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TMI Blog1991 (3) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... its capital expenditure under section 32(1A) of the Income-tax Act, 1961. The Income-tax Officer refused to allow the claim on the ground that the assessee did not carry on any business from those premises Nos. 83 and 85, Netaji Subhas Road, Calcutta, where the capital expenditure was incurred but carried on business from premises No. 23, Brabourne Road, Calcutta and, therefore, the provisions of section 32(1A) of the said Act were not applicable. Being dissatisfied with the decision of the Income-tax Officer, the assessee preferred appeals before the Commissioner of Income-tax (Appeals). It was held by the Commissioner of Income-tax (Appeals) that the issue had already been decided by the Tribunal for the assessment year 1978-79. Following the said decision of the Tribunal, the appellate authority directed the Income-tax Officer to allow depreciation in accordance with law on the capital expenditure incurred for renovation of the leasehold premises. The Revenue preferred appeals before the Tribunal. It was held by the Tribunal that it could not be disputed that the point in dispute between the parties was covered by the Tribunal's order for the assessment year 1978-79 in the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to depreciation in respect of the property in question. No interpretation of law was involved. We are firmly of the opinion that the order of the Tribunal does not give rise to any question of law and that the question proposed by the Revenue is not a question of law." The Revenue accepted the said decision and did not pursue the matter any further. Since, in this case, arguments have been pressed before us, we intend to dispose of the case on merits. The question is whether the assessee is entitled to depreciation in respect of the premises in question. The Taxation Laws (Amendment) Act, 1970, inserted section 32(1A) entitling a lessee of a building to depreciation in respect of any construction of any structure by way of renovation or extension or improvement to the building held by him under lease, where he carries on his business or profession. The language of the said sub-section as it stood before its deletion by the Amendment Act of 1986 with effect from April 1, 1988, is as follows : "Where the business or profession is carried on in a building not owned by the assessee but in respect of which the assessee holds a lease or other right of occupancy and any capital expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e eligible for the grant of depreciation allowance on such capital expenditure at rates to be specified in the Income-tax Rules." The Explanatory Note does not at all deal with the import of the qualifying phrase "where the business or profession is carried on in building" ; rather, it shows the intention of Parliament to grant this concessional right on general terms in relation to any building held by the assessee under lease and used for the purposes of his business. The expression "where business is carried on" is not at all dealt with. Board's Circular No. 26, dated March 19, 1971 containing Explanatory Notes on the implication of the amendment observes in paragraph 56 as follows : "Under the existing provisions of the Income-tax Act, an assessee is not entitled to depreciation or any other deduction in respect of capital expenditure incurred by him on renovation or extension of, or improvement to, a building not belonging to him which is used for the purposes of his business or profession. Under a new sub-section (1A), inserted in section 32 by section 5 of the Amending Act, with effect from April 1, 1971, provision has been made for the grant of depreciation on capital ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to depreciation in respect of capital expenditure incurred on leasehold structure unless he carried on business in that very structure. The case of the Revenue is that the assessee is carrying on business "with the structure" at 83 and 85, Netaji Subhas Road, Calcutta and not "in the structure" at that premises. It is true that the omission to take note of the limiting implication of the expression "where the business or profession is carried on in a building" is on account of the failure to foresee the extraordinary contingency of the type obtaining in the instant case. Those notes having no occasion to go into that question, it may be inferred that the concession in sub-section (1A) applied only to the building where the general transactions of the business take place and the business decisions are made for conduct, control and management of the business. But we have to read the provisions allowing depreciation as a whole. The court has to construe the law not always strictly to its words specially where its provisions fail to meet an unforeseeable fact situation. In such an event, construction has to be in a manner which will harmonise with the totality of the legislative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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