1990 PLP 1345 (SCMR)

NASIM HASAN SHAH, J.‑‑‑The respondent is a public limited company. In respect of the assessment of income‑tax for the assessment year 1957‑58 it claimed depreciation for certain buildings at the rate‑ of 15% under section 10(2)(vi)(a) of the Income‑tax Act on the plea that the case fell within the ambit of sub‑clause (a). The Income‑tax Officer, however, allowed the depreciation at the rate of 10% by his order dated 28‑12‑1963 obviously holding that the case fell within ‑ the ambit of clause (b). However, on appeal by the respondent, the Income‑tax Appellate Tribunal allowed 15% depreciation by its order dated 27‑5‑1969. The Tribunal then at the instance of the petitioner referred the following question to the Lahore High Court under section 66‑D of the Income‑tax Act, namely, "whether on the facts and in the circumstances of the case, the Tribunal was justified in granting depreciation under section 10(2)(a) to buildings not covered by explanation to sub‑clause (aa)?" The High Court answered the question in the affirmative by its judgment dated 31‑3‑1976. This is a petition for special leave to appeal against the said order. Section 10 of the Income‑tax Act deals with profits and gains of business, profession or vocation. Subsection (2) provides for making allowance therein before computing such profits and gains. Subsection (2)(vi) deals with depreciation in respect of the buildings and the rate of depreciation to be allowed in such computation is given in sub‑clauses (a), (aa) and (b) etc. These provisions may be quoted hereunder:‑‑ "(a) In the case of buildings, other than the buildings referred to in sub‑clause (aa) and sub‑clause (b) the erection of which is begun and completed between the 1st day of April, 1946 and the thirtieth day of June, 1975 (both days inclusive), to fifteen per cent. of the cost thereof to the assessee; (aa) In the case of residential buildings for industrial labour, the erection of which is begun and completed between the 1st day of April, 1953 and the thirtieth day of June, 1975 (both days inclusive), to twenty‑five per cent of the cost thereof to the assessee; Explanation.‑‑The expression "residential buildings for industrial labour" means buildings constructed for use as dwelling houses by workmen and other persons, employed on monthly wages not exceeding four hundred rupees, in an industrial undertaking falling under any of the clauses specified in clauses (a) to (e) of subsection (2) of section 15‑B; (b) In the case of other building, to 10 per cent of the cost thereof to the assessee; The High Court observed that the first sub‑clause is applicable to such buildings as have been completed within the period mentioned in that sub‑clause and are not covered by sub‑clause (aa) and sub‑clause (b). The nature or use to which such buildings are put are alien to sub‑clause (a) as no reference has been made to either of the aforesaid matters in this sub‑clause. Such buildings are entitled to a rebate of 15% of the costs. Sub‑clause (aa) deals with such buildings which are used for the purpose of residence but only by industrial labour and which have been constructed between the dates mentioned in that sub‑clause. Sub‑clause (b) is attracted to all other buildings i.e. all buildings which do not fall within the four corners of those described in sub‑clause (a) and sub‑clause (aa). It was held that the present case relates admittedly to buildings which were constructed between the 1st of April, 1946 and the 30th of June, 1975 and were not meant for housing industrial labour and therefore were neither covered by sub‑clause (aa) and sub‑clause (b). Hence depreciation at 15% was rightly allowed. Sh. Abdul Haque, learned counsel for the petitioner has contended before us that the learned Judges failed to appreciate the scheme of clause (vi) of sub‑clause (2) of section 10 of the Income‑tax Act and that under the scheme of clause (vi) the present case fell within the ambit of sub‑clause (b) and depreciation at the rate of 10% only was admissible‑ According to him after insertion of sub‑clause (aa) by Act I of 1954 residential buildings were classified in sub‑clauses (a) and (aa) while non‑residential buildings were classified in sub‑clause (b). We regret we cannot accept this interpretation as the language of the' provisions is perfectly clear and it follows therefrom that if a building was constructed between the 1st of April, 1946 and the 30th of June, 1975 and was not meant for housing industrial labour it would fall Within the ambit of sub clause (a). This petition has, therefore, no force which is dismissed hereby. AA./C‑59/S Petition dismissed.