C.I.T. Andhra Pradesh Vs. M/S Taj
Mahal Hotel, Secunderabad  INSC 193 (12 August 1971)
CITATION: 1972 AIR 168 1971 SCC (3) 550
CITATOR INFO :
R 1981 SC1274 (10) R 1985 SC 679 (32) RF 1986
SC 338 (7,11) RF 1987 SC1023 (31) RF 1988 SC1087 (8) R 1989 SC 335 (9) F 1989
SC 622 (4) RF 1991 SC 686 (16) RF 1991 SC 999 (14) F 1992 SC 129 (7) F 1992
Income-tax Act (11 of 1922) s. 10(2) (vi) and
(vi-b)- 'Plant', meaning of.
During the assessment year 1960-61, the
assessee, a registered firm running hotels, incurred expenditure in installing
sanitary and pipeline fittings in its hotels. On the question whether such
fittings in a building run as a hotel fell within the meaning of the word
'plant' in s. 10(2)(vi-b) of the Income-tax Act, 1922, and the assessee was
therefore entitled to development rebate under that sub- section, the High
Court, in reference, answered in favour of the assessee.
Dismissing the appeal to this Court,
HELD: (1) Apart from the dictionary or
literal meaning of the word 'plant', the context of the provisions of the Act
shows that sanitary and pipe line fittings are 'plant' under s. 10(2)(vi-b)
read with s. 10(5). [173H; 174A-B] In computing the profits and gains of a
business under s.
10(1) o the Act allowances by way of
depreciation in respect of 'plant' under s. 10(2)(vi) and by way of development
rebate in respect of 'plant' under s. 10(2)(vi-b) have to be made. Under s.
10(5), 'plant' includes vehicles, books, scientific apparatus and surgical
equipment purchased for the purpose of the,-business profession or vocation.
Where a word is not defined in a statute, it must be construed in its popular
sense, that is, that sense which people conversant with the subject-matter with
which the statute is dealing, would attribute to it. The word 'includes' is
generally used to enlarge the meaning of words or phrases used in the statute
so that, words and phrases may be construed as comprehending not only such
things as they signify according to their nature and import, but also these
things which the interpretation clause declares that they shall include. The
fact that even books have been included in 'plant' shows that the meaning given
to 'plant' is wide.
It should cover sanitary and pipe-line fittings.
[170E-H;171E-H, 173F] To have such fittings in a bath room is one of the
essential amenities or conveniences which are normally provided in any good
hotel, and the hotelier can reasonably expect to get more custom and earn a
larger profit by charging higher rates. Therefore, the fittings in the present
case, were not merely a part of the setting in which the hotel business was
being carried on, but were required for the purpose of the hotel business.
[173C-G] C.I.T., U.P. v. Indian Turpentine and Rosin Co. Ltd., (1 970) 75
I.T.R. 533, approved.
Jarrold (Inspector of Taxes) v. John Good
& Sons Ltd., (1963) 1 W.L.R. 214, applied.
169 J. Lyons Co. Ltd. v. Attorney General,
 1 Ch. 281 and Yar mouth v. France,  19 Q.B. 647, referred to.
(2) The fact that the assessee while claiming
depreciation allowance had included the fittings in question under the head
'furniture and fittings' and claimed higher depreciation allowance than what
would be applicable to 'plant', would not detract from the meaning of the word
'plant' in s. 10(2)(vi-b). [174C-E]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1369 of 1968.
Appeal from the judgment and order dated
August 1, 1967 of the Andhra Pradesh High Court in Case Referred No. 68 of
S. T. Desai, J. Ramanurthi, R. N. Sachthey
and B. D. Sharma, for the appellant.
M. Natesan and K. Jayaram, for the
The Judgment of the Court was delivered by
Grover, J.--This is an appeal by certificate from the judgment of the Andhra
Pradesh High Court in a case referred under s. 66(1) of the Income Tax Act,
1922 (hereinafter referred to as the Act).
The respondent who is the assessee is a
registered firm running a hotel at Secunderabad with branches at Sultan Bazar
and King Kothi in Hyderabad. During the previous year ending 30th September,
1959 relating to the assessment year 1960-61, the assessee incurred an
expenditure of Rs.
57,154/- in installing sanitary fittings and
of Rs. 1,370/- for pipe-line fittings. The assessee claimed development rebate
on these two items at the rate of 25 per cent under S. 10(2)(vi-b) of the Act
amounting in the aggregate to Rs.
