# C.I.T. ANDHRA PRADESH v. M/S TAJ MAHAL HOTEL, SECUNDERABAD August 12, 1971

- **Citation:** [1972] 1 S.C.R. 168
- **Court:** Supreme Court of India
- **Decided:** 1971-08-12
- **Case number:** Civil Appeal No. 1368 of 1968
- **Bench:** K. s. HEGDE, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/c-i-t-andhra-pradesh-v-m-s-taj-mahal-hotel-secunderabad-august-12-1971-5340
- **Pages:** 7

## Headnote

Income-tax Act (I I of 1922) s. 10(2) (vi) and (vi-b)-'Plant',
meaning of
During the assessment year 1960-61, the assessee, a registered firm
running hotels,
incurred expenditure in installing sanhary and pipeline fittings in its hotels. On the question whether such fittings in a
building run as a hotel fell within the meaning of the word 'plant'
in s. 10(2)(vi-b) of the Income-tax Act, 1922, and the assessee was
therefore entitled to development rebate under that sub-section, the
High Court, in reference, answered in favour of the assessee.
Dismissing the appeal to this Court,
HELD: (I) Apart from the dictionary or literal meaning of the
word 'plant', the context of the provisions of the Act shows that sanitary
and pipe line fittings are 'plant' under s. 10(2)(vi-b) read with s. 10(5).
[173H; 174A-B]
Jn computing the profits and gains of a business under s. 10(1) o
the Act allowances by way of depreciation in respect of 'plant' under
s. 10(2)(vi) and by way of development rebate in respect of 'plant' under
s. 10(2)(vi-b) have to be made. Under s. 10(5), 'plant' includes vehicles,
books, scientific apparatus and surgical equipment purchased for the
purpose of the business profession or vocation. Where a word is not
defined in a statute, it must be construed in its popular sense, that is,
that sense which people conversant with the subject-matter with which
the statute is dealing,
would attribute to it. The word 'includes' is
generally used to enlarge the meaning of words or phrases used in the
statute so that, words and phrases may be construed as comprehending
not only such things as they signify according to their nature and import,
but also these thingl; which the interpretation clause declares that tlley
shall include. The fact that even books have been included in 'plant'
shows that the meaning given to 'plant' is wide. It should cover sanitary
and pipe-line fittings.
[170E-H; 171E-H, 173F]
To have such fittings in a bath room is one of the essential amenities
or conveniences which are normally provided in any good hotel, and
. the hotelier can reasonably expect to get more custom and earn a larger
profit by charging higher rates. Therefore, the fittings in the present
case, were not merely a part of the setting in which the hotel business was
being carried on, but were required for the purpose of the hotel business.
[173C-G]
C.l.T., U.P. v. Indian Turpentine and Rosin Co. Ltd., (1970) 75 I.T.R.
533, approved.
Jarrold (Inspector of Taxes) v. John Good & Sons Ltd., (1963) I
W.L.R. 214, applied.
A
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D
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H
'
A
B
C.I.T. V. TAJ MAHAL HOTEL (Grover, J.)
169
J. Lyons Co. Ltd. v. Attorney General, [ 1944] l Ch. 281 and Yar
mouth v. France, [1887] 19 Q.B. 647, referred to.
(2) The fact that the assessee while claiming depreciation allowance
had inc:uded the fittings in question under the head ··furniture and fittings'
and claim~d higher depreciation allowance than what would be applicable
to 'plant', would not detract from the meaning of the word 'plant' in
" l0(2)(vi-b). [174C-E]

