D.K. Seth, J.
1. In this reference the following question has been referred to this court:
'Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in directing the Assessing Officer to grant investment allowance under Section 32A and additional depreciation under Section 32(1)(iia) of the Income-tax Act, 1961?'
Submission on behalf of the Department :
2. Mr. Mallick, learned senior counsel for the appellant, submits that the Assessing Officer (the ITO) had properly dealt with the question referred to in this reference. The appellate authority and the learned Tribunal have wrongly appreciated the proposition having regard to the provisions contained in Sections 32(1)(iia) and 32A(1) of the Income-tax Act, 1961. According to him, in order to avail of the benefit of Sections 32(1)(iia) and 32A(1) of the 1961 Act, additional depreciation and investment allowance can be availed of only in respect of the plant, other than those excepted by Clause (b) of the respective proviso, owned by the assessee and used for the purpose of manufacturing being installed in the factory. In this case on the railway siding and the locomotive, the provisions of Sections 32A(1) and 32(1)(iia) of the Act cannot be applied. He also contends that in order to attract the said provisions it has to be installed. Neither the railway siding nor the locomotive is connected with the manufacturing purpose. That apart, the railway siding being situated outside the factory premises, the said two sections cannot be attracted.
3. In order to elaborate his submission he submits that the exception is road transport vehicle as is apparent from the respective Clause (b) of the proviso to Sections 32(1) and 32A(1). Road transport vehicle is defined under the Road Transport Corporations Act which includes all kinds of transport whether rail or road. The definition is not exhaustive. It is inclusive. It includes tram car. Therefore, it will include rail. He pointed out that Sections 32 and 32A speak of aircraft, ships but do not speak anything about rail or road. Whereas road transport vehicles is excepted. Therefore, according to him, the Legislature has intended only to include three modes of transport, namely, air transport, water transport and surface transport. It has not made any sub-division in any of the three modes. The exception road transport vehicle means transport vehicle used on surface. Therefore, this exception covers rail transport as well. He further contended that the railway siding or the locomotive does not fall within the description of plant. Hence, these provisions cannot be attracted. Therefore, he prays that the question should be answered in the negative, against the assessee.
4. Mr. Mallick relied on CIT v. Anand Theatres : [2000]244ITR192(SC) and contended that the railway siding or the platform at best be a building and such building is a setting to accommodate some apparatus. It is not an apparatus or tool or means of business. Every question is to be decided on the facts of each case. Therefore, the railway siding can never be treated as plant. He contended further that Rule 5 deals with depreciation. Therefore, Appendix I prescribed under Rule 5 of the Income-tax Rules has no manner of application in respect of additional depreciation or investment allowance. Rule 5 specifically deals with depreciation and it provides for different rates. It has not prescribed any rate of depreciation in respect of railway siding or locomotive. Therefore, the enumeration of railway siding and locomotive in Appendix I to Rule 5 of the Rules does not help the assessee.
Submission on behalf of the assessee :
5. Mr. Bajoria, learned senior counsel for the assessee-respondent, on the other hand, contends that the dispute is with regard to the additional depreciation and investment allowance. The general depreciation on these two items as plant is not in dispute. If the general depreciation is not in dispute then by no stretch of imagination can it be treated to be outside the purview of plant. According to him, installation means putting something in use. It may be in different manners. Therefore, the question of installation does not stand in the way. He contends that when a particular word or expression is not defined in the Act and if no internal aid is available from the statute, such expression is to be interpreted in the general sense as understood in common parlance. According to him rail and road are two different distinct transport systems. Therefore, when only road transport vehicle is excepted rail trails-port vehicle cannot be included within the said exception. He also referred to Appendix I for the purpose of pointing out that railway siding and locomotive has been included as plant on which the assessee is entitled to depreciation. He also refers to Clause (f) of Appendix I, which prescribes for depreciation and includes railway siding and locomotive. It is not necessary to interpret the provision independent of Appendix I. When Appendix I itself prescribes the rate of depreciation on plant and machinery specifically on railway siding and locomotive no other external aid is necessary. Therefore, according to him, the question has to be answered in the affirmative, in favour of the assessee.