14,629/-. The Income Tax Officer disallowed
the claim. On appeal, the Appellate Assistant Commissioner upheld the
disallowance. An appeal was taken to the Appellate Tribunal. The Tribunal
rejected the appeal holding that the definition of "plant" must
necessarily be the same, whether it was for claiming depreciation under s.
10(2)(vi) or for development rebate under S. 10(2)(vi-b). Accordingly, it was
held that the sanitary and pipe-line fittings did not fall within the meaning
of the word "plant". On being moved under s. 66(1) of 170 the Act,
the following question was referred for the opinion of the High Court :-
"Whether the sanitary fittings and pipelines, installed in the King Kothi
branch of the Hotel, constituted 'plant' within the meaning of sec. 10(5) of
the Indian Income-tax Act and whether the assessee is entitled to develop- ment
rebate in respect thereof under sec.
10(2) of the Act The High Court answered the
question in the affirmative and in favour of the assessee.
The only question that was argued before the
High Court and which has been debated before us is whether sanitary and
pipe-line fittings in a building which is run as a hotel would fall within the
meaning of the word "plant" in section 10(2)(vi-b) of the Act.
Section 10(1) of the Act provides that tax
shall be payable by an assessee in respect of the profits and gains of any
business profession or vocation. Sub-section (2) gives the allowances which
have to be made in computation of such profits and gains. Clause (vi) of that
sub-section relates to the depreciation in respect of "such buildings,
machinery, plant or furniture being the property of the asses see".
Clause (vi-b) of S. 10(2) is as follows:-
"(vi-b) in respect of a new ship acquired or new machinery or plant
installed after the 31st day of March, 1954, which is wholly used for the
purposes of that business carried on by the assessee, a sum by way of
development rebate in respect of the year of acquisition of the ship or of the
installation of the machinery or plant, equivalent to...........
Section 10(5) provides inter alia that in
sub-section (2) " plant" includes "vehicles, books, scientific
apparatus and surgical equipment purchased for the purpose of the business,
profession or vocation".
171 The main argument of the learned counsel
for the Commissioner of Income Tax who is the appellant is that the word
"plant" should not have been given a wide meaning and should have
been interpreted according to the common understanding in commercial circles
among persons who deal in plant and machinery. It is asserted that the
development rebate cannot be claimed in respect of the items which have become
a part of the building itself. It has also been pointed out that the assessee
while claiming depreciation allowance has included the assets in question under
the head "furniture and fittings" the rate claimed being 9 per cent
which was duly allowed by the Income Tax Officer. This rate of 9 per cent was
applicable under Rule 8 only to furniture and fittings used in hotels etc. If
the assets were to be treated as plant, only the general rate of 7 per cent
would be applicable. The definition of "plant" must necessarily,
therefore, be the same whether it be for claiming depreciation under s.
10(2)(vi) or for development rebate under s. 10(2)(vi-b). It has also been
suggested that the primary meaning of the word "plant" has connection
with mechanical or industrial business or manufacture of finis hed goods from
raw goods and that sanitary and pipe- line fittings could not possibly satisfy
Now it is well settled that where the
definition of a word has not been given, it must be construed in its popular
sense if it is a word of every day use. Popular sense means "that sense
which people conversant, with the subject matter with which the statute is
dealing, would attribute to it".
In the present case, s. 10(5) enlarges the
definition of the word "plant" by including in it the words which
have already been mentioned before. The very fact that even books have been
included shows that the meaning intended to be given to "plant" is
wide. The word "includes" is often used in interpretation clauses in
order to enlarge the meaning of the words or phrases occurring in the body of
the statute." When it is so used, these words and phrases must be
construed as comprehending not only such things as they signify according to
their nature and import but also those things which the interpretation clause
declares that they shall include. The word "include" is also
susceptible of other constructions which it is unnecessary to go into.
172 The case-J. Lyons and Company Limited v.
Attorney General (1) relied upon by the learned counsel for the appellant apart
from being distinguishable hardly supports the contention of the appellant. In
that case, it was I held that electric lamps and fittings in a tea shop were
not part of the apparatus used for carrying on the business but were part of
the setting in which the business was carried on, and, therefore, were not
"plant", within the meaning of certain provisions of the War Damage
Act, 1943. It was observed at page 286 "if these articles are plant, it
can only be by reason that they are found on premises exclusively devoted to
trade purposes. Trade plant alone need be considered".' The meaning of
"plant" as given in yar mouth v. France (2) was accepted as correct.
