
The assesses contested the appeal. It was contended
that the purpose of allowing depreciation was to compute the
net taxable income,; that unless roads are laid it is not
possible for the convenient carrying on of the business
activity, that the assessee laid roads and incurred
expenditure thereon, and therefore the roads form part of
the building as capital asset which is admissible for
depreciation under Section 32 of the Act. It was further
contended that the Rules only regulate the rate of
depreciation at which the assessee is entitled to and that
proceeding the Fourth Amendment Rules with effect from 2nd
April, 1983, the rates were variable and the assessee were
entitled to claim either as plant or building etc. To set at
rest that part of the controversy the Rules were amended
and came into force with effect from April 2, 1983.
In this and the connected appeals the common question
of law arose: whether ‘building’ under section 32 of the
Income-tax Act, 1961 would include roads and drains.
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Dismissing the Appeals, this Court,
HELD : 1. The roads laid within the factory premises as
links or providing approach to the buildings are necessary
adjuncts to the factory building to carry on the business
activity of the assessee would be building within the
meaning of section 32 of the Act. The capital expenditure
incurred thereon is admissible to depreciation of written
down value. It has to be worked out for the purpose of
depreciation as per the provisions of the Act read with the
Rules in Appendix. Equally the drains also would be an
integral part of building for the convenient enjoyment of
the factory. The expenditure incurred in laying the drains
or written down value of the cost of its construction would
equally be entitled to depreciation. It is to be worked out
in terms of section 32 of the Act read with the Rules in
the Appendix. [1030 C-E]
2.(a). The expressions used in a taxing statute would
ordinarily be understood in the sense in which it is
harmonious with the object of the statute to effectuate the
legislative animation. [1026 G]
2(b). The Income-tax Act has to be read and understood
according to its language. If the plain reading of the
language compels the court to adopt an approach different
from that dictated by any rule of logic the court may have
to adopt it. [1027 A]
Raja Jagadambika Pratap Narain Singh v. C.B.D.T.,
[1975] 100 ITR 698 and Azam Jah Bahadur (H.H. Prince) v.
E.T.O., [1983] 72 ITR 92, referred to.
3. Logic alone will not be determinative of a
controversy arising from taxing statute. Equally, common
sense is stranger and incompatible partner to the income-tax
Act. It is not concerned itself with the principles of
morality or ethics. It is concerned with the very limited
question as to whether the amount brought to tax constitutes
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the income of the assessee.
[1027 B]
4. If the language is plain and unambiguous one can
only look fairly at the language used and interpret it to
give effect to the legislative animation. Nevertheless tax
laws have to be interpreted reasonably had in consonance
with justice adopting purposive approach. The contextual
meaning has to be ascertained and given effect to. [1027 C]
5. A provision for deduction, exemption or relief
should be construed
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reasonably and in favour of the assessee. The object being
that in computation of the net income, the statute provides
deductions, exemptions or depreciation of the value of the
capital assets from taxable income. [1027 D]
6. Building which have not been specifically defined to
include road in the Act must taken in the legal sense. [1027
D]
7. Section 32 provides depreciation of capital assets
in respect of buildings, machinery, plant or furniture.
[1027 E]
C.I.T. v. Taj Mahal Hotel, [1971] 82 ITR 44; Municipal
Corporation of Greater Bombay & Ors. v. Indian Oil
Corporation Ltd., JT (1990) 4 SC 533 and C.I.T. v. Ram Gopal
Mills Ltd., 4 ITR 280, referred to.
8. Depreciation allowance is in respect of assets used
in the business and has to be calculated on the written down
value. The allowance towards depreciation is for the
continuation of the use of the assets wholly or in part
during the accounting year and its contribution to the
earning of the income. The object is to determine net income
liable to tax. [1027 G]
C.I.T. v. Alps Theatre, [1967] 65 ITR 377, explained.
