TMI Blog2001 (8) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... se of assessees who carried on business and not in the case of assessees who are involved in "profession". The assessee challenged the assessment order and the Commissioner of Income-tax (Appeals) relying upon the decision of the Supreme Court in the case of Barendra Prasad Ray v. ITO [1981] 129 ITR 295, accepted the claim of the assessee and directed the Income-tax Officer to grant initial depreciation at 40 per cent. in respect of the building erected by the assessee. The Revenue went in appeal before the Tribunal and the Tribunal came to the conclusion that the assessee was not entitled to the relief claimed by it. According to the Tribunal, the decision of the Supreme Court in the case of Barendra Prasad Ray [1981] 129 ITR 295, was rendered on the particular facts of the case and it was restricted to the situation prevailing, therein. It was further observed by the Tribunal that the said decision of the Supreme Court was not meant to be applied to every case irrespective of the facts. The Tribunal also took note of the difference between the provisions of section 32(1) of the Act and section 32(1)(iv) of the Act and held that wherever the Legislature intended to give particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpretation which is favourable to an assessee bearing in mind that a taxing statute is being construed. Mr. Akil Qureshi, learned counsel for the Revenue, in support of the Tribunal's order contended that the definition of both the terms "business" and "profession" though worded to be inclusive have to be given their independent meanings and even though the term "business" is very wide, the same has to be read as excluding "profession" in the light of the separate definitions. Referring to the provision of section 32 it was pointed out that various clauses show that the Legislature intended the application of only certain clauses to both "business" and "profession", while some of the clauses were applicable only to "business". It was pointed out that clause (i) referred to a case of ships, clause (ii) referred to a case of buildings, machinery, plant or furniture, clause (iia) referred to new machinery or plant installed after the specified date, clause (iii) referred again to building, machinery plant or furniture which is sold, discarded, etc., and in none of the aforesaid clauses is it specified as to whether it is applicable to "business" or "profession" and hence what is st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent indicating that the Legislature was aware of the situation that the said three clauses apply only in case of "business" and if the legislative intent was clear it was not open to the court to take a different view of the matter. Mr. Qureshi further submitted that both the terms had separate meanings assigned to them in the definition section and while computing the income under the head "Profits and gains of business or profession" the scheme of the Act envisages that a particular provision would apply to one or the other while another provision would apply to both. It was further submitted that if section 32(1)(iv) of the Act could operate independently of the opening portion of section 32(1) it was not necessary to import the word "profession" into the said clause as there was no warrant in the statute for doing so. Referring to the Supreme Court decision in the case of Barendra Prasad Ray [1981] 129 ITR 295, it was pointed out that the Supreme Court was dealing with a situation arising under section 9 of the Act which operated in an entirely different field, while section 32 had a surrounding set of sections, sub-sections and clauses which would enable one to arrive at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el, for the assessee, very emphatically and repeatedly stressed that the interpretation that should be put on clause (iv) of sub-section (1) of section 32 of the Act should not deprive an assessee who is engaged in a profession from the relief which the Legislature has provided for in the said provision. That the definition of terms "business" and "profession" are not restrictive and the court should not read them in that context. It was urged that if a restrictive meaning is read into the term "business" in clause (iv) of section 32(1) of the Act, it would result in unjust discrimination in relation to those classes of employees who are employed by a professional, that the entire class of employees would get fragmented into those employed by a professional and those employed by a businessman and such intention should not be ascribed to the Legislature. It is well settled that even amongst one category of persons it is open to the Legislature to prescribe rational classification based on intelligible nexus. Therefore, if the Legislature has classified a group of persons employed by a professional into one class and another class comprised of a group of employees employed by a bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reference to ships is absent. Can it then be contended that no deduction for depreciation is allowable because section 32(1) does not provide for ships in the opening portion? The answer is obviously "No". This is just an illustration of the scheme or the framework in which the section operates. It is, therefore, not possible to accept the contentions raised on behalf of the assessee that the opening portion of section 32(1) would govern the operation of the various clauses which follow: and