Commissioner of Income TaxChennai v. M/s.Chemplast Sanmar Ltd.,9, Cathedral Road, Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 05.06.2007CORAMTHE HON'BLE MR.JUSTICE P.D.DINAKARANANDTHE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJAT.C.(A)No.407 of 2007Commissioner of Income TaxChennai...Appellant -vs-M/s.Chemplast Sanmar Ltd.,9, Cathedral Road, Chennai...Respondent Appeal under Section 260A of the Income Tax Act, 1961 against theorder of the Income Tax Appellate Tribunal, Madras 'A' Bench dated13.10.2006 in ITA No.2343/Mds/2004 for the assessment year 1996-97against the order of the Commissioner of Income Tax(A)III Chennai dated23/7/04 in ITA.No.96/2002-03/A-III against the Assesment order of theDeputy Commissioner of Income Tax Company Circle I (3) Chennai dated21/3/02 in PAN/GIR No.AAACC3000F respectively.For Appellant :Mr.J.NarayanaswamyJ U D G M E N T(Delivered by P.D. DINAKARAN, J.)The revenue has preferred the above tax case appeal against the orderof the Income Tax Appellate Tribunal, Madras 'A' Bench dated 13.10.2006 inITA No.2343/Mds/2004, raising the substantial question of law as towhether the Tribunal was right in allowing depreciation on "ChlorineContainers" claimed by the assessee at 100% wherein the rule specificallystates that 100% depreciation is available only on "Gas cylindersincluding valves and regulators", under the following facts andcircumstances of the case.2. The relevant assessment year is 1996-97. The assessee company isengaged in the manufacture and sale of chemicals. Even though theassessment for the year 1996-97 was completed on 18.3.1999, the same wasre-opened by issuing notice under section 148 of the Income-tax Act. https://hcservices.ecourts.gov.in/hcservices/ During the re-assessment, the Assessing Officer disallowed thedepreciation on Chlorine containers claimed by the assessee at 100% andtreated these containers as normal plant and machinery and alloweddepreciation only at 25%, while the assessee claimed 100% depreciationplacing reliance on Item III (3) (v) of Appendix-I read with Rule 5 of theIncome-tax Rules, relating to the rates at which depreciation isadmissible, which reads as hereunder:-APPENDIX I(See rule 5)TABLE OF RATES AT WHICH DEPRECIATION IS ADMISSIBLE-----------------------------------------------------Block of assetsDepreciation allowance as percentage ofwritten down value-----------------------------------------------------PART ATANGIBLE ASSETSI.BUILDINGS...II.FURNITURE AND FITTINGS...III.MACHINERY AND PLANT(1) ...(2) ...(3)(i) ... (ii) ... (iii) ... (iv) ... (v) Gas cylinders including valves and regulators 100....-----------------------------------------------------3. Concededly, the gas cylinders for which the assessee seeks 100%depreciation is a tangible asset, which comes under the list of assets inCategory A. But, what is agitated by the Revenue is that the gascylinders, for which depreciation is claimed by the assessee is onlymachinery and plant, which do not fall under 3(v) as the asset in questionis only a container and not a gas cylinder. On the other hand, it is thecase of the assessee that the asset in question for which 100%depreciation is claimed is nothing but a gas cylinder including valves and https://hcservices.ecourts.gov.in/hcservices/ regulators, for which 100% depreciation is allowable. Rejecting thecontention of the assessee, the Assessing Officer allowed depreciationonly at 25% treating the asset in question as a normal machinery and plantand not as a gas cylinder including valves and regulators, by hisassessment order dated 21.3.2002.4. Against which, the assessee preferred an appeal before theCommissioner of Income-tax (Appeals), who by order dated 23.7.2004confirmed the order of the assessing officer, which necessitated theassessee to prefer a further appeal before the Income-tax AppellateTribunal, which, following a decision of the Delhi High Court inCommissioner of Income-tax vs. Goyal MG Gases Ltd., reported in (2006) 201CTR 342, allowed the appeal and granted 100% depreciation. Hence, theabove appeal.5. Concededly, there is no dispute with regard to the followingmaterial facts:-(i)that the assessee is a manufacturer and seller of chemicals;(ii)that the assessee claimed depreciation of 100% for thelarger containers for transporting chlorine, a gas, underthe category of gas cylinders including valves andregulators; and(iii)that the asset in question has valves and regulators.6. The case of the Revenue is that the gas cylinders including valvesand regulators, which are entitled to 100% depreciation as tangible assetunder Part-A Item III (3)(v) read with Rule 5 of the Income-tax Rules,shall not include the containers, which