Case: C.I.T. Andhra Pradesh Vs. M/S Taj Mahal Hotel, Secunderabad

2. The respondent who is the assessee is a registered firm running a hotel at Secunderabad with branches at Sultan Bazar and King Kothi in Hyderabad. During the previous year ending 30th September, 1959 relating to the assessment year 1960-61, the assessee incurred an expenditure of Rs. 57,154/- in installing sanitary fittings and of Rs. 1,370/- for pipe-line fittings. The assessee claimed development rebate on these two items at the rate of 25 per cent under S. 10 (2) (vi-b) of the Act amounting in the aggregate to Rs. 14,639/-. The Income Tax Officer disallowed the claim. On appeal, the Appellate Assistant Commissioner upheld the disallowance. An appeal was taken to the Appellate Tribunal. The Tribunal rejected the appeal holding that the definition of "plant" must necessarily be the same, whether it was for claiming depreciation under S. 10 (2) x(vi) or for development rebate under S. 10 (2) (vi-b). Accordingly, it was held that the sanitary and pipe-line fittings did not fall within the meaning of the word "plant". On being moved under S. 66 (1) of the Act, the following question was referred for the opinion of the Highthe sanitary fitting and pipelines, installed in the King Kothi branch of the Hotel, constituted plant within the meaning of S. 10 (5), of the Indian Income-tax Act and whether the assessee is entitled to development rebate in respect thereof under S. 10 (2) of theTribunal answered the question in the affirmative and in favour of the assessee.3. The only question that was argued before the High Court and which has been debated before us is whether sanitary and pipe-line fittings in a building which is run as a hotel would fall within the meaning of the word "plant" in section 10 (2) (vi-b) of the Act.

Reasoning: 6. Now it is well settled that where the definition of a word has not been given, it must be construed in its popular sense if it is a word of every day use. Popular sense means "that sense which people conversant with the subject matter with which the statute is dealing, would attribute to it". In the present case, S. 10 (5) enlarges the definition of the word "plant" by including in it the words which have already been mentioned before. The very fact that even books have been included shows that the meaning intended to be given to "plant" is wide. The word "includes" is often used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the "statute". When it is so used, these words and phrases must be construed as comprehending not only such things as they signify according to their nature and import but also those things which the interpretation clause declares that they shall include. The word "include" is also susceptible of other constructions which it is unnecessary to go into.If the dictionary meaning of the word "plant" were to be taken into consideration on the principle that the literal construction of a statute must be adhered to unless the context renders it plain that such a construction cannot be put on the words in question - this is what is stated in Websters Third New Internationalbuildings, machinery, apparatus and fixtures employed in carrying on trade or other industrial business. . .It is, however, unnecessary to dwell more on the dictionary meaning because looking to the provisions of Act, we are satisfied that the assets in question were required by the nature of the hostel business which the assessee was carrying on. They were not merely a part of the setting in which hotel business was being carried on.11. The High Court was right in not accepting the reasoning of the Tribunal based on the rates relating to depreciation under S. 10 (2 (vi) and the assessee having claimed that the sanitary and pipe-line fittings fell within the meaning of "furniture and fittings" in R. 8 (2) of the Rules. It has been rightly observed that the Rules were meant only for the purpose of carrying out the provisions of the Act and they could not take away what was conferred by the Act or whittle down its effect. If the assessee had claimed higher depreciation allowance that would not detract from the meaning of the word "plant" in the clause (vi-b) of S. 10our judgment, the more apposite decision is that of the Court of Appeal in Jarrold(Inspector of Taxes) v. John Good and Sons Ltd. (1963) 1 WLR214. There the nature of the assessees business required that its office accommodation should be capable ofinto a number of rooms varying in size etc. according to the requirements from time to time of the agencies which it carried on. The office accommodation consisted of a large open floor space in which partitions could be erected so as tothe floor space into a number of rooms of any size. Certain partitions were made which were screwed to the floor and ceiling only and could be easily moved if it was desired to alter the size or number of the rooms. The question was whether these partitions were plant within sections 279 and 280 of the English Income Tax Act, 1952, so as to entitle the company to allowances under those sections. There the material words in the statute were "where the person carrying on a trade in any year of assessment has incurred expenditure on the provision of machinery or plant for the purposes of the trade". It was held that the partitions were "plant" as they were used in the carrying out of the companys trade or business. Donovan, L. J. held that the partitions were used to enable the trader to cope with the vicissitudes of the business as it increased and diminished and relied on the finding of the commissioners that the flexibility of accommodation which the partitions provided was a commercial necessity for the company. Further illustrations were given of assets which would fall within the meaning of "plant". "The heating installation of building may be passive in the sense that it involves no moving machinery, but few would deny it the name of "plant". The same thing could, no doubt be said of many air conditioning and water softening installations."8. It cannot be denied that the business of a hotelier is carried on by adapting a building or premises in a suitable way to be used as a residential hotel where visitors come and stay and where there is arrangement for meals and other amenities are provided for their comfort and convenience. To have sanitary fittings etc. in a bath room is one of the essential amenities or conveniences which are normally provided in any good hotel, in the present times. If the partitions in Jarrolds case, (1963) 1 WLR 214 (supra) could be treated as having been used for the purpose of the business of the trader, it is incomprehensible how sanitary fittings can be said to have no connection with the business of the hotelier. He can reasonably expect to get more customers and earn larger profit by charging higher rates for the use of rooms if the bath rooms have sanitary fittings and similar amenities. We are unable to see how the sanitary fittings in the bath rooms in a hotel will not be "plant" within S. 10 (vi) (b) read with S. 10 (5),when it is quite clear that the intention of the Legislature was to give a wide meaning and that is why articles like books and surgical instruments were expressly included in the definition of "plant". In decide cases, the High Courts have rightly understood the meaning of the term "plant" in a wide sense. (See. Commr. ofU. P. v. Indian Turpentine and Rosin Co. Ltd. (1970) 75 ITR 533 (All))  .