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TMI Blog2006 (4) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... original cost. We are inclined to agree with the learned A.R. that the assessee is entitled to claim depreciation as per sub-clause (b) of section 43(6) according to which written down value of the assets acquired before the previous shall be actual cost of the assets less depreciation actually allowed in respect of that assets under Income-tax Act, 1961, if any, and not the depreciation provided by way of book entry, without any relevance of computation of income for the purpose of Income-tax Act. Whether a structure is 'plant' or 'building', one has to see if building or structure constituted an apparatus or tool of taxpayer by means of which business activities are carried out, or the structure played no part in the carrying on those activities but merely constituted a place wherein they were carried on - From the record we found that in the instant case all these assets are necessary and critical apparatus/tools with which the port carries on its business and are so designed to equip itself with heavy machinery such as cranes, railway wagons and slidings, heavy goods vehicles, loader, etc., and is not merely concrete structure which can be said to be building. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RMA, A.M. For the Appellant : J.P. Shah, Adv. For the Respondent : D.C. Sonkar, Adv. ORDER R.C. Sharma, Accountant Member. 1. This is an appeal filed by the assessee against the order of CIT(A) dated 21-1-2004 for the assessment year 2003-04. 2. The following grounds of appeal have been taken by the assessee. (i) Learned CIT (Appeals) has erred in adopting the WDV as per books of calculation of depreciation instead of original cost of assets, which is WDV of assets as per Act for the facts and circumstances of the case. (ii) The Commissioner (Appeals) has erred in not treating Wharves, Quays, Pavements, Drain, Docks, Jetties, Fender Buoys, Navigational Aids Structures, etc., as Plant for the purpose of depreciation which are tools of trade and without which no port operations can be carried out. For the facts and circumstances of the case, these assets are plant and so depreciation, as claimed for plant and machineries, needs to be allowed. 3. Rival contentions have been heard and record perused. The facts in brief are that the assessee Kandla Port Trust is a Major Port under the Major Ports Trust Act, 1963. It is having status of Local Authority. The income of the Port Trust was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rate of applicable to Plant Machinery. The Assessing Officer has treated these assets as building and allowed depreciation at 10 per cent. 5. By the impugned order CIT(A) confirmed the action of the Assessing Officer by observing that merely since the income was not includible in the total income earlier, depreciation cannot be said to have been allowed is not a correct interpretation of law. The difficulty in working out depreciation as per I.T. Act for all these years also should not be a reason for not following the legal provisions in letter and in spirit. He also treated various apparatus used by assessee in its Port as building and confirmed the action of Assessing Officer for not allowing depreciation thereon at the rate applicable to plant and machinery. Aggrieved by the order of CIT(A), the assessee is in further appeal before us. 6. It was contended by the learned Senior A.R., Mr. J.P. Shah, that Kandla Port Trust was exempted till the assessment year 2002-03 under the Income-tax Act, 1961 and has been made liable to tax from the assessment year 2003-04, therefore, the question of claiming depreciation under the said Act has arisen for the first time in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act, 1922, or any Act Repealed by that Act, or under any executive orders issued when the Indian Income-tax Act, 1886, was in force: Provided that in determining the written down value in respect of buildings, machinery or plant for the purpose of clause (ii) of sub-section (1) of section 32, Depreciation actually allowed shall not include depreciation allowed under sub-clauses (a), (b) and (c) of clause (vi) of subsection (2) of section 10 of the Indian Income-tax Act, 1922, where such depreciation was not deductible in determining the written down value for the purposes of the said clause (vi) (c) In the case of any block of assets **** (not produced as it is not relevant) 11. Thus, determination of written down value refers to three types of situations. First, sub-clause (a) of section 43(6) speaks of the determination of cost where assets are acquired in the previous year concerned. In that case, the actual cost of the assessee shall be the written down value. Secondly, sub-clause (b) of section 43(6) states that the written down value of any asset acquired before the previous year shall be actual cost of the asset less depreciation actually allowed in resect of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The written down value during the previous year in question would be the original cost less nil, i.e., the original cost. The only depreciation allowed under the I.T. Act is the depreciation allowed by any I.T.O. when computing its profits and gains of business for assessment purposes. Actually allowed means allowed by an income-tax authority; depreciation claimed by the assessee itself in its own account is not depreciation allowed to it. The language used in section 43(6) is very clear. As per our considered view so long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention of the Legislature cannot then be appealed to whittle down the statutory language which is otherwise unambiguous. If the intendment is not in the words, it is nowhere else. The need for interpretation arises when the words used in the statute are, on their own terms, ambivalent and do not manifest the intention of the Legislature. When words acquired a particular meaning or sense because of their authoritative construction by superior courts, they are presumed to have been used in the same sense w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which requires for its support addition or substitution of words has to be avoided. The court cannot aid the Legislature's defective phrasing of an Act, the court cannot add or mend any by construction make up deficiencies which are left there. It is a trite law that in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in nothing is to be implied. One can look fairly at the language use. This view has been reiterated by the Supreme Court time and again. In State of Bombay v. Automobile Agricultural Industries Corpn. [1961] 12 STC 122, the court said: But the courts in interpreting a taxing statute will not be justified in adding words thereto so as to make out some presumed object of the Legislature. If the Legislature has failed to clarify its meaning by the use of appropriate language, the benefit thereof 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 view of the above discussion we are inclined to agree with Mr. Shah that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . If the wording of section 139(10) precludes existence of the return, assessment cannot be presumed and necessarily it would mean that depreciation was not actually allowed. Even notional allowance of depreciation cannot be considered for the purpose of section 43(6). In the above case, case law cited and relied upon are Rampur Distillery Chemical Works Ltd. v. CIT [1965] 55 ITR 338 (All.), Madeva Upendra Sinai v. Union of India [1975] 98 ITR 209 (SC) and CIT v. Mahendra Mills [2000] 243 ITR 56 (SC). 15. In the instant case the assessee, Kandla Port Trust was not assessed to tax till assessment year 2002-03 by virtue of provisions of section 10(20) and thus was not required to compute profits and gains of business or profession under the I.T. Act. Thus mere passing of accounting entry made for depreciation in the books of account was not the depreciation actually allowed, as there was no liability to tax and as there was no assessment till assessment year 2002-03. Thus, WDV as on 1-4-2002 would be original cost less nil i.e., original cost. 16. As per our considered view, the question is not to determine block of assets, but to determine WDV as on 1-4-2002 for the purpose of calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are core assets for the business of the port and the revenue is earned out of these assets. We also found that income generated by deployment of these assets accounts for more than 50 per cent of the total income of the port. In CIT v. Dr. B. Venkata Rao [2000] 243 ITR 81 (SC), the assessee, a medical practitioner, ran a nursing home. In respect of the building in which the nursing home was run, the assessee claimed, for the assessment year 1983-84, that it was a 'Plant'. Supreme Court applying functional test allowed assessee's claim and held that if it was found that the building or structure constituted an apparatus or a tool of the taxpayer by means of which business activities were carried on, it amounted to a 'Plant'. Reference can also be made to Supreme Court decision in case of Scientific Engg. House (P.) Ltd. v. CIT [1986] 157 ITR 86, wherein applying the functional test 'Documentation Services' obtained from foreign collaborator, i.e., supply to up-to-date, correct and complete set each of five types of documents such as manufacturing, drawing, processing documents, designs, charts, plans and other literature were held to be a 'Plant'. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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