9. Dictionary meaning of the ‘building’ cannot be
confined to a structure or superstructure having walls and
roof over it. The roads and roadways are adjuncts of the
buildings lying within the factory area linking them
together and are being used for carrying on its business by
the assessee. Therefore, they must be regarded as forming
part of the factory building. The expenditure incurred,
therefore, will have to be regarded as expenditure on
buildings and the depreciation must be allowed. [1028 E-F]
10. While amending the Income-tax 4th Amendment Rules
1983, the rule making authority accepted the interpretation
consistently laid down by various High Court that building
includes roads and also elongated bridges, Culverts, wells
and tubewells as building but prescribed fixed rates of
depreciation setting at rest the variable rates claimed by
the assessee. Rules validly made have the same force as the
sections in the Act. [1029 C]
11. The inclusive definition of ‘building’ to include
roads etc. enlarges the scope of Section 32 and does not
whittle down its effect. [1029 D]
C.I.T. v. Coromandel Fertilsers Ltd., [1985] 156 ITR
283, (A.R.) over-
1021
ruled; C.I.T. v. Sanavik Asia Ltd., [1983] 144 ITR 585
(BOM.); C.I.T. v. Clour Chem Ltd., [1977] 106 ITR 323;
C.I.T. v. Lucas-TVS Ltd., [1977] 110 ITR 346 (Mad.); Panyem
Cement and Chemical Industries Ltd. v. Addl C.I.T., [1979]
117 ITR 770 (A.P.); C.I.T. v. Kalyani Spinning Mills Ltd.,
[1981] 128 ITR 279 (Cal.); C.I.T. v. Mec. Gaw Laboratories
India (Ltd.), [1981] 132 ITR 401 (Guj.); C.I.T. v. Bangalore
Turf Club Ltd., (150 ITR 23,) approved.
12. An interpretation consistently given over the years
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and accepted and acted upon by the department may not
normally be upset even though a different view of law may
reasonably be possible unless the perceptions and
circumstances warrant fresh look. [1030 A]
Saharanpur Electric Supply Co. Ltd. v. C.I.T., [1992]
194 ITR 294, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2916
(NT) of 1980.
From the Judgment and Order dated 9.3.1979 of the
Bombay High Court in I.T.A. No. 43 to 1979
WITH
C.A. Nos. 1194/77, 2978/89, 5535/90 & 1404 of 1991.
S.C. Manchanda, S. Rajappa, Ms. A. Subhashini and K.P.
Bhatnagar for the Appellant.
Harish N. Salve, S. Kukumaran, Mukul Mudgal, T. Ray,
Krishna Kumar, Mrs. P. Madan, N. Talwar, A.D.N. Rao and A.S.
Rao for the Respondent.
The Judgment of the Court was delivered by
K. RAMASWAMY, J. The assessee claimed depreciation on
the written down value of roads constructed by it as forming
part of the cost of the factory building and also claimed
development rebate on industrial transport use for
transporting raw materials and finished goods within the
factory premises. The I.T.O. disallowed the claims. The
assessee went in appeal. The A.A.C. dismissed the appeal.
On a further appeal the Tribunal following its earlier
order for assessment year 1962-63 in the case of the
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assessee, allowed the aforesaid two claims with regard to
depreciation on the roads as well as rebate on the Tractors,
Trailors etc. The revenue filed an application under
Section 256(1). The said application was dismissed by the
Tribunal. The revenue then filed application under Section
256(2) in the High Court. The High Court accepted the
application with regard two questions only and rejected it
so far as the question regarding depreciation on roads is
concerned. The revenue filed SLP against the order of the
High Court. This Court by order dated 5.12.1980 granted
special leave confined to question No. 1 only which reads as
under:-
"Whether on the facts and in the circumstances of
the case, the Appellate Tribunal was justified in
law in holding that depreciation is admissible on
the W.D.V. of the cost of construction of roads in
the factory premises on the footing that they
constitute building?"
Civil Appeal No. 1194 of 1977
C.I.T., Bombay ...Appellant
v.
M/s Electro Metallurgical Works Pvt. Ltd. ...Respondent
The Appellate Assistant Commissioner directed the
I.T.O. to allow depreciation on roads inside the factory
compound at appropriate rates. It was claimed before the
A.A.C. that roads within the factory compound constituted
plant and the I.T.O. should be allowed depreciation as
admissible for buildings. It was not clear from the order
of the A.A.c. whether depreciation was to be granted on
roads at the rates applicable to plant and machinery or at
the rates applicable to building. The Tribunal while
deciding the appeal filed by the revenue observed that it
was not concerned with the above aspect regarding the rates.
