TMI Blog1999 (7) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... that the petitioners have claimed depreciation allowable under the Act in respect of opening balance of the tea bushes at the beginning of the year and in respect of the additions made during the year at the rate of 25 per cent. According to the petitioner, the petitioner filed its return of income claiming depreciation on tea bushes treating them to be plant and claimed depreciation permissible under section 32 of the Act. However, the claim of the petitioner for depreciation has become inadmissible due to the modification of definition of the term "plant" in section 43(3) of the Act as amended by the Finance Act, 1995, with retrospective effect and the result was that the petitioner became liable to tax on income computed without allowing the claim for depreciation made by the petitioner in respect of the additional value of the plant. The petitioner has questioned the amendment on the ground that it was totally unconstitutional and void and the additional liability which has been created by the retrospective effect given to the amendment is bad in law. The petitioner has raised a number of grounds challenging the validity of the amendment. A common counter affidavit was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deny the double deduction in respect of replacement cost as well as depreciation allowance, the Legislature have amended section 43(3) of the Act excluding tea bushes from the scope of the definition "plant". He submitted that it is not uncommon in the Income-tax Act to claim depreciation on capital assets and claim revenue expenditure on repairs on the same assets and there is no question of any double deduction as the deduction granted under two different provisions cannot be regarded as double deduction. Learned senior counsel submitted that since the Legislature has proceeded on a mistaken notion that there is a double deduction in the case of tea bushes by grant of depreciation, the amendment made should be declared invalid and unconstitutional. Mr. S. V. Subramanian, learned senior counsel appearing for the respondents, submitted that under rule 8(2) of the Income-tax Rules, 1962, the deduction is granted in respect of expenditure incurred on replacement of old tea bushes and such deduction is granted in lieu of depreciation, and if depreciation is also granted on the cost of tea bushes, it would amount to grant of double deduction. Learned senior counsel submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ientific apparatus and surgical equipment used for the purposes of business or profession. In certain judicial pronouncements, it has been held that the term 'plant' includes tea bushes and, therefore, they would also be eligible for depreciation under section 32. Rule 8(2) of the Income-tax Rules, already provides for a deduction in respect of the expenditure incurred on replacement of old tea bushes by an assessee. The deduction under rule 8(2) is allowed in lieu of depreciation. As a result of the judicial pronouncements, double deduction is now being claimed on the tea bushes-once as replacement cost and then as depreciation allowance. With a view to setting at rest the aforesaid controversy, section 43(3) is being amended to provide that the term 'plant' will not include tea bushes and livestock. The proposed amendments will take effect, retrospectively, from 1st April, 1962, and will, accordingly, apply in relation to the assessment year 1962-63 and subsequent years." In this connection, it is useful to refer to rule 8(2) of the Income-tax Rules and the relevant rule reads as under : "8. Income from the manufacture of tea.---(1) Income derived from the sale of tea g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "I do not know whether a horse used for traction comes within that or whether it does not, but I am clearly of opinion that the diminished value of a breeding animal, merely due to the fact that having lived a year it is a year nearer its end, and therefore is from that point of view less valuable, is not within this section. You need not take only the case of an animal ; you may take the case of the value of a prolific tree. Of course, I am only dealing with the idea. You have here an article which you are not wearing out by use. I neglect any question of abuse of the animal. You are not wearing it out by use. You have got an article whether it be an animal or a vegetable article, the life of which is only a limited term of years. As the years go on you take the produce and the reproduction of that animal, and when the years come to an end the animal or the tree or whatever it is, dies or is killed because it is no longer worth keeping. That diminished value, by reason of the efflux of time year by year of an animal or a tree, does not seem to me to be diminished value by reason of wear and tear ; it is simply diminished value because you have invested your money in a source of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clauses (2) to (6) of article 19 and so on. No enactment can be struck down by just saying that it is arbitrary or unreasonable. Some or other constitutional infirmity has to be found before invalidating an Act. An enactment cannot be struck down on the ground that court thinks it unjustified. Parliament and the Legislatures, composed as they are of the representatives of the people, are supposed to know and be aware of the needs of the people and what is good and bad for them. The court cannot sit in judgment over their wisdom. In this connection, it should be remembered that even in the case of administrative action, the scope of judicial review is limited to three grounds, viz., (i) unreasonableness, which can more appropriately be called irrationality, (ii) illegality and (iii) procedural impropriety (see Council of Civil Service Union v. Minister for the Civil Services [1985] AC 374 ; [1984] 3 All ER 935 ; [1984] 3 WLR 1,174 (HL)) which decision has been accepted by this court as well). The applicability of the doctrine of proportionality even in administrative law sphere is yet a debatable issue. (see the opinions of Lords Lowry and Ackner in R v. Secy. of State for the Home ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . N. S. Getti Chettiar [1971] 82 ITR 599, 605 (SC) ; W. T. Ramsay Ltd. v. IRC [1981] 54 TC 101, 184 (HL) ; CIT v. Casino (Pvt.) Ltd. [1973] 91 ITR 289 (Ker) ; CIT v. Natu Hansraraj [1976] 105 ITR 43, 49 (Guj) ; Gopal Industrial, Estate v. ITO [1980] 123 ITR 727, 732 (Guj) and any other parts of the Act which throw light upon the intention of the Legislature and which may serve to show that the particular provision ought not to be construed as it would be if considered alone and apart from the rest of the Act (Per Lord Herschell, Colquhoun v. Brooks [1989] 2 TC 490, 500 (HL) ; CIT v. Narsee Nagsee and Co. [1960] 40 ITR 307 (SC) ; CIT v. National Taj Traders [1980] 121 ITR 535, 541, 542 (SC) ; CIT v. B. C. Srinivasa Setty [1981] 128 ITR 294, 299 (SC) ; K. P. Varghese v. ITO [1981] 131 ITR 597, 604 (SC) ; CIT v. Gopal Investors' Corporation P. Ltd. [1976] 103 ITR 563, 571, 573-574 (Bom) ; CIT v. Maharaja Visweswar Singh [1935] 3 ITR 216, 221 (Patna) ; Ramachandra Mardaraj Deo v. Collector of Commercial Taxes [1957] 31 ITR 651 (Orissa) ; CIT (Addl.) v. Santosh Industries [1974] 93 ITR 563, 572 (Guj). But the court must disregard any assumption of the legislature as to the prevailing la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is a replacement of tea bushes by in-filling tea bushes. Therefore, I am not able to accept the submission of learned senior counsel appearing for the petitioner that the basic assumption of the Legislature that there is a possibility of double deduction is erroneous. Moreover, under the Act, the gross income is subject to deductions allowable by the Act and the deduction can be claimed only if they are provided in the Act. In other words, the deductions are statutory in nature and there is no general right to get the deduction. Therefore, when the Legislature in its wisdom have proceeded on the basis that double deduction should not be granted on the same expenditure and regulated the grant of deduction on the said expenditure, I am of the view that the exclusion cannot be declared to be invalid under the provisions of the Constitution of India. Though the petitioner may not be able to claim deduction at the time of purchase or acquisition of tea estate, when the entire tea bushes are replaced in a systematic manner during the course of years, the petitioner may become eligible to get deduction on the infilling charges incurred for replacing tea bushes. Parliament, in my v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned. Learned senior counsel for the petitioners submitted that the expression "plant" has been construed in a broad manner and there is no justifiable reason to unsettle the settled law with retrospective effect. As already observed, learned senior counsel referred to the decision of the Supreme Court in Cawasji (D.) and Co. v. State of Mysore [1984] 150 ITR 648. In considering the question whether the retrospective effect given to the definition of the term "plant" by the Finance Act, 1995, is correct or not, it is necessary to bear in mind that the cases of both the petitioners relate to the assessment year 1994-95 and by virtue of the retrospective effect to the amendment, the petitioner is not prejudiced. Further, when rule 8(2) of the Income-tax Rules was enacted, the Legislature thought that the assessee would be entitled to only one deduction, i.e., in respect of expenditure incurred on the replacement cost of tea bushes. By virtue of various judicial pronouncements, the expression "plant" was widened and some Benches of the Income-tax Appellate Tribunal have taken the view that tea bushes should also be regarded as plant. Hence, to set at rest the controversy whether tea bu ..... 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