6. Mr. Bajoria contended further that Appendix I prescribed under Rule 5 deals with depreciation prescribing different rates for different items. Provisions for additional depreciation are part of the same section. Therefore, for the purpose of grant of additional depreciation, there cannot be a differential treatment of the respective items on which depreciation is allowed. Similarly, there cannot be any question of ignoring Appendix I while considering the question of investment allowance. The decision in Anand Theatres' case : [2000]244ITR192(SC) does not help Mr. Mallick, rather it helps him. He points out that a building can also be a plant. According to him, the railway siding and locomotive are apparatus or means of business. Railway siding is not a setting or premises. It satisfies the functional test.
7. Mr. Bajoria had cited Kalinga Tubes Ltd. v. CIT [1974] 96 ITR 20 (Orissa) and Chief Commissioner (Admn.) v. Visveswarayya Iron and Steel Ltd. [1993] 199 ITR 98 (Karn), in order to support his contention that railway siding and locomotive are plants. He cited CIT v. Vulcan Laval Ltd. [1991] 188 ITR 453 (Bom), to substantiate his contention with regard to the expression installation. He relied on CIT v. Progressive Engineering Co. : [1998]230ITR729(AP) and CIT v. C.S. Anand [1997] 225 ITR 573 (Patna) for supporting his contention with regard to the exception of road transport vehicles where dumpers and tippers were held not to be road transport vehicle. On the question of the meaning of the expression business activities he relied on CIT v. Mahalinga Setty and Co. [1992] 195 ITR 526 (Karn).
Facts :
8. In order to appreciate the situation we may refer to the brief facts of the case. In this case the Assessing Officer (the ITO) in his order of assessment had disallowed the claim of additional depreciation on railway siding and locomotives available under Section 32(1)(iia) of the 1961 Act and investment allowance thereon under Section 32A(1). On appeal, the appellate authority reversed the said order and allowed additional depreciation and investment allowance and directed the Income-tax Officer to reassess the income of the assessee for the assessment year 1985-86. The learned Tribunal affirmed the order of the appellate authority. On this the Department had sought for reference under Section 256(1) of the Act on the question referred to above, which has since been referred to this court by the learned Tribunal.
9. The question seems to be simple. This is also covered by a decision of the Karnataka High Court as is apparent from the decision cited by Mr. Bajoria. The said High Court and the Orissa High Court had occasion to deal with a similar question though in different contexts. These High Courts have proceeded on the basis of Appendix I where railway siding and locomotive have been included as plant and, therefore, it was not necessary to fall back on the expression used in the different sections. However, both the appellate authority and the learned Tribunal had observed that there is no decision on this point by the Calcutta High Court.
10. We would have simply followed the decision of the Karnataka High Court. However, we do not find any reason to differ with the same. But because of the question raised, we feel that we should answer the question with some reasons of our own which might supplement the reasoning given by the Karnataka and the Orissa High Courts. We also draw inspiration from the said decisions in order to support our view.
Section 32(1) : Additional depreciation :
11. Section 32(1) of the Act allows deduction for depreciation of plant (among others) owned by the assessee and used for the purpose of the business as may be prescribed for different items mentioned in the said section. It also provides for additional depreciation in Clause (iia) in respect of the plant installed excluding NESA or put to use for the previous year. The proviso in Clause (b) excludes road transport vehicles from the scope and ambit of such deductions.
12. The plain reading of the said provision shows that in order to avail of the deduction on account of additional depreciation the thing on which depreciation is claimed must be (i) a plant among other things; (ii) owned by the assessee; (iii) installed in the previous year; and (iv) used for the purpose of his business, as may be prescribed for different items. Such prescription is provided by Rule 5 of the Income-tax Rules in Appendix I where in item No. III machinery and plant have been included. Admittedly, railway siding and locomotive are included in Appendix I as plant. This very inclusion does not pose any difficulty in answering the question in the affirmative. But then even if we look at the provisions contained in the said section, we find that the exception relates to 'road transport vehicle'.
Section 32A(1) : Investment allowance :
13. Section 32A(1) allows deduction of investment allowance in respect of (i) plant among other things specified in Sub-section (2); (ii) owned by the assessee; (iii) installed after a particular date; and (iv) wholly used for the purpose of the business carried on by him. However, in Clause (b) of the proviso 'road transport vehicles' have been excepted.