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The Department’s claim was that no depreciation at all
should be given on roads. The Tribunal held that different
benches of the Tribunal at Bombay had taken the view that
depreciation on roads inside the factory compound connecting
different factory buildings and connecting the factory to
the outer road should be allowed either on the footing that
such roads are a part of the buildings or alternatively
that they constituted plant. The Tribunal thus held that
A.A.C. was justified in directing the I.T.O. to grant the
necessary depreciation
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The appeal of the revenue was dismissed. The revenue filed a
petition under Section 256(1). The question number one
related to calculating the reliefs under Section 80-I
without taking into consideration the development rebate.
The second question related to allowing of depreciation on
roads inside the factory at appropriate rates. The Tribunal
with regard to second question held that the Bombay High
Court itself in the case of Colour Chem Ltd. had taken the
view that depreciation should be granted on the roads. The
Tribunal in these circumstances did not consider it
worthwhile to refer the second question. As regards the
first question also with which we are not concerned the
Tribunal did not consider it worthwhile for referring the
same to the High Court. The revenue then filed a petition
under Section 256 (2) in the High Court. In this petition
paragraph 7 it has been stated as under:-
"so far as question No. 2 is concerned, the
department has since decided not to pursue the
matter further. In the prayer clause also the
direction to the Tribunal to state the case and
refer the question of law was made in respect of
question No. 1 only."
The High Court by order dated June 17, 1979 issued
notice as regards question No. 1 only and dismissed the
application so far as question No. 2 is concerned. The
revenue in the above circumstances field SLP against the
order dated June 17, 1979 and leave was granted.
Civil Appeal No. 2978 of 1989
C.I.T. ...Appellant
v.
M/s. Hindustan Aeronautics Ltd ...Respondent
I.T.O. disallowed the claim for depreciation on roads
and drains for the assessment year 1977-78. The Commissioner
Income-tax (Appeals) allowed the depreciation following the
decision of the Bombay High Court in C.I.T. v. Colour Chem
Ltd., (106 ITR 323) and Madras High Court decision in C.I.T.
v. Loockers TVs Ltd., (110 ITR 346). The Tribunal dismissed
the appeal filed by the revenue. The Tribunal rejected the
reference application filed under Section 256 (1). On a
reference application filed by the revenue under Section
256(2), the High Court directed the
1024
Tribunal to state the case and refer the question of law for
its opinion. The High Court followed its earlier decision
in C.I.T. v. Bangalore Turf Club case, (150 ITR 23) and
answered the question against the revenue. The question of
law raised was whether on the facts and in the circumstances
of the case, the Appellate Tribunal is right in law in
holding that the assessee is entitled to depreciation on the
written down value of roads and drains at the rates
applicable to buildings.
Civil Appeal No. 5553 of 1990
C.I.T., Bangalore ...Appellant
v.
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M/s. Hindustan Aeronautics Ltd. ...Respondent
I.T.O. allowed depreciation on roads and drains in the
original assessment for the assessment year 1973-74 C.I.T.
set aside order of the I.T.O. under Section 263.
Reassessment by the I.T.O. disallowing the assessee’s claim
for depreciation on roads and drains to the extent of Rs.
15,50,526. On appeal the C.I.T. (Appeals) allowed the
assessee’s claim for depreciation. The Tribunal dismissed
the appeal of the revenue. At the instance of the revenue
on a reference under Section 256(1) the High Court answered
the question against the revenue. The High Court by order
dated October 25, 1983 answered the question in favour of
the assessee relying on its earlier decision reported in
C.I.T. v. Bangalore Turf Club Ltd., (150 I.T.R. 23)
Civil Appeal No. 1404 of 1991
The Commissioner of Income Tax ....Appellant
.
I.D.L. Chemicals Ltd. ....Respondent
I.T.O. rejected the claim for depreciation on roads.
A.A.C. allowed depreciation on roads treating the same as
buildings. The Tribunal relying on its earlier order held
that depreciation on roads should be allowed by treating
them as plant. On reference applications, the Tribunal
referred two questions to the High Court for its opinion (1)
whether the assessee
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was entitled to depreciation on roads as part of the plant,
(2) whether the assessee was entitled to depreciation for
the assessment year 1972-73 on the written down value of the
sum of Rs. 3,41,595 referred in question No. 1 and also on
the questions to plant and machinery of Rs. 1,52,767 made
during the previous year relevant for the assessment year
1971-72. The High Court by order dated 12.10.1984 held that
the same covered by a consolidated order passed on June 15,
1983 in favour of the assessee. The question was,
therefore answered against the revenue and in favour of the
assessee. As regards the second question, High Court held
that it was covered as a result of an amendment to the Act
which has been noted in R.C. No. 80/78 dated April 18, 1983.