are larger in size. But,unfortunately we are unable to appreciate the stand taken by the Revenue,as Item III (3)(v) of Appendix-I of the Rules is not subject to any otherqualification as to the size of the cylinder. On the other hand, theasset in question is manufactured as a cylinder as specified under the GasCylinder Rules, 2004, whereunder the gas cylinder includes container.Since the asset in question also contains valves and regulators, we do notsee any reason for not considering them as gas cylinders that are entitledto 100% depreciation. In any event, unless the legislature prescribes andimposes any qualification as to the size of the gas cylinders that areentitled to 100% depreciation, even though they possess valves andregulators for their entitlement to 100% depreciation, it may not beproper for this Court to import such qualifications to deny the benefitsconferred under Item III (3)(v) of Appendix-I of the Rules, as it is asettled law that the statute should be read as it is without distorting ortwisting its language. https://hcservices.ecourts.gov.in/hcservices/

7.1. In a case where the statutory provision is plain andunambiguous, the Court shall not interpret the same in a different manner,only because of harsh consequences arising therefrom; and it is well knownthat the Court can iron out the creases but it cannot change the textureof the fabric, cannot enlarge the scope of legislation or intention whenthe language of the provision is plain and unambiguous, cannot add orsubstract words to a statute or read something into it which is not thereand cannot rewrite or recast legislation, vide NASIRUDDIN v. SITA RAMAGARWAL [2003] 2 SCC 577. 7.2. There should be a literal rule of interpretation of a statute,which is the first and foremost principle of interpretation and where thewords of a statute are absolutely clear and unambiguous, recourse cannotbe had to the principles of interpretation other than the literal rule andeven if the literal interpretation results in hardship or inconvenience,it has to be followed. The language employed in a statute is thedeterminative factor of the legislative event and even assuming there is adefect or any omission in the words used in the legislature, the Courtcannot correct or make up the deficiency, especially when a literalreading thereof produces an intelligible result and any departure from theliteral rule would really be amending the law in the garb ofinterpretation, which is not permissible and which would be destructive ofjudicial discipline, vide RAGHUNATH RAI BAREJA v. PUNJAB NATIONAL BANK[2007] 2 SCC 230.8. The above view of ours is also supported by the decision of theDelhi High Court in Commissioner of Income-tax vs. Goyal MG Gases Ltd.,reported in (2006) 201 CTR 342, which the Appellate Tribunal has reliedupon. In the case before the Delhi High Court, the contention of theassessee therein was that the containers/tankers were nothing but bigcylinders as they had all the attributes of a cylinder, which was rejectedby the Revenue on the ground that since the so-called cylinders weremerely containers and were mounted on trucks, the assessee therein wasentitled to depreciation at the rate of 25 percent as eligible to "plantsand machineries". While deciding the issue whether the item claimed bythe assessee therein is gas cylinders or machinery, the Division Bench hasfound that there is no dispute that the item in question was gas cylinder,though no doubt a big one and that the expression 'gas cylinders' used inAppendix I to the IT Rules does not mention the size of the gas cylindersnor does it say that gas cylinders should be only for cooking purpose orfor any other particular purpose and any interpretation of the expression'gas cylinders' to mean 'cooking gas cylinder', would be really addingwords to the statute which is not permissible. Accordingly, the DivisionBench of the Delhi High Court held that gas cylinders are entitled todepreciation at 100 per cent. https://hcservices.ecourts.gov.in/hcservices/ For all these reasons, we find no substantial question of law thatarises for our consideration in this appeal. Accordingly, the tax caseappeal is dismissed. sraSd/-Asst.Registrar/true copy/ Sub Asst.RegistrarTo1.The Assistant Registrar,Income Tax Appellate TribunalBench "A", Chennai.2.The Secretary, Central Board of Direct Taxes, New Delhi.3.The Commissioner of Income Tax (Appeals), Chennai.4.The Deputy Commissioner of Income-tax, Company Circle-I(3),Chennai.5.The Asst. Registrar, The Income Tax Appeal Tribunal, Rajaji Bhavan, 3rd Floor, Besant Nagar, Madras-600 090.+1 cc to M/s.Pushya Sitaraman, Advocate Sr.No.31669.NSM(co)DCP/14.6.07 T.C.(A).No.407 of 2007