The question :
14. Now the question is whether the assessee is entitled to deduction of additional depreciation under Section 32(1)(iia) and investment allowance under Section 32A(1) of the Income-tax Act, 1961, on railway siding and locomotives. We find that the requirement of these two sections are identical. The only distinction we find with regard to use of the plant for the purpose of the business. In Section 32(1) the word 'wholly', qualifying the expression 'used for the purpose of the business', used in Section 32A(1) is absent. For claiming deduction under Section 32(1) of the Act it is not necessary that the plant is to be wholly used for the purpose of the business. But in order to claim investment allowance, the plant has to be wholly used for the purpose of the business carried on by the assessee. However, no dispute has been raised by Mr. Mallick with regard thereto.
Road transport vehicle : Meaning of:
15. In both these two sections, Clause (b) of the proviso excludes road transport vehicles. We are required to examine whether railway siding and locomotive are plants, and if so, whether those are excepted under Clause (b) of the proviso.
16. In common parlance road and rail are two different modes of transport. Even in law rail and road have been treated differently. Separate statutes have been legislated for governing the field of road transport and that of rail transport. The definition of vehicle contained in the Road Transport Corporations Act has a limited application. Such a definition is confined to the scope and purpose of the said Act, which is related to the incorporation of a State owned Road Transport Corporation. The same is a special statute and has no general application. Therefore, the definition given therein cannot be borrowed for the purpose of the Income-tax Act.
17. That apart 'road transport service' is defined in the said Road Transport Corporations Act, 1964, to mean a service to carry passengers or goods or both by road in vehicles for hire or reward. It clearly means a service by road. Whereas 'vehicles' is defined in the 1964 Act to mean a vehicle capable of being used for road transport and includes tram car, trolley vehicle or trailer. It does not include rail. The stress is on road and includes tram car but not rail or train.
18. If a statute in an inclusive definition refers to one item distinct from the other and omits that other item, then the intention of the Legislature appears to be clear. While including one by special reference without referring to the other the omission is deliberate. When the Legislature through the coining of the statute expresses its clear intention, the court is not supposed to ignore the same. In case it interprets it in a manner contrary to the legislative intent gathered from the text then the court would not be interpreting but would be stepping out to invade the field of legislation which the court cannot do.
19. If rail transport was also intended to be excluded through the exception contained in Clause (b) of the proviso then instead of using the expression 'road transport vehicle' it could have used the expression 'transport vehicle' which would have included all kinds of transport vehicles including rail or road or it could have used rail and road transport vehicles. Instead, it has used 'road transport vehicle' which specifically expresses that it is only the vehicle, which is used as transport on road. Definitely a transport used on road cannot be used on rail. Similarly, a transport used on rail cannot be used on road. Therefore, the expression 'road transport' cannot include 'rail transport'. Therefore, the locomotive cannot be excluded in view of Clause (b) of the proviso.
20. If we consider the contention of Mr. Mallick that railway siding is a building, even then it will not improve the situation. Each case has to be decided on the facts particular in each case. A building can also be treated to be a plant. It is not the ordinary meaning that has to be considered. If it is not a premises or setting, then a building can also be a plant if it satisfies the functional test that the building is an apparatus or tool or means for the trade or part of the apparatus and not a part of the setting or premises. Having relation to the question at hand as adopted by various courts in various decisions, we may refer to the common parlance or the trade or commercial parlance test, functional test, and the premises test. It is the functional test, which would determine the nature and character. We must look at the function of the railway siding and the locomotive in order to determine its character for the purpose of these sections with which we are now dealing. If it is a setting or place to accommodate some apparatus, it would not be a plant. If it plays an important role in the carrying on of the business, then it would be a plant. It is to be found out of which it forms part, whether it forms part of a setting or premises to house or install the apparatus or it is a part of the apparatus. The ratio laid down in Anand Theatres : [2000]244ITR192(SC) , related to a building housing the theatre. It has to be read in that context. But then the principle laid down therein relate to the functional test as to whether the item is an apparatus or tool or part of it or is a setting premises. Therefore, this decision does not help Mr. Mallick to the extent he intended to rely upon the same.