## Text

168
C.I.T. ANDHRA PRADESH
v.
M/S TAJ MAHAL HOTEL, SECUNDERABAD
August 12, 1971,
[K. s. HEGDE AND A. N. GROVER, JJ.]
Income-tax Act (I I of 1922) s. 10(2) (vi) and (vi-b)-'Plant',
meaning of
During the assessment year 1960-61, the assessee, a registered firm
running hotels,
incurred expenditure in installing sanhary and pipeline fittings in its hotels. On the question whether such fittings in a
building run as a hotel fell within the meaning of the word 'plant'
in s. 10(2)(vi-b) of the Income-tax Act, 1922, and the assessee was
therefore entitled to development rebate under that sub-section, the
High Court, in reference, answered in favour of the assessee.
Dismissing the appeal to this Court,
HELD: (I) Apart from the dictionary or literal meaning of the
word 'plant', the context of the provisions of the Act shows that sanitary
and pipe line fittings are 'plant' under s. 10(2)(vi-b) read with s. 10(5).
[173H; 174A-B]
Jn computing the profits and gains of a business under s. 10(1) o
the Act allowances by way of depreciation in respect of 'plant' under
s. 10(2)(vi) and by way of development rebate in respect of 'plant' under
s. 10(2)(vi-b) have to be made. Under s. 10(5), 'plant' includes vehicles,
books, scientific apparatus and surgical equipment purchased for the
purpose of the business profession or vocation. Where a word is not
defined in a statute, it must be construed in its popular sense, that is,
that sense which people conversant with the subject-matter with which
the statute is dealing,
would attribute to it. The word 'includes' is
generally used to enlarge the meaning of words or phrases used in the
statute so that, words and phrases may be construed as comprehending
not only such things as they signify according to their nature and import,
but also these thingl; which the interpretation clause declares that tlley
shall include. The fact that even books have been included in 'plant'
shows that the meaning given to 'plant' is wide. It should cover sanitary
and pipe-line fittings.
[170E-H; 171E-H, 173F]
To have such fittings in a bath room is one of the essential amenities
or conveniences which are normally provided in any good hotel, and
. the hotelier can reasonably expect to get more custom and earn a larger
profit by charging higher rates. Therefore, the fittings in the present
case, were not merely a part of the setting in which the hotel business was
being carried on, but were required for the purpose of the hotel business.
[173C-G]
C.l.T., U.P. v. Indian Turpentine and Rosin Co. Ltd., (1970) 75 I.T.R.
533, approved.
Jarrold (Inspector of Taxes) v. John Good & Sons Ltd., (1963) I
W.L.R. 214, applied.
A
B
c
D
E
F
G
H
'
A
B
C.I.T. V. TAJ MAHAL HOTEL (Grover, J.)
169
J. Lyons Co. Ltd. v. Attorney General, [ 1944] l Ch. 281 and Yar
mouth v. France, [1887] 19 Q.B. 647, referred to.
(2) The fact that the assessee while claiming depreciation allowance
had inc:uded the fittings in question under the head ··furniture and fittings'
and claim~d higher depreciation allowance than what would be applicable
to 'plant', would not detract from the meaning of the word 'plant' in
" l0(2)(vi-b). [174C-E]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1368
of 1968.
Appeal from the judgment and
order dated August
c
I, 1967 of the Andhra Pradesh High Court in Case Referred No. 68 of 1964.
D
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S. T. Desai, J. Ramamurthi, R. N. Sachthey and B. D.
Sharma, for the appellant.
M. Natesan and K. Jayaram, for the respondent.
The Judgment of the Court was delivered by
Grover, J.--This is an appeal by certificate from the
judgment of the Andhra Pradesh High Court in a case
referred under s. 66(1) of the Income Tax Act, 1922 (hereinafter referred to as the Act).
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. 14,629/-. 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. I 0(2)(vi) or for development rebate
under s. 10(2)(vi-b). Accordingly, it was held that tl1e
sanitary and pipe-line fittings did not fall within the meaning
of the word "plant". On being moved under s. 66(1) of
170
SUPREME COURT REPORTS
[1972] 1 S.C.lt
the Act, the following question was referred for the opinion
A
of the High Court :-·
"Whether the sanitary fittings and pipelines,
installed in the King Kothi branch of the
Hotel, constituted 'plant' within the meaning
of sec. 10( 5) of the Indian Income-tax Act
and whether the assessee is entitled to development rebate in respect thereof under sec.
10(2) of the Act ?"
B
The High Court answered the question in the affirmac
tive and in favour of the assessee.
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" o
in section I0(2)(vi-b) of the Act.
Section 10(1) of the Act provides that tax shall be
payable by an assessee in respect of the profits and gains
-0f any business profession or vocation.
Sub-section (2)
gives the allowances which have to be made in computation
E
-0f such profits and gains. Clause (vi) of that sub-section
relates to the depreciation in respect of "such buildings,
machinery, plant or furniture being the property of the
.assessee".
Clause (vi-b) of s. 10(2) is as follows:-
F
"(vi-b) in respect of a new ship acquired or
new machinery or plant installed after the 31st
day of March, 1954, which is wholly used for
the purposes of that business carried on by
the assessee, a sum by way of development
G
rebate in respect of the year of acquisition of
the ship or of the installation of the machinery
I
. 1
,,
or p ant, eqmva ent to, ....... .
Section 10(5) provides inter alia that in sub-section (2)
"plant" includes "vehicles, books, scientific apparatus
H
and surgical equipment purchased for the purpose of the
business, profession or
vocation".
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C.I.T. V, TAJ MAHAL HOTEL (Grover,!.)
171
