1. These three appeals filed by the assessee are directed against the common order dated 24-3-1983 of the Commissioner (Appeals) relating to the assessment years 1972-73, 1973-74 and 1974-75. They raise a common issue for decision. Hence, they are heard together and disposed of by this common order for the sake of convenience.
2. The assessee is a limited company deriving income from business in the manufacture and sale of chemicals. In the course of the assessment proceedings for the assessment years 1978-79, 1979-80 and 1980-81, the ITO found that the assessee had sold certain parts of its machinery at prices considerably below their written down value. The actual figures are that the sale proceeds fell short of the written down value by Rs. 29,990 in the assessment year 1979-80 and Rs. 38,915 in the assessment year 1980-81. The assessee explained that the parts of the machinery were no longer usable and so they were scrapped and sold as such resulting in the aforesaid losses. The written down value of the machinery sold was Rs. 30,940 and the sale proceeds were Rs. 950 in the assessment year 1979-80. The original cost of the same machinery was Rs. 3,42,264. In the assessment year 1980-81, the cost of the machinery sold was Rs. 1,68,050, their written down value was Rs. 64,184 and the sale proceeds were Rs. 25,269. The ITO accepted the claim of the assessee and allowed the aforesaid losses of Rs. 29,990 and Rs. 38,915 in the two years under consideration. Then the ITO found that the machineries sold at a loss were acquired in the assessment years 1972-73, 1973-74 and 1974-75 and development rebates of Rs. 5,943, Rs. 2,727 and Rs. 6,711 had been allowed in those three assessment years, respectively, on the aforesaid items of machinery. He invoked the provisions of Section 155(5) of the Income tax Act, 1961 ('the Act') and passed orders withdrawing the aforesaid development rebates in the three years under consideration.
3. According to the ITO, the sale was made within eight years of the installation of the machineries and Section 155(5) does not say that the machinery sold within the period of eight years should be in working condition. Hence, he held that describing the machineries sold as unusable or scrap would not take the assessee out of the mischief of Section 155(5). On this reasoning, the ITO withdrew the development rebate allowed earlier in the three assessment years under consideration.
4. The assessee appealed to the Commissioner (Appeals) and contended that though the parts of the machineries were sold within eight years, they were first scrapped and so they no longer remained the same machinery on which development rebate was given. According to the assessee, the machineries sold should remain as usable machineries for the same purposes for which the assessee had installed the same ; otherwise, their sale would be outside the purview of Section 155(5).
The Commissioner (Appeals) did not agree with the above contention on the ground that the clear wording of Section 155(5) did not support the contention of the assessee. In this view of the matter, he upheld the orders of the ITO and dismissed the appeals.
5. Shri M.M. Parulekar, the learned representative for the assessee, urged before us that the only dispute in these appeals is whether the things sold by the assessee as scrap could be said to be machineries or plant for the purpose of Section 155(5). According to him, what the assessee sold were scrap materials and were not the machineries or plant which were acquired by the assessee earlier. He urged that Section 155(5) would apply only if the machinery or plant was sold as such in a workable condition. Since the assessee sold it as scrap, Section 155(5) had no application at all. Further, he urged that if two reasonable views as possible, then the one favourable to the assessee should be taken and Section 155 read with Section 154 of the Act will have no application.
6 Shri R.D. Mahadeshwar, the learned representative for the department, on the other hand, supported the orders of the revenue authorities. He took us through Section 155(5) and pointed out that the section is very clear. Once the machinery or plant is sold within the stipulated period of eight years, the development rebate allowed originally has to be withdrawn. He pointed gut that no further condition is laid down in this section as alleged by the learned representative for the assessee.
It is not necessary that the plant and machinery should be usable for the purpose for which the assessee acquired it and should remain in a workable condition. Hence, he urged that the order of the Commissioner (Appeals) was quite in order and so it deserved to be upheld.7. We have considered the contentions of both the parties as well as the facts on record. The short question that is raised in these appeals is whether the sale of machinery or plant part by part as scrap would take a case out of the mischief of Section 155(5). In other words, whether the phrase 'ship, machinery or plant' appearing in Section 155(5) includes unusable parts of the ship, machinery or plant which has become unusable for the original purpose for which they were acquired by the assessee. If the phrase includes the said parts which were first described as scrap and then sold then, obviously, Section 155(5) would apply; otherwise, it will not apply. Assuming for a moment that the parts of the machinery or plant which has become unusable for the original purpose for which it was acquired by the assessee can no longer be described as machinery or plant, then the question which arises is : how to describe them Are they still machinery or plant If not, what are they If the argument of the assessee is to be accepted, then we have to introduce certain words into the section which are really not there. The assessee's interpretation proceeds on the basis that the words 'ship, machinery or plant' should be read as 'ship, machinery or plant still usable as such'. We do not find any reason to introduce those words which are absent in the section. In our opinion, the parts or ship, machinery or plant, which are described as scrap on the ground that they are no longer usable for the purpose for which they were originally acquired, continue to remain as parts of the ship, machinery or plant, even when they are no longer usable.
Originally, they were machinery fit for the use and in good condition, later, because of natural wear and tear, they have become machinery no longer fit for use and not in good condition. But in either case, they are still machinery because the section speaks of only machinery or plant without any reference to their utility or physical state or commercial value. Hence, we come to the conclusion that the provisions of Section 155(5), which are intended to prevent the misuse of a conditional advantage given by the Legislature, apply to a case of sale of the machinery within the stipulated period of eight years, irrespective of the fact as to whether the said machinery could or could not be used for the original purpose for which the assessee installed the same. We do not find any scope for having two views on the matter or any debate or long drawn out reasoning for arriving at the conclusion. The language of the provision is indeed clear and categorical and admits of no ambiguity or doubt. We feel fortified in our decision by the oft-quoted dictum of Justice Rowlett in Cape Brandy Syndicate v. IRC [1921] 2 KB 403 to the effect that "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. One can only look fairly at the language used." For the above reasons, we uphold the order of the Commissioner (Appeals) for all the three years under consideration.