TMI Blog1977 (11) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... n August 21, 1970, the assessee installed newly purchased machinery and thereafter claimed relief under section 80J of the Income-tax Act, before the Income-tax Officer. The Income-tax Officer found that the building which the assessee had purchased was used previously for carrying on some other business and invoked the Explanation to section 80J to reject the claim made by the assessee as according to him the value of the building used in some other business previously was more than 20% of the value of the building, plant and machinery used in the new industrial undertaking. According to his view the land under the building was very much part of the building and for the purposes of considering the Explanation the value of the superstructure as well as the value of the land underneath it had to be considered and if so considered the assessee was not entitled to relief under section 80J of the Act. The assessee took the matter in appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner found that the assessee had installed new machinery worth Rs. 7,62,421. He determined the value of the superstructure purchased by the assessee at Rs. 1,60,780. Before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the value of the old asset had to be considered, there was no question of the land underneath the superstructure being old or new, and accordingly the superstructure alone would be required to be considered at the time of applying the Explanation. Finally it was submitted that if there was any difficulty in choosing the meaning of or interpretation to be given to the word " building ", the one more favourable to the assessee should be adopted. The Tribunal found the issue not completely free from doubt. However, having regard to the decision of the Supreme Court in Alps Theatre's case [1967] 65 ITR 377 and bearing in mind the nature of the relief claimed, the Tribunal was inclined to take the view that the building referred only to the superstructure and not to the land beneath it. The Tribunal also referred to the dictionary meaning of the word " building " which supported it. It accordingly upheld the decision of the Appellate Assistant Commissioner and held that the assessee was entitled to relief under section 80J of the Act. On these facts the following two questions have been referred to us under section 256(1) of the Income-tax Act, 1961 : " (1) Whether, on the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions that the word " building " occurring therein will be required to be considered and construed : " (4) This section applies to any industrial undertaking which fulfils all the following conditions, namely :--... (ii) it is not formed by the transfer to a new business of a building not (being a building taken on rent or lease), machinery or plant previously used for ally purpose,....... (6) This section applies to the business of any hotel, where all the following conditions are fulfilled, namely:--... Explanation.--Where-- (a) in the case of an industrial undertaking, any building, machinery or plant, or any part thereof previously used for any purpose, or, (b) in the case of the business of a hotel, any building or any part thereof, previously used as a hotel, or any machinery or plan, or any part thereof, previously used for any purpose, is, in either case, transferred to a new business, and the total value of the building, machinery or plant or part so transferred does not exceed twenty per cent. of the total value of the building, machinery or plant used in the business, then, for the purposes of clause (ii) of sub-section (4) and clause (a) of sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. A Division Bench of the Bombay High Court had an occasion to consider the decision in Alps Theatre's case [1967] 65 ITR 377 (SC) in Commissioner of Income-tax v. Colour-Chem Ltd. [1977] 106 ITR 323, where it was observed that it was in the context of the claim of depreciation that the Supreme Court had held that the word " building " occurring in the relevant provisions of section 10(2) of the Indian Income-tax Act, 1922, meant " structure " and did not include the site (see page 327 of the report). In Colour-Chem Ltd.'s case [1977] 106 ITR 323 (Bom), it is made clear that the expression " building " will have to be construed and given a meaning having regard to the context of the particular subject-matter dealt with by the relevant provision of the Act. It would follow, therefore, that the decision in Alps Theatre's case [1967] 65 ITR 377 (SC) must be regarded as having been given in the context of the provision pertaining to depreciation and cannot be accepted as colouring the meaning to be given to the word " building " throughout the Income-tax Act. Mr. Joshi on behalf of the revenue urged very strenuously that the word " building " as used in ordinary langu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. What is important to be noted for our purposes is that the decision speaks of the ordinary and popular meaning of the word " building " as including the site on which the superstructure stands generally and not in the context of the statutory provision under construction. The stautory provision is considered only after stating the ordinary meaning and finding that applying the ordinary meaning does not lead to any absurdity, inconsistency or redundancy or surplusage. The case, therefore, would seem to be a judicial authority for the purpose of laying down the ordinary popular meaning of the word " building " and for the purpose of interpretation that in ascribing a meaning and construing the statutes, the words must be interpreted in their ordinary grammatical sense unless there be something in the context, or in the object of the statute to show that they were used in a special sense different from their ordinary grammatical sense. We were referred to by the learned counsel for the assessee to the portion in the order of the Tribunal (para 8) which refers to the definition of the word " building " in Chambers Twentieth Century Dictionary. We were also given the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f hotel business and it was submitted that part of a building call only refer to the part of the superstructure of a building and can have no reference to the land underneath the superstructure. The argument has a plausible attractiveness, but if it is realised that the Explanation contains a workable rule of thumb for the purposes of allowing relief to an assessee who would be disentitled to such relief by the conditions prescribed under subsections (4) and (6), it would be realised that even a part of a building can be valued and the valuation can be made by reference to either the portion of the superstructure itself or by the portion of the superstructure in conjunction with the value of the land occupied by that portion of the superstructure. If the latter concept is considered and found acceptable, then it would not necessarily follow that the part of the building referred to in Explanation (b) is only the part of the superstructure and the land below the entire structure is totally excluded from the concept of valuation of that part. Similarly, it was contended that under section 80J(4)(ii) transfer of a building previously used for any purpose in the new industrial undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a proper comment. Arguments of this nature had been considered by Lord Atkinson in Corporation of the City of Victoria v. Bishop of Vancouver Island [1921] 2 AC 384 (PC) and rejected ; a and, with respect, we agree with the process of reasoning indicated in the said decision. Similarly, reliance was placed on behalf of the assessee on rule 19A which provides for the computation of capital employed in an industrial undertaking or a ship or the business of a hotel for the purposes of section 80J. It was submitted that if sub-rule (2)(i) of this rule is looked at it would indicate that only the superstructure is to be considered. Sub-rule (2)(i) does provide for assets which are entitled to depreciation provided for by sub-rule (2)(ii) and sub-rule (2)(iii) and we fail to see how an argument can be raised only on the provisions of sub-rule (2)(i) ignoring what is provided by sub-rule (2)(ii) and sub-rule (2)(iii). This brings us to an argument advanced on behalf of the assessee based on the principle of favourable construction. This was to the effect that if two meanings are possible or can be given, the meaning to be given to a statutory provision like the Income-tax Act must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent fallacy in this argument. When a person uses the entire structure on the land or a portion of the structure, he cannot be said to be not using the land beneath that structure though in the latter case the user of the land (if any valuation is to be made) may have to be regarded as not the full user but a partial or a pro tanto user. There are observations to this effect to be found in the decision of our High Court in Colour-Chem Ltd.'s case [1977] 106 ITR 323 (Bom), which we have referred to earlier in this judgment. The matter does not call for more elaborate discussion. We have before us the ordinary and popular meaning of the word " building ". Keeping the statutory provision before us, viz., the language and the intention of the legislature as deducible from the language used, is there any warrant for not ascribing the word " building " in the statutory provision its ordinary and popular connotation as indicated by Lord Atkinson and restricted connotation as canvassed on behalf of the assessee. Our attention has not been drawn to any requirement of law or logic which would require the narrower meaning to be preferred over the popular meaning. If that is so, the question ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