The answer was therefore recorded against the assessee and
in favour of the revenue. In the SLP, it is stated that
both the questions referred to were answered in favour of
the assessee which is not correct.
Since this bunch of appeals raised common questions of
law for decision, they are disposed of by a common judgment.
The facts in Civil Appeal No. 2916/80 are sufficient for
decision. Hence they are extracted. For the assessment
year 1963-64 for the previous year ending 31st March, 1963,
the respondent assessee, a company incorporated under the
Company’s Act claimed depreciation on the roads constructed
by it as forming part of cost of the factory building. The
Income-tax Officer and on an appeal the Asstt. Appellate
Commissioner rejected the claim. On further appeal,
following the decision of the Bombay High Court for previous
year, the Tribunal allowed the appeal and held that the
assessee is entitled to depreciation. Then the revenue
sought for reference on the question:
"Whether on the facts and in the circumstances of
the case the Appellate Tribunal was justified in
law in holding that the depreciation was applicable
on the written down value of the cost of
construction of roads in the factory premises on
the footing that they constitute building?"
The High Court by it impugned order under s. 256(2) of
the Income-tax Act, 1961 for short ‘the Act’ declined to
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call for a reference.
The contention of Sri Manchanda, learned counsel for
the Revenue, is that the word "building" in its connotation
is referable to something that a constructed one as a
structure or super-structure on land with walls and
1026
roof. According to the counsel since the Act did not give a
definition of its own, the dictionary meaning of the
"building" which means "a house or anything which built a
structure" is to be adopted which was made manifest by
subsequent amendment to appendix I under Income-tax, 4th
Amendment Rules, 1983 for short ‘the Rules’ having come into
force with effect from 2nd april, 1983 which includes roads.
Therefore, till 2nd April, 1983 the roads did not form part
of the building. It is also further contended that the
Rules made manifest that they would be applicable only
prospectively from 2nd April, 1983. By necessary
implication till that cut off date the legislature excluded
roads from the connotation of the building. The capital
expenditure incurred by an assessee on construction of road
even within factory premises is not entitled to depreciation
as a deduction in the computation of profits and gains of
assessee’s income of the previous year. Sri Harish Salve,
the learned senior counsel and other counsel appearing for
the assessees resisted the contention. Sri Salve contended
that the purpose of allowing depreciation is to compute the
net taxable income; unless roads are laid it is not possible
for the convenient carrying on of the business activity, the
assessee laid roads and incurred expenditure thereon.
Therefore, the roads form part of building as capital asset
which is admissible for depreciation under s. 32 of the Act.
The Rules only regulate the rate of depreciation at which
the assessee is entitled to. Preceding the 4th Amendment
Rules with effect from 2nd April, 1983, the rates were
variable and the assessees were entitled to claim either as
plant or building etc. To set at rest that part of the
controversy the rules were amended and came into force with
effect from 2nd April, 1983. The subordinate legislature
gave effect to the interpretation given by various High
Courts to the word building which included roads as well.
Sri Manchanda further contended that taxing statute should
be strictly construed; common sense approach, equity, logic,
ethics and morality have no role to play. The words in the
taxing statute should be given literal interpretation.
Nothing is to be read in, nothing is to be implied; one can
only look fairly at the language used and nothing more and
nothing less.
It is settled law that the expressions used in a taxing
statute would ordinarily be understood in the sense in which
it is harmonious with the object of the statute to
effectuate the legislative animation. In Raja Jagadambika
Pratap Narain Singh v. C.B.D.T., [1975] 100 ITR 698, this
Court held that "equity and income-tax have been described
as strangers". The Act from the very nature of things
cannot absolutely cast upon logic.
1027
It is to be read and understood according to its language.
