TMI Blog1939 (1) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ootacamund hotel, the assessee company's contention being that it was entitled to this deduction under the provisions of Section 10(2)(vi) of the Indian Income-tax Act, 1922. The Income-tax Officer refused to allow the deduction and held that the hotel in Ootacamund must be regarded as property and as such was assessable only under Section 9 of the Act. His decision was in turn concurred in by the Assistant Commissioner and the Commissioner. The assessee being dissatisfied asked the commissioner to refer the matter to this Court as it involved a point of law and the Commissioner has in consequence framed this question:-- Whether in this case the petitioner is entitled to an allowance for depreciation under Section 10(2)(vi) of the Act in respect of their Ootacamund building let out to Messrs. Davis Co. Mr. Sesha Ayyangar has very properly conceded that when the assessee was running the hotel it was entitled to be assessed under Section 10 of the Act, and therefore entitled to the deduction allowed by sub-section 2, clause (vi); but he says, inasmuch as the assessee has ceased to utilise the building itself for the purpose of a hotel business the building must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or a parts of its undertaking. As I regard the cases as being governed by Mangalagiri Rice Factory v. Commissioner of Income-tax, I would answer the reference in the affirmative. The assessee, having succeeded in the reference, is entitled to its costs, ₹ 250, and the refund of its deposit of ₹ 100. Mockett, J.-I entirely agree. In my view, the decision of the Income-tax authorities was based on the information that what was let in this particular case was a building . In the decision, Mangalagiri Rice Factory v. Commissioner of Income-tax, (2 I.T.C. 251) it will be seen that the Company in that case had their powers separately divided with regard to their properties. They were empowered to lease out building and vacant sites of lands and by a separate provision they were empowered to lease or give their factory for contract. In this case, that power is contained in the memorandum of association, clause 3(j), not separately as in the above case. Now, what did Davis Company get in this case? In my view, they received a lease of the undertaking of a hotel known as a hotel business. In the case to which reference has been made, it was a rice mill business. Now, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or Section 10 of the Indian Income-tax Act, 1922 as claimed by the assessee. On behalf of the department a suggestion was made but not persisted in, that Section 9 must first be restored to before considering the applicability of Section 10. It seems to me that if a case properly comes within Section 10, there is no question of having to choose between that section and some other section in the Act. Being a taxing statute, the Income-tax Act should receive a strict construction, that is, a construction in favour of the subject, and not in favour of the Crown. If a case appears to be governed by either to two provisions, it is clearly the right of the assessee to claim that he should be taxed under that one which leaves him with a lighter burden. Section 10 lays down the method to be adopted for arriving at the tax payable by an assessee under the head 'Business' and says that the tax should be payable in respect of the profits or gains of any business carried on by him. In computing such profits and gains certain allowances have necessarily to be made as directed by the various clauses of sub-section (2). These allowances are peculiar to the case where income from a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company is not the business of the assessee, but is really the business of Messrs. Davis Company only. The position I concede, may be different if instead of the building, fitted up as this building has been fitted up, being leased, the business itself had been leased as a running concern. The Act, it seems to me, contemplates the business as being something different from the buildings, these plant, machinery or furniture which may be used for the purpose of the business. It is as different from any of these things, as for instance the capital embarked on it, or the establishment with which it is carried on. The term business as used in the section denotes, I think, an abstract and intangible thing, quite apart from any of these physical adjuncts, and quite apart also from such the elements as the goodwill, the business connection, the business reputation and so on. In my judgment it is an entity different from any of these things, and has to be so understood in the Act. A running business can be leased, as it can be sold, as such, together with the building where it is carried on. If the lessee carries on the business leased to him, using the same premises together with the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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