The main agrument of the learned counsel for the
Commissioner of Income Tax who is the appellant is
that the word "plant" should not have been given a wide
meaning and should have been interpreted according to
the common understanding in commercial circles among
persons who deal in plant and machinery. It is asserted
that the development rebate cannot be claimed in respect
of the items which have become a part of the building
itself. It has also been pointed out that the assessee
while claiming depreciation allowance has included the
assets in question under the hf;ad "furniture and fittings"
the rate claimed being 9 per cent which was duly allowed
by the Income Tax Officer. This rate of 9 per cent was
applicable under Rule 8 only
to furniture and fittings
used in hotels etc. If the assets were to be treated as
plant, only the general rate of 7 per cent would be applicable.
The definition of "plant" must necessarily, therefore, be
the same whether it be for claiming_ depreciation under
s. 10(2)(vi) or for development rebate under s. 10(2)(vi-b).
It has also been suggested that the primary meaning of
the word "plant" has connection with mechanical or industrial business or manufacture of finished goods from raw
goods and that sanitary and pipe-line fittings could not
possibly satisfy those conditions.
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 thmgs which
the interpretation clause declares that they shall mclude.
The word "include" is also susceptible of other constructions which it is unnecessary to go into.
172
SUPREME COURT REPORTS
(1972] l S.C.R.
The case-]. Lyons and Company Limited v. Attorney
General (1) relied upon by the learned counsel for the
appellant apart from being distinguishable hardly supports
the contention of the appellant. In that case, it was held
that electric lamps and fittings in a tea shop were not part
A
of the apparatus used for carrying on the business but
8
were part of the setting in which the business was carried
on, and, therefore, were not "plant", within the meaning
of certain provisions of the War Damage Act, 1943. It
was observed at page 286 "if these articles are plant, it
can only be by reason. that they are found on premises
exclusively devoted to trade purposes.
Trade plant alone c
need be considered". The meaning of "plant" as given
in Yarmouth v. France (2)was accepted as correct. According
to that meaning "plant" includes whatever apparatus or
instruments are used by a businessman in carrying on
his business".
In our judgment, the more apposite decision is that of the Court of Appeal in Jarrold (Inspector
D
of Taxes) v. John Good & Sons Ltd. (3) There the nature of
the assessee's business required that its office accommodation
should
be capable of sub-division into a number
of rooms varying in size etc. according to the requirements
from time to time of the agencies which it carried on.
E
The office accommodation consisted of a large open floor
space in which partitions could be erected so as to subdivide the 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 of number of the rooms.
The question was whether these partitions were plant within
F
sections 279 and 280 cf the Engfoh Inccme 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
G
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 company's trade or
business.
Donovan, L.J. held that the partitions were
used to enable the trader to cope with the vicissitudes of
(I) [194 'i (I) Ch. 281.
(2) [1887] (19) Q. B. 647.
(3) [1963] (I) W.L.R. 214.
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C.I.T. v. TAJ MAHAL HOTEL (Grover;/.)
173
the bnsiness as ,it increased and diminished and relied
on the finding of the commissionets 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 ef a
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 softe.ning installations".
It cannot be denied that the business of 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 Jarrold's case (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 hotlier .. He can reasonably expect to, get more
custom, 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(2)(vi-b) read with Section 10(5)
when it is quite clear that the intention·Of the Legislature
was to give it a wide meaning and that is why, articles
like books and surgical instruments were expressly included in the definition of "plant". In decided cases,
the High Courts have rightly understood the meaning of
the term "plant" in a wide sense. (See Commissioner of
Income-tax, U.P. v. Indian Turpentine a~d Rosin Co. Ltd.). (1)
If the dictionary meaning of the word "plant" were
to be taken into consideration on the principle that the
literal construction of a statue 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 Webster's Third New International Dictionary:-
(!) [1970] (75) l.T.R. 533.
17 4
SUPREME COURT REPORTS
(1972] l S.C.R.
"Land, buildings, machinery, apparatus and
fixtures employed in carrying on trade or other
industrial business .... "
A
It is, l.owever, unnecessary to dwell more on the
dictionary meaning because looking to the provisions of
Act, we are satisfied that the assets in question were reB
quired by the nature of the hotel business which the assessee
was carrying on. They were not merely a part of the
setting in which hotel business was being carried on.
The High Court was right in not accepting the reasoning of the Tribunal based on the rates relating to depreciac
tion 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 Rule 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
D
the Act or whittle down its effect. If the assessee had claimed higher depreciation allowance that would not detract
from the llleaning of the word plant in clause (vi-b) of
s. 10(2).
In the result, this appeal fails and it is dismissed with
E
costs.
V.P.S.
Appeal Dismissed.