High Court Of Delhi
CIT vs. Mahanagar Telephone Nigam Ltd.
Sections 32(1), 260A, Rule Appendix I, Part I, Item F-21(14)
Asst. Year 1987-88
Arijit Pasayat, C.J. & D.K. Jain, J.
IT Appeal No. 154 of 2001
3rd October, 2001
Counsel Appeared
Sanjiv Khanna with Mrs. Prem Lata Bansal, for the Petitioner : None, for the Respondent
JUDGMENT
ARIJIT PASAYAT, C.J. :
This is an appeal under s. 260A of the IT Act, 1961 (in short the ‘Act’). The only plea raised is that Income-tax Appellate Tribunal (for short ‘the Tribunal’) was not justified in holding that extra shift allowance is allowable on underground cables treating the same as part of plant of the assessee. Dispute relates to the asst. yr. 1987-88.
2. Factual background is as follows : For the assessment year in question assessee filed its return declaring total loss of Rs. 47,65,82,959. Subsequently, by a revised return, the loss was indicated to be Rs. 40,64,12,360.
The AO noticed that assessee had claimed extra shift allowance in respect of lines, wires and cables while computing depreciation allowable. Assessee had claimed extra shift allowance under the heading “triple shift allowance” on two heads “on lines and wires” and “on cables”. Assessee was required to show cause why the claims shall not be disallowed. Assessee’s stand was that the overhead lines and wires were categorised in the chart of depreciation as actually forming an integral part of the system i.e., network of telephone exchanges, the apparatus and plant. Hence, lines and wires cannot be separated from the overall system of machinery and plant. Therefore, the claim made regarding extra shift allowance on lines and wires was in order. AO with reference to sub-item No. 14 of item 21 of cl. F of old Appendix-I of the IT Rules, 1962 (for short ‘the Rules’), held that no extra shift allowance was permissible on the assets styled as overhead lines and wires. So far as underground cables and wires are concerned, it was submitted that there was no bar for extra shift allowance. This did not find acceptance to the AO who held that a distinction cannot be made between overhead lines and wires and underground lines and wires and cables. It was held that cables, lines and wires do not form an integral part of the overall plant and machinery. Further, legislative intent was that benefit of extra shift allowance was not to be allowed on cable, whether it was overhead or underground. Consequently, the entire claim was refused. Assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals) [for short CIT(A)]. Said authority was of the view that there being no dispute that the plant would also include machinery in the common parlance, there was no justification in disallowing extra shift allowance on the underground cables. Assessee, however, did not press its claim for extra shift allowance on overhead wires and cables. Matter was carried in appeal before the Tribunal by the Revenue. It was noted by the Tribunal that conditions requisite for grant of extra shift allowance were fulfilled and, therefore, the view of the CIT(A) was in order.
In support of the appeal learned counsel for the Revenue submitted that the artificial bifurcation made by the CIT(A) about overhead and underground lines and cables, etc. does not stand to reason. According to him, the area of functioning being the same there was no scope for making such a distinction.
We find that in order to be eligible for claim for deduction as extra shift allowance the following conditions are required to be fulfilled : (a) the asset for which extra shift allowance is claimed should be plant and machinery; (b) there should be multiple shift functioning of the concern; (c) such plant and machinery should be entitled to depreciation; and (d) there should not be any prohibition in the Appendix-I to the Rules relating to the allowance of extra shift allowance. As noted by the Tribunal the main business of the assessee is to provide communication network in Delhi and Bombay and the main apparatus of the assessee consists of exchange and related equipments, cable lines and wires, etc. The cable network forms the link between two exchanges. This network consists of underground cables laid from one exchange to another exchange in various localities which are served by the exchange and as such forms part of the apparatus of the plant of the assessee. Since the underground cables constitute link between two exchanges, in its absence, the entire network will cease to function.
The expression “plant” has been defined in s. 43(3) by an inclusive definition. The definition given by Lindley, J. in Yarmouth vs. France (1887) 19 QBD 647 (QB) is generally adopted. It was observed : “There is no definition of plant in the Act; but, in the ordinary sense, it includes whatever apparatus is used by a businessman for carrying on his business not his stock-in-trade, which he buys or makes for sale; but all goods and chattels fixed or movable, live or dead, which he keeps for permanent employment in his business.” In Scientific Engineering House (P) Ltd. vs. CIT (1985) 49 CTR (SC) 386 : (1986) 157 ITR 86 (SC) : TC 29R.512 the test laid down was whether the article fulfils the function of a plant in the assessee’s trading activity and whether it is a tool of his trade with which he carries on his business ? If the answer is in the affirmative, it will be a plant. The inevitable conclusion in view of the legal and factual background highlighted above is that underground cables which are used by the assessee for carrying on its business constitute plant of the assessee. That being the position, the conclusions of the Tribunal are in order. The submission that there can be no distinction between overhead cables and wires and underground cables and wires is hardly acceptable because of the expression of legislative intent by the use of specific words. Only overhead cables and wires were covered and not underground wires and cables. The normal rule is that general words in a statute must receive a general construction unless there is something in the statute itself such as the subject-matter with which the statute is dealing or the context in which the said words are used to show the legislative intent that they must be given a restrictive or wider meaning. Viscount Simon quoted with approval a passage from Rowlatt, J. expressing the principle with following words, which have become locus classicus : “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. On can only look fairly at the language used.” [See : Cape Brandy Syndicate vs. IRC (1921) 1 KB 64].
We find no merit in this appeal which is dismissed.
[Citation : 254 ITR 627]