1986 PLP 461 (PTD)

Dates of hearing: 12th, 13th, 18th and 19th March,1986. MAMOON KAZI, J.‑‑This petition calls in question the order passed by the Commissioner of Income‑tax (Revision), Karachi, dated 10‑5‑1979, whereby the revision fled by the petitioner under section 33‑A(i) of the Income‑tax Act, 1922,, was dismissed.

2. The facts giving rise to this petition are that the petitioner, which is a public limited company, has its registered office at Hotel Intercontinental, Karachi. The petitioner owns a chain of Intercontinental Hotels in Pakistan, which included one at Dacca, formerly in East Pakistan. In 1971 war broke out between Pakistan and India as a result of which East Pakistan fell to India and a new country, namely, Bangladesh emerged. As a consequence of this, Hotel Intercontinental, Dacca, was completely abandoned by the petitioner as it was not possible for the latter to either manage or retain: t tie: ownership of the same.

3. On 28th February, 1972, the President of Bangladesh passer President's Order No. 16 of 1972, namely, the Bangladesh Abandoned Property (Control, Management and Disposal) Order, 1972, section 4 of which provided, that on the commencement of the said order all abandoned property in Bangladesh shall vest in the Government of that country" and shall be administered, controlled, managed and disposed of, by transfer or otherwise in accordance with the provisions of the said order. Thereafter, under the provisions of the said Order, Hotel Intercontinental Dacca, became "abandoned property" and vested in the Government of Bangladesh The written down value of the petitioner's assets in the said hotel at that time, which comprised of building, plant, machinery and furniture amounted to Rs.4,33,44,772.

4. In the accounting year 1973, that is to say, the income‑trig: year 1974‑75, the petitioner filed income‑tax return, claiming deductions on account of losses incurred .due to the said take over of Hotel Intercontinental, Dacca, under section 10(2)(vii) of the Income‑‑tax Act; 1922, but the same were, however, disallowed by the income‑tax Officer as not admissible in law vide order, dated 30‑6‑1977.

5. An appeal was then preferred by the petitioner against the said order but the same was also rejected vide order, dated 19‑12‑1978. Thereafter, the petitioner filed revision before the respondent which was also rejected by order, dated 10‑5-1979, holding that the deduction claimed by the petitioner was not a revenue loss but a capital loss. Under such circumstance, the instant petition was filed. 6 We have, heard Mr. Nasim Ahmed Khan, learned counsel for the petitioner and Mr. Shaikh Haider, learned counsel for the respondent.

7. The Contention of Mr. Nasim Ahmed ‑has been that since the assets in ‑question were taken over by the Government of Bangladesh kinder the said "residential Order, the same would be deemed to have been "discarded" by the petitioner in Dacca and as such, by virtue of section 10 (2)(vii) of the Income‑tax Act, 1922, deductions on account of loss of such assets, comprising of building, machinery and plant would be admissible. It was however, conceded by the learned counsel that furniture does not fall within the purview of clause (vii). In order to appreciate the argument raised by the learned counsel, it would be advantageous to reproduce the relevant provisions of section 10 which inter alia provide as follows. "10(1)‑‑ Subject to the provisions of this Act, the tax shall be payable by an assessee under the head "Profits and gains of business, profession or vocation" in respect of the profits or gains of any business, profession or vocation carried on by him. (2)‑‑ Subject to the provisions of this Act, such profits or gains shall be computed after making the following allowances, namely:‑ (vii) in respect of any such buildings, machinery or plant which has been sold, transferred by way of exchange, or is compulsorily acquired by a competent authority under any law for the time being in force, or discarded or demolished or destroyed in the previous year, the amount by which the written dawn value thereof exceeds the amount for which the buildings, machinery or plant is actually sold, transferred or compulsorily acquired, as the case may be or its scrap value.

8. The argument of Mr. Shaikh Haider, learned counsel .for the respondent, however, was that the loss incurred by the petitioner in East Pakistan was a capital loss which could be adjusted only against capital gains, and as such, the petitioner was not entitled to claim any adjustment in respect of t‑he assets in question.