It the plain reading of the language compels the court to
adopt an approach different from that dictated by any rule
of logic the court have to adopt it, vide Azam Jah Bahadur
(H.H. Prince) v. E.T.O., [1983] 72 ITR 92. Logic alone will
not be determinative of a controversy arising from a taxing
statute. Equally, common sense is stranger and incompatible
partner to the Income-tax Act. It is not concerned itself
with the principles of morality or ethics. It is concerned
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with the very limited question as to whether the amount
brought to tax constitutes the income of the assessee. It
is equally settled law that if the language is plain and
unambiguous one can only look fairly at the language used
and interpret it to give effect to the legislative
animation. Nevertheless tax laws have to be interpreted
reasonably and in consonance with justice adopting purposive
approach. The contextual meaning has to be ascertained and
given effect to. A provision for deduction, exemption or
relief should be construed reasonably and in favour of the
assessee. The object being that in computation of the net
income, the statute provides deductions, exemptions or
depreciation of the value of the capital assets from taxable
income. Therefore, building which have not been
specifically defined to include road in the Act must be
taken in the legal sense.
The question emerges, therefore, whether roads and
drains include building under s. 32 of the Act. Section 32
provides depreciation of capital assets in respect of
buildings, machinery, plant or furniture. This Court in
C.I.T. v. Ram Gopal Mills Ltd. (41 I.T.R. 280), held that
"the basic and normal scheme of depreciation under the Act
is that it decreases every year being a percentage of the
written down value which in the first year is the actual
cost and in succeeding years the actual cost less all
depreciations actually allowed under the act or any act
repealed thereby". The depreciation allowance, therefore,
is in respect of such assets as are used in the business and
each to be calculated on the written down value. The
allowance towards depreciation is for the continuation of
the use of the assets wholly or in part during the
accounting year and its contribution to the earning of the
income. The object is to determine net income liable to
tax. In C.I.T. v. Alps Theatre, [1967] 65 ITR 377, heavily
relied on by the revenue this Court considering s. 10(2) of
the Income-tax Act, 1922 held that s. 10(2) provides that
such profits or gains shall be computed after making certain
allowances. The object of giving these allowances is to
determine the assessible income. Therein the question was
whether the
1028
land on which the theatre was constructed is a building
within the meaning of s. 10(2) of the Income-tax Act, 1922.
This court held that land is not a building and, therefore,
depreciation allowance for land separately is not
admissible. The ratio therein has no application but the
principle laid would be considered in the light of the
purpose of the Act. In C.I.T. v. Taj Mahal Hotel, [1971] 82
ITR 44, this court adopting purposive approach held that
sanitary and pipeline fittings fell within the definition of
plant. 1922 Act intended to give wide meaning to the word
"plant". The rules are meant only to carry out the
provisions of the Act and cannot take away what is conferred
by the Act or whittle down its effect. In the Municipal
Corporation of Greater Bombay & Ors. v. Indian Oil
Corporation Ltd., JT (1990) 4 SC 533, the oil tanks for
storage of petrol were held to be buildings exigible to
property tax.
The question whether the roads would include within the
meaning of the word buildings was considered by various High
Courts. The leading decision is of the Bombay High Court in
C.I.T. v. Colour Chem Ltd., [1977] 106 ITR 323. While
negativing the contention that roads are part of the plant,
the Bombay High Court held that the roads within the factory
premises are used for the purpose of carrying raw materials,
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finished products and workers. Therefore, it must be
regarded as building or buildings within the meaning of sub-
clause (iv) of s.10(2) of 1992 Act. It was also held that
dictionary meaning of the word "building" cannot be confined
to a structure or superstructure having walls and roof over
it. The roads and roadways are adjuncts of the buildings
lying within the factory area linking them together and are
being used for carrying on its business by the assessee.
Therefore, they must be regarded as forming part of the
factory building. The expenditure incurred, therefore, will
have to be regarded as expenditure on buildings and the
depreciation must be allowed. The appeal filed against the
judgment in Colour Chem Ltd. case the leave was refused on
the grounds of delay. More or less though for different
reasons on "common sense principle" same is the ration in
C.I.T. v. Locas-TVS Ltd., [1977] 110 ITR 346 (Mad.). When
the appeal was filed, this court dismissed the Special Leave
Petition on the ground of delay. Same is the view in Panyem
Cement and Chemical Industries Ltd. v. Addl. C.I.T., [1979]
117 ITR 770 (A.P.); C.I.T. v. Kalyani Spinning Mills Ltd.,
[1981] 128 ITR 279 (Cal.); C.I.T. v. Mec. Gaw Laboratories
India (Ltd.), [1981] 132 ITR 401 (Guj.). In C.I.T v.
