High Court Of Madras
CIT vs. Chemplast Sanmar Ltd.
Section 32; IT Appendix I, Part A, Item III(3)(v)
Asst. Year 1996-97
P.D. Dinakaran & P.P.S. Janarthana Raja, JJ.
Tax Case (Appeal) No. 407 of 2007
5th June, 2007
Counsel Appeared
J. Narayanaswamy, for the Appellant
JUDGMENT
P.D. Dinakaran, J. :
The Revenue has preferred the above tax case appeal against the order of the Tribunal, Madras ‘A’ Bench, dt. 13th Oct., 2006 in ITA No. 2343/Mds/2004, raising the substantial question of law, as to whether the Tribunal was right in allowing depreciation on “chlorine containers” claimed by the assessee at 100 per cent wherein the rule specifically states that 100 per cent depreciation is available only on “gas cylinders including valves and regulators”, under the following facts and circumstances of the case.
2. The relevant assessment year is 1996-97. The assessee company is engaged in the manufacture and sale of chemicals. Even though the assessment for the year 1996-97 was completed on 18th March, 1999, the same was reopened by issuing notice under s. 148 of the IT Act. During the reassessment, the AO disallowed the depreciation on chlorine containers claimed by the assessee at 100 per cent and treated these containers as normal plant and machinery and allowed depreciation only at 25 per cent, while the assessee claimed 100 per cent depreciation placing reliance on Item III(3)(v) of Appendix I r/w r. 5 of the IT Rules, relating to the rates at which depreciation is admissible, which reads as hereunder : “APPENDIX-I (See rule 5) Table of rates at which depreciation is admissible II. Furniture and fittings ** III. Machinery and plant (1) (2)** (3)(i) *** (ii) ***(iii)*** (iv) *** (v) Gas cylinders including valves and 100” regulators Concededly, the gas cylinder for which the assessee seeks 100 per cent depreciation is a tangible asset, which comes under the list of assets in Category A. But, what is agitated by the Revenue is that the gas cylinders, for which depreciation is claimed by the assessee is only machinery and plant, which do not fall under Item III 3(v) as the asset in question is only a container and not a gas cylinder. On the other hand, it is the case of the assessee that the asset in question for which 100 per cent depreciation is claimed is nothing but a gas cylinder including valves and regulators, for which 100 per cent depreciation is allowable. Rejecting the contention of the assessee, the AO allowed depreciation only at 25 per cent treating the asset in question as a normal machinery and plant and not as a gas cylinder including valves and regulators by his assessment order dt. 21st March, 2002.
Against which, the assessee preferred an appeal before the CIT(A), who by order dt. 23rd July, 2004 confirmed the order of the AO, which necessitated the assessee to prefer a further appeal before the Tribunal, which, following a decision of the Delhi High Court in CIT vs. Goyal MG Gases Ltd. (2006) 201 CTR (Del) 342, allowed the appeal and granted 100 per cent depreciation. Hence, the above appeal. Concededly, there is no dispute with regard to the following material facts : (i) that the assessee is a manufacturer and seller of chemicals; (ii) that the assessee claimed depreciation of 100 per cent for the larger containers for transporting chlorine, a gas, under the category of gas cylinders including valves and regulators; and (iii) that the asset in question has valves and regulators.
6. The case of the Revenue is that the gas cylinders including valves and regulators, which are entitled to 100 per cent depreciation as tangible asset under Part A, Item III(3)(v) r/w r. 5 of the IT Rules, shall not include the containers, which are larger in size. But unfortunately we are unable to appreciate the stand taken by the Revenue, as Item III(3)(v) of Appendix I of the Rules is not subject to any other qualification as to the size of the cylinder. On the other hand, the asset in question is manufactured as a cylinder as specified under the Gas Cylinder Rules, 2004, whereunder the gas cylinder includes container. Since the asset in question also contains valves and regulators, we do not see any reason for not considering them as gas cylinders that are entitled to 100 per cent depreciation. In any event, unless the legislature prescribes and imposes any qualification as to the size of the gas cylinders that are entitled to 100 per cent depreciation, even though they possess valves and regulators for their entitlement to 100 per cent depreciation, it may not be proper for this Court to import such qualifications to deny the benefits conferred under Item III(3)(v) of Appendix I of the Rules, as it is a settled law that the statute should be read as it is without distorting or twisting its language.
7. In a case where the statutory provision is plain and unambiguous, the Court shall not interpret the same in a different manner, only because of harsh consequences arising therefrom; and it is well known that the Court can iron out the creases but it cannot change the texture of the fabric, cannot enlarge the scope of legislation or intention when the language of the provision is plain and unambiguous, cannot add or subtract words to a statute or read something into it which is not there and cannot rewrite or recast legislation, vide Nasiruddin vs. Sita Ram Agarwal (2003) 2 SCC 577. 7.2 There should be a literal rule of interpretation of a statute, which is the first and foremost principle of interpretation and where the words of a statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule and even if the literal interpretation results in hardship or inconvenience, it has to be followed. The language employed in a statute is the determinative factor of the legislative intent and even assuming there is a defect or any omission in the words used in the legislature, the Court cannot correct or make up the deficiency, especially when a lateral reading thereof produces an intelligible result and any departure from the literal rule would really be amending the law in the garb of interpretation, which is not permissible and which would be destructive of judicial discipline, vide Raghunath Rai Bareja vs. Punjab National Bank (2007) 2 SCC 230.
8. The above view of ours is also supported by the decision of the Delhi High Court in CIT vs. Goyal MG Gases Ltd. (supra) which the Tribunal has relied upon. In the case before the Delhi High Court, the contention of the assessee therein was that the containers/tankers were nothing but big cylinders as they had all the attributes of a cylinder, which was rejected by the Revenue on the ground that since the so-called cylinders were merely containers and were mounted on trucks, the assessee therein was entitled to depreciation @ 25 per cent as eligible to “plants and machineries”. While deciding the issue whether the item claimed by the assessee therein is gas cylinders or machinery, the Division Bench has found that there is no dispute that the item in question was gas cylinder, though no doubt a big one and that the expression gas cylinders used in Appendix I to the IT Rules does not mention the size of the ‘gas cylinders’ nor does it say that gas cylinders should be only for cooking purpose or for any other particular purpose and any interpretation of the expression ‘gas cylinders’ to mean cooking ‘gas cylinder’ would be really adding words to the statute which is not permissible. Accordingly, the Division Bench of the Delhi High Court held that ‘gas cylinders’ are entitled to depreciation at 100 per cent. For all these reasons, we find no substantial question of law that arises for our consideration in this appeal. Accordingly, the tax case appeal is dismissed.
[Citation : 296 ITR 81]