9. As far as the argument of Mr. Shaikh Haider, is concerned, the same cannot be accepted as clause (vii) of section 16(2) of the Income‑tax Act clearly allows certain deductions in respect of buildings, machinery or plant which have been sold, transferred acquired discarded, demolished or destroyed as admissible and the language of clause (vii) nowhere suggests that such deductions are admissible only against capitals gains: However, in Liquidators of Pursa Limited v. Commissioner of Income‑tax, Bihar A I R 1954 S C 253 it was held that buildings, machinery or plant referred to in clause (vii) of section 10(2) should be such as have been used for the purpose of enabling the owner to carry on the business and earn profits in the business. But since it is not the case of the respondent that building, machinery and plant in respect of which deductions are now being claimed by the petitioner were not being used by the latter for the purpose of its business, and the case of the petitioner is that such assets were "discarded" by it in Dacca, the objection taken by Mr. Shaikh Haider is devoid of force,

10. Adverting to the argument of Mr. Nasim Ahmed, the learned counsel has referred to the dictionary meaning of the term 'discard' as the said term has not been defined anywhere in the income‑tax Act. According to Chamber's 20th Century Dictionary, New Edition, the term 'discard' when used as verb intransitive; means "'to throw away, to cast off; to discharge; or to reject." When used as a noun, the said term means, "the act of discarding; discharge; dismissal or abandonment". According to the Concise Oxford Dictionary, the said term means, "cast aside; give up, throw out or reject." According to Mr. Nasim Ahmed, however, this word is synonymous with 'abandon' and, therefore, he has also referred to the meaning of the term 'abandon' as found in different dictionaries. According to Black's Law Dictionary, fourth Edition, the term 'abandon' means 'to desert, surrender, forsake, or cede. To relinquish or give, up with intent of never again resuming one's right or interest. To give up or to cease to‑ use to give up absolutely to forsake entirely; to renounce utterly; to desert. In Legal Thesaurus by Willian C. Burton,, the said term has been defined to mean, as "to abdicate, lack down, back off, back out, forsake

pull out, quit

renege, retire; retract, retreat, stand aside, tender one's resignation, vacate office".

11. However, in our view, since the word used in clause (vii) of section 10(2) is "discarded" and not "abandoned" it is the interpretation of the word 'discard' which clinches the issue. Considering the context in which‑it has been used, the said term, in our opinion; means to cast off or to reject, which involves some volition, moreover, this word has been used in clause (vii) in company of other words such as sold, transferred, acquired, demolished or destroyed, which with the exception of the word 'destroyed' denote some intentional act. Even apart from that, a plain reading of clause (vii) of section 10(2) itself shows that the proceeds of sale transfer, exchange, etc., of any building, machinery or 'plant, sold, transferred, exchanged acquired, discarded, demolished, or destroyed, or its scrap value, are to be adjusted against its written down value. That further shows that the Legislature clearly contemplated that `the property sold, transferred, exchange, discarded, etc. would fetch some value which could be adjusted against its written down value. Mr. Nasim Ahmed, however, contended that such an interpretation may lead to absurdity as he referred, by way of example to a case, where the assessee's assets may be completely destroyed, without there remaining any scrap value, in respect thereof. The counsel argued that the assessee would be entitled to claim deductions under clause (vii) even in such a case. It is true that such an eventuality can occur, but any discussion on the point would be purely academic, as such a case is not before us, at present. However, we are clearly of the view that the term "discard" in the context it has been used, cannot be given the same meaning as canvassed by Mr. Nasim.

12. Turning to the facts of the instant case, admittedly the petitioner abandoned its assets in Hotel Intercontinental, Dacca, owing to happenings over which it had no control. It is the case of the petitioner itself that due to breaking out of war between Pakistan and India and the events, which followed thereafter, the petitioner was compelled to abandon the said Hotel with all its assets and equipment as it was not possible for it either to retain the ownership of or manage the same. The abandonment of Hotel and assets was, therefore, clearly due to reasons over which the petitioner had no control whatsoever. Such abandonment of assets by the petitioner, cannot be construed as their discarding and as such, the same cannot fall within the purview of clause (vii) of section 10(2) of the Income‑tax Act so as to entitle the petitioner to claim deductions as aforesaid. It is, therefore, clear that the petitioner did not discard its assets in Dacca within the meaning of clause (vii) of section 10(2) and as such it is not entitled to claim; any deductions thereunder.

13. We therefore, find no force in this petition and the same is dismissed. However owing to the circumstances of the case and nature of the points raised the parties are left, to bear their awn costs. M. B. A. Petition dismissed.