Bangalore Turf Club Ltd., 150 ITR 23, when the appeal was
filed this court dismissed the same in Special
1029
Leave petition Nos. 5198-99/85 dated December 16, 1987.
In Permanent Words and Phrases, Vol. 5A ‘building’ was
defined that every thing that is necessary to perfect a
manufacturing establishment and fit for use designed as a
part of it is a building. The roads would serve as
necessary links between the raw material and finished
products in the business activity. The roads are liable to
wear and tear and need constant repairs or relaying the road
afresh.
While amending Income-tax 4th Amendment Rules 1983, the
rule making authority accepted this interpretation
consistently laid by various High Courts that building
includes roads and also alongated bridges, culverts, wells
and tubewells as building but prescribed fixed rates of
depreciation setting at rest the variable rates claimed by
the assessee. Rules validly made have the same force as the
sections in the Act. The contention of the respondents that
unless the Act itself is amended, the rules would not cut
down the meaning of the word ‘building’ is without
substance. The inclusive definition of the building to
include roads etc. enlarges the scope of s. 32 and does not
whittle down its effect. It is true that in C.I.T. v.
Coromandel Fertilisers Ltd., [1985] 156 ITR 283, (A.P.), the
High Court of Andhra Pradesh interpreted that roads fell
within the meaning of "Plant" and granted depreciation at
the rates admissible to plant. In C.I.T. v. Sanavik Asia
Ltd., [1983] 144 ITR 585 (Bom.), took opposite view and held
to be building. In view of the consistent view of the other
High Courts and in our view which is the correct one, the
view of the High Court of A.P. is not correct in law.
It is true, as contended for the Revenue that the
Income-tax 4th Amendment Rules 1983 were given effect from
2nd April, 1983 thereby manifested that the rates enumerated
in the rules would be applicable prospectively from the
later assessment years. It by no means be construed that
the legislature expressed its intention that for the earlier
period building does not include roads. If it were to be so
it was open to the Parliament to expressly brought out an
amendment to the Act to that effect. On the other hand we
are of the view that the subordinate legislature accepted
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the interpretation given by the High Courts and included
roads as integral part of the building. In Bangalore Turf
Club Ltd. case 150 ITR 23, the Karnataka High Court held
that the amendment was by way of clarification in confirmity
with the law laid by the High Courts. It is also
1030
equally settled law that an interpretation consistently
given over years and accepted and acted upon by the
department may not normally be upset even though a different
view of law may reasonably be possible unless the new
perceptions and circumstances warrant fresh look. The ratio
in Saharanpur Electric Supply Co. Ltd. v. C.I.T., [1992] 194
ITR 294, is not in conflict with the above view. It is also
settled law that, unless it is expressly stated or by
necessary implication arises, a statute should always be
read as prospective. The ratio therein is also in
consonance with the view we are taking.
Accordingly we have no hesitation to hold that the
roads laid within the factory premises as links or provided
approach to the buildings are necessary adjuncts to the
factory buildings to carry on the business activity of the
assessee would be building within the meaning of s. 32 of
the Act. The capital expenditure incurred thereon is
admissible to depreciation of written down value. It has to
be worked out for the purpose of depreciation as per the
provision of the Act read with the Rules in appendix.
Equally the drains also would be an integral part of
building for the convenient enjoyment of the factory. The
expenditure incurred in laying the drains or written down
value of the cost of its construction would equally be
entitled to depreciation. It is to be worked out in terms
of s. 32 of the Act read with the rules in the Appendix. In
view of the settled position the reference sought for in CA
No. 2916/80 and CA No. 1194/77 is unnecessary. The appeals
are accordingly dismissed. No costs.
CIVIL APPEAL NO. 1404/91
The appeal is partly allowed. The I.T.O. would compute
roads as building and depreciation should be given
accordingly. In view of the circumstances the parties are
directed to bear their own costs.
Civil Appeal Nos. 2978/89 & 5535/90
The Civil Appeals are dismissed. No. costs.
N.V.K. Appeals dismissed.
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