According to that meaning "plant" includes whatever apparatus or
instruments are used by a businessman in carrying on his business". In our
judgment, the more apposite decision is that of the Court of Appeal in Jarrold
(Inspector of Taxes) v. John Good & Sons Ltd. (3) There the nature of the
assessee's business required that its office accommodation should be capable'
of sub-division into a number of rooms varying in size etc. according to the
requirements from time to time of the agencies which it carried on. The office
accommodation consisted of a large open floor space in which partitions could
be erected so as to subdivide the floor space into a number of rooms of any
size. Certain partitions were made which were screwed to the floor and ceiling
only and could be easily moved if it was desired to alter the size of number of
the rooms. The question was whether these partitions were plant within sections
279 and 280 of the English Income Tax Act 1952, so as to entitle the company to
allowances under those sections. There the material words in the statute were
"where the person carrying on a trade in any year of assessment has
incurred expenditure on the provision of machinery or plant for the purposes of
the trade." It was held that the partitions were "plant" as they
were used in the carrying out of the company's trade or business. Donovan, L.J.
held that the partitions were used to enable the trader to cope with the
vicissitudes of (1)  (1) Ch. 28 1. (2)  (19) Q. B. 647.
(3)  (1) W.L.R. 214.
173 the business as it increased and
diminished and relied on the finding of the commissioners that the flexibility
of accommodation which the partitions provided was a commercial necessity for
the company. Further illustrations were given of assets which would fall within
the meaning of "plant".
"The heating installation of a building
may be passive in the sense that it involves no moving machinery, but few would
deny it the name of plant". The same thing could, no doubt be said of many
air conditioning and water softening installations".
It cannot be denied that the business of
hotelier is carried on by adapting a building or premises in a suitable way to
be used as a residential hotel where visitors come and stay and where there is
arrangement for meals and other amenities are provided for their comfort and
convenience. To have sanitary fittings etc. in a bath-room is one of the
essential amenities or conveniences which are normally provided in any good
hotel, in the present times. If the partitions in Jarrold's case (supra) could
be treated as having been used for the purpose of the business of the trader,
it is incomprehensible how sanitary fittings can be said to have no connection
with the business of the hotlier.
He can reasonably expect to get more custom,
and earn larger profit by charging higher rates for the use of rooms if the
bath-rooms have sanitary fittings and similar amenities. We are unable to see
how the sanitary fittings in the bath- rooms in a hotel will not be
"plant" within s.10(2)(vi-b) read with Section 10(5) when it is quite
clear that the intention of the Legislature was to give it a wide meaning and
that is why, articles like books and surgical instruments were expressly
included in the definition of "plant". In decided cases, the High
Courts have rightly understood the meaning of the term "Plant" in a
(See Commissioner of' Income-tax, U.P. v.
Indian Turpentine and Rosin Co. Ltd.). (1) If the dictionary meaning of the
word "plant" were to be taken into consideration on the principle
that the literal construction of a statue must be adhered to unless the context
renders it plain that such a construction cannot be put on the words in
question-this is what is stated in Webster's Third New International
Dictionary:- (1)  (75) I.T.R. 533.
17 4 "Land, buildings, machinery,
apparatus and fixtures employed in carrying on trade or other industrial
It is, however, unnecessary to dwell more on
the dictionary meaning because looking to the provisions of Act, we are
satisfied that the assets in question were required by the nature of the hotel
business which the assessee was carrying on. They were not merely a part of the
setting in which hotel business was being carried on.
The High Court was right in not accepting the
reasoning of the Tribunal based on the rates relating to depreciation under
s.10(2)(vi) and the assessee having claimed that the sanitary and pipe-line
fittings fell within the meaning of "furniture and fittings' in Rule 8(2)
of the Rules. It has been rightly observed that the Rules were meant only for
the purpose of carrying out the provisions of the Act and they could not take
away what was conferred by the Act or whittle down its effect. If the assessee
had claimed higher depreciation allowance that would not detract from the
meaning of the word plant in clause (vi-b) of S. 10(2).
In the result, this appeal fails and it is
dismissed with costs.
V.P.S. Appeal Dismissed.