TMI Blog2000 (8) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... the residence of employees of the assessee getting a salary of less than Rs. 7,500 per annum, in terms of section 32(1)(iv) of the Income-tax Act, 1961 ?" The dispute relates to the assessment year 1969-70 corresponding to the accounting year ended on February 28, 1969. The factual position giving rise to the reference in a nutshell is as follows : Modipon Ltd., hereinafter referred to as the assessee, is a public limited company, which was incorporated on August 19, 1965, for manufacturing Nylon-6 yarn. However, the production started in 1968. The previous year relevant for the assessment year, as noted above is from March 1, 1968, to February 28, 1969. In the return of income filed, the assessee claimed initial depreciation of Rs. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been used are "used solely for the purpose of" and, therefore, the user may be one of the relevant considerations but not the only consideration. Several practical difficulties were enumerated to conclude that a pragmatic view was necessary to be taken. It was noticed that in the subsequent years when the quarters were constructed for the senior employees, the quarters which were in their occupation during the assessment year concerned, were vacated for the purpose of allotment to junior employees. As such depreciation in respect of B, C and D type quarters were liable to be granted and, accordingly, he directed the Income-tax Officer to allow initial depreciation equivalent to 20 per cent. of the cost of quarters. The matter was carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the rival submissions, it is necessary to take note of the relevant provisions which at the time were as follows : "32. (1) In respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, the following deduction shall, subject to the provisions of section 34, be allowed---. . . (iv) in the case of any building which has been newly erected after the 31st day of March, 1961, where the building is used solely for the purpose of residence of persons employed in the business and the income of each such person chargeable under the head 'Salaries' is seven thousand five hundred rupees or less, or where the building is used solely or mainly for the welfare o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of user of the building. Where such building is either solely or mainly used for the welfare of such persons, employed in the business, as hospital, creche, school, canteen, library, recreational centre and lunch room, depreciation is also allowable. In both the types of cases at the relevant time a sum equal to 20 per cent. of the actual cost of the building was allowable in respect of the previous year of the erection of the building. But it was stipulated that no such sum shall be deducted in determining the written down value for the purposes of clause (ii) of section 32(1). It is to be noted that in the two types of buildings referred to in the provision similar user is not warranted. In the case of buildings which are used for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r advertising being painted and placarded as an advertisement, or used for carrying a band in order to make public announcement was not used "solely" in the course of trade so as to give exemption from duty under the Inland Revenue Act, 1869. Lambton's case [1895] 2 QB 233 has also been dealt with in several other cases, e.g., Nicholls v. Malim [1906] 1 KB 272. Unless the conditions clearly stipulated are fulfilled the question of any deduction does not arise. A taxing statute is to be strictly construed. In the illuminating words of Lord Wensleydale and reaffirmed by Lord Halsbury and Lord Simon, "the subject is not to be taxed without clear words for that purpose ; and also that every Act of Parliament must be read according to the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof must go to the taxpayer. It is settled law that in case of doubt. that interpretation of a taxing statute which is beneficial to the taxpayer must be adopted." In a very recent case, the apex court was considering the scope and ambit of the expression "land is used for any industrial purpose", "land is used for any commercial purpose" and "land is used for any other non-agricultural purpose", of the Andhra Pradesh Non-agricultural Lands Assessment Act, 1963 (in short "the A.P. Act"). The apex court held that emphasis is on the words "is used" for the purposes of levy of assessment on non-agricultural land at the rates specified in the Schedule for land used for industrial purpose, and there has to be a finding as a fact that land i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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