in the case of each clause a deduction would be available against income from business or profession. On a close reading of the entire scheme it is apparent that the Legislature has used both the terms "business" and "profession" as having distinct meaning and operating in a specified situation for the purpose of computing the income specified in section 28 in the manner laid down in section 29 of the Act. Clause (iv) states that any building which has been newly erected after March 31, 1961, shall become eligible for a deduction for initial depreciation at the sum equal to 40 per cent. of the actual cost of the building in the year of erection subject to the specified user. Now in so far a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the relief would be available to one class of assessees under another portion of t the same clause. In fact, the language used in clause (iv) is so interwoven that it is not possible to interpret the provision in such a manner as the assessee would like the court to adopt. Another angle from which the matter can be examined is that the entire part "D" deals with profits and gains of business or profession and right from sections 28 to 43A of the Act, we find that though the phrase has been used in certain sections as "business" or "profession" nowhere has the phrase been used as "business" and "profession". In fact, as can be seen, wherever the Legislature intended that a benefit of a particular provision should be available to both "business" or "profession", it has used the phrase "business" or "profession", or after using the said phrase in the opening portion of the section not specified in relation to each individual sub-section or clause where the benefit of deduction is available to both categories of assessees. Furthermore, the provisions of section 36 of the Act provide for an almost identical situation wherein we find that sub section (1) of section 36 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment'." Therefore, we may examine the controversy which the Supreme Court was called upon to decide and the factual matrix in which the decision was rendered so as to ascertain whether the said decision can come to the aid of the assessee before us. The appellants before the Supreme Court were partners of a firm of solicitors who were acting as solicitors for a German corporation. It appears that two cross suits were filed on the original side in the Calcutta High Court for alleged infringement of a patent. The appellants were instructed by a firm of solicitors in London who also were acting for the German corporation. The London solicitors instructed the appellants to retain Mr. Blanco White, a resident of the LT. K. for representing German corporation in the suits before the High Court. When Mr. Blanco White arrived in India he was retained by the appellant as a counsel but no briefs were delivered to him and the appellant neither undertook to pay nor paid any fees for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness and profession although not all those provisions are applicable to income from a profession.". The court then goes on to observe that the phrase "business connection" has not been defined. It is further stated that though there is specific reference to "business" in section 9(1) and there is no reference to "profession", no tenable reason is discernible from the statute for excluding income arising out of profession from its scope. While dealing with the submission made on behalf of the appellant to the effect that it was the intention of Parliament to exclude non-residents engaged in learned profession from tile operation of section 9(1) it is held: "We do not find that there is any substance in the first submission. There could be no good reason for Parliament for excluding non-resident professional men from the purview of section 9(1) of the Act. There is no material on which we can reach that conclusion . . ." The second submission on behalf of the appellant was that since the term "profession" was not expressly used the court should not fill up the lacuna so as to include the same within the term "business connection". The court has thereafter come to the conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as urged that if the Legislature has failed to clarify the meaning by use of the appropriate language the benefit thereof must go to the taxpayers. There can be no quarrel with the aforesaid rule of interpretation but it is equally well settled that the court in interpreting the taxing statute will not be justified in adding words thereto so as to make out some presumed object of the Legislature. In fact we are not called upon to deal with a situation where a definition clause which defines the meaning of a word would be construed so as to take away its ordinary meaning. The expression "business" as defined in section 2(13) of the Act though an inclusive one cannot be extended to include "profession" when the latter term is separately defined in section 2(36) of the Act. We are not faced with a situation where there would be compelling words in the surrounding provision which would require us to adopt a meaning to the contrary and there is nothing repugnant in the subject or the context for us to hold that the term "business" used in section 32(1)(iv) of the Act, is not used correctly or exactly as defined in the Act. Similarly, we do not find that there is any contrary intentio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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