Dalmia Biscuits Ltd. vs Commissioner of Income Tax

S.S. Sodhi, J.—The matter here concerns the assessee''s claim for initial depreciation u/s 32(1)(vi) of the income tax Act, 1961 (''the Act'') in respect of an electric generator installed by it for its business. The assessee Dalmia Biscuits Ltd., Rajpura, derives its income from the manufacture and sale of biscuits. During the relevant assessment year 1976-77, the assessee installed and commissioned an electric generator for its business at a cost of Rs. 6,56,533 and then put-forth a claim for initial depreciation for this generator u/s 32(1)(vi). It is the declining of this claim by all the authorities under the Act that has now led to the following question being referred for the opinion of this Court, namely:

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the initial depreciation u/s 32(1)(vi) of the income tax Act, 1961, was not allowable on the generator set installed by the assessee during the accounting period relevant to the assessment year 1976-77 for the generation of electricity or power for consumption in the process of manufacture of its own products?

The question posed has indeed to be answered in the affirmative in favour of the revenue and against the assessee in view of the clear and plain interpretation of the relevant statutory provision. The crucial words in section 32(1)(vi) are "new machinery or plant installed for purposes of business of generation or distribution of electricity or any other form of power." The use of the words here ''for the purposes of business of admit of only one interpretation, namely, that the machinery or plant installed must be for the purposes of business of generation or distribution of electricity or any other form of power. In other words, it is only where the business is of generation or distribution of electricity or any other form of power that the installation of new machinery or plant qualifies for initial depreciation in terms of section 32(1)(vi).

Mr. S.S. Mahajan, the counsel for the assessee sought, on the other hand, to contend that as the generator had been installed for generation of electricity which was required for the business of the assessee, it must be taken to satisfy the requirements of section 32(1)(vi)and the assessee was thus, entitled to the depreciation claimed. This is indeed a contention which cannot be sustained. It is the well-established rule of interpretation of statutes that every word of a statute has to be assumed to have been deliberately and consciously incorporated therein by the Legislature and has thus, to be given a meaning and effect. Courts are, therefore, enjoined upon to avoid such interpretation as would leave any part of the provision enacted without effect.

The plain and obvious meaning of the relevant words used in section 32(1)(vi) provides no escape from the conclusion that as the business of the assessee was not that of generation or distribution of electricity or any other form of power, its claim for depreciation in respect of the generator was rightly declined. This reference is answered accordingly. There will, however, be no order as to costs.