21. In Progressive Engineering Co.'s case : [1998]230ITR729(AP) and C.S. Anand's case [1997] 225 ITR 573 (Patna), dumpers and tippers were held not to be road transport vehicles, because, though these operate on roads they are not transport vehicles. These decisions may not help us in the present context. However, we may draw inspiration from the reasoning given in these decisions. These decisions explained as to what include road transport vehicle. Roads have been treated as building for the purpose of depreciation. But railway siding has not been treated as building for such purpose. Locomotive cannot run without the rail. Both are supplement to each other. Railway siding has no utility without the locomotive and locomotive has no utility without the railway siding. Railway siding and locomotive are inseparable. Therefore, the railway siding cannot be treated separately from the locomotive and as such it forms part of the same plant.
22. Relying on the said decision Mr. Mallick attempted to point out that Appendix I related to Rule 5 and, therefore, the same cannot be applied to additional depreciation. This does not seem to be a sound proposition. Rule 5 deals with depreciation and its rates as prescribed in Appendix I. The depreciation is allowable on building, furniture and fittings, machinery and plant. If for the same section for the purpose of depreciation railway siding or locomotive is included in the heading of 'Machinery and plant', the same cannot be given a different meaning for the purpose of additional depreciation. Similarly, a different meaning cannot be had for the purpose of investment allowance. Additional depreciation is a depreciation added to the depreciation allowable under Rule 5 in certain cases. Therefore, it is an addition to the depreciation allowable under Rule 5. Therefore, additional depreciation is not a proposition outside the scope of Rule 5 when both depreciation and additional depreciation are provided for in the same section. Once an item is held having been given a particular meaning in the Appendix I, we cannot borrow a different meaning and deviate therefrom without any justifiable reasons. We see no justifiable reason, as we would be discussing hereafter,
Section 43(3) : Plant : Meaning of:
23. The word 'plant' is defined in Section 43(3) of the Act. It is not an exhaustive definition. It is an inclusive definition. It includes vehicles, among other things, used for the purpose of the business or profession. The word 'vehicle' has not been defined. The original meaning of the vehicle as we find from the Shorter Oxford Dictionary, third edition, means 'a conveyance provided with wheels used for the carriage of persons or goods; a carriage, cart, wagon, sledge, etc., a receptacle in which anything is placed in order to be moved'. Clause (b) to the proviso to Section 32(1)(iia) and Section 32A(1) excepts road transport vehicle. Therefore, vehicles other than road transport vehicles are plants. In Scientific Engineering House Private Limited, v. CIT : [1986]157ITR86(SC) , it was held that plant includes any article or object fixed or movable, live or dead, used by a businessman for carrying on his business and it is not necessarily confined to an apparatus which is used for mechanical operations or processes or is employed in mechanical or industrial business. The test to be applied for such determination is; does the article fulfil the function of a plant in the assessee's trading activity? Is it a tool of his trade with which he carries on his business? If the answer is in the affirmative, it will be a plant.
24. We may draw inspiration from the decision in CIT v. Shaan Finance (P.) Limited; First Leasing Company of India Limited : [1998]231ITR308(SC) and Anand Theatres' case : [2000]244ITR192(SC) , for enumerating the proposition to support the view we are taking.
Railway siding and locomotive : Whether plant :
25. Plant means something, which is required for the purpose of carrying on business enterprise. Plant must be something, which is used by the assessee in aid of the object or purpose of the business. It is not only the means of processing the end-product. It includes the entire operation undertaken for the purpose of obtaining the end-product. Therefore, loading or unloading of raw materials or transporting the finished products are also part of the operation of the business for obtaining the end-product. As such any device, apparatus or means used for such purpose are definitely plant. These are so held in two decisions relied upon by Mr. Bajoria, viz., Kalinga Tubes Ltd.'s case [1974] 96 ITR 20 (Orissa) and Visveswarayya Iron and Steel Ltd.'s case [1993] 199 ITR 98 (Karn).
Locomotive : Meaning of:
26. We find that vehicles used on road are described as automotive while those used on rail are described as locomotive. These words and expressions have separate distinct meanings, which are in use for over a long period of time. One does not confuse with the other. Locomotive carries wagons. Locomotive has no use for the purpose of the business without the wagons, i.e., the carriages. Therefore, carriages/wagons are an inseparable part of the locomotive. The word rail transport does not mean the engine. It means the whole vehicle of transport on rail pulled by the locomotive. The locomotion of the wagon/ carriage are effected by the engine, the locomotive. The word 'locomotive' used in Appendix I has to be read in the context of the said two sections. It is to be interpreted to mean and include the rail transport vehicle used or wholly used for the purpose of the business/ as the case may be, in respect of these two sections.
Owned by the assessee : Meaning :
27. It is not in dispute that the railway siding and locomotive are owned by the assessee. Though it is stated that it is outside the factory premises but the same would not be a criteria for deciding the question. Whether it is outside the boundary wall of the factory or inside such boundary wall is immaterial if the railway siding is owned by the assessee, it will qualify the assessee to the deduction on account of investment allowance provided it satisfies the other conditions provided in the statute.
Installed : Meaning of:
28. The expression 'install' does not mean affixation. The word 'install' has different connotation in different context having regard to the nature and character and specified manner of use of a particular plant or machinery for effective and appropriate utilisation of operation thereof. A locomotive is installed as soon it is put on rail ready for use. A railway siding is installed as soon it is constructed and made ready for use. In Vulcan Laval Ltd.'s case [1991] 188 ITR 453 (Bom), cited by Mr. Bajoria somewhat similar view was taken. Therefore, the expression 'install' will pose no difficulty on the question to answer.
Used for the purpose of business :
29. The word 'business' includes the whole process of the undertaking carried on by the assessee. It begins with the initial process to achieve the end-product and ends with the realisation of the ultimate profit. Whatever means or mode is connected with such process are part of the business. The business may be of manufacturing or trading or otherwise. A business of manufacturing does not begin or end with manufacturing the product. It begins with all the processes, which are undertaken by the assessee to facilitate the manufacturing. The purpose of manufacturing is to earn profit out of the product manufactured. The profit can be earned by marketing or trading the product. It is one whole cycle of a business or trade, which is comprehended in these two sections. If the plant relates to the process of the business of manufacturing, then it is used for the purpose of the business. It is not in dispute that the same is used wholly by the assessee. Therefore, there is no difficulty in including railway siding and locomotive within the scope of Appendix I and are so included in Appendix I.
30. The expression used in both Sections 32(1) and 32A(1) is in relation to the business, viz,., for the purposes of the business. It does not make out anything to the extent that such business has to be related to manufacturing purpose. Therefore, the Income-tax Officer was proceeding on a wrong footing that it has to be related to the purpose of manufacturing. The section does not make any such provision circumscribing the application only in respect of the plant required for manufacturing purpose. If it is related to the business of the assessee, namely, used for the purpose of the business, the provisions of Sections 32 and Section 32A would be attracted.
31. Sub-section (2) of Section 32A in Clause (b) of Sub-clause (iii) used the expression 'for the purposes of business of construction or manufacturing or production of any article or thing' except those specified in the list in Eleventh Schedule, while defining the meaning of the word 'plant'. There also the construction manufacturing production is preceded by the expression for the purpose of the business. Therefore, it is not the manufacture with which it is to be concerned. It is for the production of the thing and purpose of business related to a production or manufacturing of a thing. It includes everything except those excluded in the list provided in the Eleventh Schedule. Articles, which do not come within the excluded article provided in the Eleventh Schedule would be the subject matter of provision under Sub-clause (iii) of Clause (b) of Sub-section (2) of Section 32A of the Act. Therefore, this provision also does not say anything that the plant must be related directly to the manufacturing purpose. The plant must be related to the business, which may be a business of manufacturing or production as the case may be. It is so held in the decision in Mahalinga Setty and Co.'s case [1992] 195 ITR 526 (Karn) and CIT v. Shaan Finance (P.) Ltd, : [1998]231ITR308(SC) .
Order : The answer :
32. We, therefore, are unable to agree with the contention raised by Mr. Mal-lick. We answer the question in the affirmative, in favour of the assessee.
33. The reference is, thus, disposed of.
34. All parties are to act on a signed xerox copy of this dictated order on the usual undertaking.