Case No: Civil Appeal No. 14 of 1974
Judge: Kemaluddin Hossain,
Court: Appellate Division ,,
Advocate: Abdul Wadud Chowdhury,Syed Muzaffar Hossain,,
Citation: 28 DLR (AD) (1976) 14
Case Year: 1976
Appellant: Commissioner of Income Tax
Respondent: M/s. Gulistan Cinema Co.
Subject: Constitutional Law,
Delivery Date: 1975-18-11
Syed A. B. Mahmud Hussain CJ
Ahsanuddin Choudhury J
Kemaluddin Hossain J
Debesh Chandra Bhattacharya J.
The Commissioner of Income Tax, Dacca Zone
M/s. Gulistan Cinema Co.
17th & 18th November, 1975
Constitution of Pakistan, 1962
An analysis of Article 58 of the 1962 Constitution of Pakistan shows that in cases covered by clause (2) an appeal lies to the Supreme Court as of right. Clause (1) no doubt confers jurisdiction on the Supreme Court to hear appeals from any judgment, decree, order or sentence of the High Court.
Cases Referred to:
The Commissioner of Income-Tax East Pakistan Dacca Vs. Messrs. Haji Gaffar Haji Habib Janoo 38 of 1959 dated 7th April, 1964; Tata Iron Steel Co. Ltd., Vs. Chief Revenue Authority, Bombay, 50 Indian Appeals 212; Commissioner of Income-Tax Vs. Arunachalm Chettiar, 1953 (23) I.T.R. 180; Sri Mahant Harirar Gfr Vs. Commissioner of Income Tax Bihar and Orissa, 1941 (9) I.T.R. 246; Ramnath Ram Prasad Vs. Commissioner of Income-Tax U. P. 1964 (54) I.T.R. 777; Jamnadas Prabhudas, Bombay Vs. Commissioner of Income-Tax Bombay City, 1952 (22) I.T.R. 150; Chandi Prasad Chokhani Vs. State of Bihar, 1961 (43) I.T.R. 498; Provincial Library Vs. Commissioner of Income-tax East Pakistan, PLD 1958 (S.C.) 81; Harjina & Co. (Pak) Ltd., Karachi Vs. Commissioner of Income Tax (Central) P.L.D. 1963 Karachi, 996.
Abdul Wadud Chowdhury, Sr. Advocate, instructed by Mr. A. M. Khan Chowdhury, Advocate-on -Record—For the Appellant.
Syed Muzaffar Hossain, Advocate instructed by Mr. M. R. Khan, Advocate-on Record—For the Respondent.
Civil Appeal No. 14 of 1974
(From the Judgment and Order dated 7. 2. 68 passed by the Dacca High Court in Reference Case No. 3 of 1967).
1. This is an appeal on special leave obtained by the Commissioner of Income Tax, Dacca from the judgment of the High Court, Dacca passed on reference under section 66(2) of the Income-Tax Act.
2. The assessee Gulistan Cinema Co., Dacca, an unregistered firm of exhibitor of Cinema films submitted the return of income of their business for the assessment year 1960-61. They claimed deductions under section 10(2) of the Act, a sum of Rs. 34,000/- on account of the costs of repairs. The Income-Tax Officer disallowed a sum of Rs. 20,803/- spent on oil painting of walls and Mosaic flooring-of the Cinema Hall, considering them to be capital expenditure.
3. On appeal, the Assistant Commissioner held that of the amount of Rs. 20,803/- a sum of Rs. 9,240/- was spent for oil painting the walls of the Hall, and in his view the work could be -termed current repairs, and allowed deduction of the said amount. He disallowed the sum of Rs. 11,563/- now in dispute, spent on mosaic flooring on the ground that it was an expenditure of capital nature. On further appeal by the assessee, it was allowed by the Tribunal holding that the amount came within the expression 'current repairs' as contemplated in section 10(2)(v) of the Act. The Tribunal also observed that this deduction would be allowable under section 10(2) (xvi) of the Act.
4. The Commissioner of Income-Tax, was however, dissatisfied with the order of the Tribunal and prayed for a reference to the High Court Dacca but prayer was rejected by the Tribunal. The Commissioner then moved the High Court under s. 66(2) of the Act and obtained an order to that effect and the High Court after framing the question direction-for a reference of the question on stating facts by the Tribunal.
5. The High Court directed the Tribunal to refer the following question for answer by the High Court and it was so done —
6. Before the High Court the Assessee challenged the formulation of the question but it was overruled. The High Court then proceeded to answer the question. Referring to relevant provisions of the Income-Tax-Act and the certain rulings answered the question, holding that the Tribunal was right in deleting the disallowance of Rs. 1l,563/- and was right in allowing deduction under s. 10(2) (v) and refrained from expressing any opinion on S. 10(2) (vi) of the Act.
7. The appellant obtained Special leave against the judgment of the High Court to consider whether the Assessee can claim deduction of Rs. 11,563/- for conversion of white cement flooring into mosaic flooring under 'current repairs' of the building in respect of which it is a tenant u/s. 10(2) (ii) only, and also under section 10(2)(v) of the Income-Tax Act.
8. Mr. Hossain for the Assessee respondent has raised two preliminary question as to the competency of the appeal. The first is that no appeal lies under Article 58 of the Constitution of 1962 inasmuch as judgment given by the High Court on reference under section 66 of the Income-Tax Act is not a judgment within the meaning of the Article, and the appellant not having obtained a certificate under sub-section (2) of S. 66A of the Act cannot maintain this appeal. He has in support of his contention cited some decisions which will be considered presently. The second question raised by Mr. Hossain is that the Assessee abandoned before the Tribunal the applicability s. 10(2)(ii) of the Income-Tax Act and proceeded only on the basis of 'current repairs' under section 10(2)(v), and so the question as framed and answered by the High Court was incompetent.
9. As regard the second question of Mr. Hossain, it is to be remembered that the same contention was raised before the High Court at the hearing of the reference, and after giving reasons, the High Court overruled the contention. The assessee did not move the Supreme Court and take appropriate leave to urge the point. In this view of the matter, this objection by Mr. Hossain cannot be entertained.
10. Mr. Hossain, of course, has submitted a lengthy argument and has laboured much in support of the first question on the competency of the appeal. The argument of Mr. Hossain will be dealt with presently. Let us look at the relevant provisions of the Constitution of 1962. For our purpose Articles 58, 60 and 255 are material. Article 58 consists of three clauses. Clause (1) says that the Supreme Court, subject to this Article, shall have jurisdiction to hear and determine appeals from judgments decrees, orders or sentences of a High Court. Clause (2) consists of three sub-clauses. Sub-clause (a) says that an appeal shall lie to the Supreme Court, if the High Court certifies that the case involves a substantial question of law as to the interpretation of the Constitution. Sub-clause (b) says that an appeal shall lie to the Supreme Court, if the High Court has sentenced a person to death or transportation for life; Sub-clause (c) provides that an appeal shall lie to the Supreme Court where the High Court has imposed under Article 123 punishment for contempt of Court. Clause (3) says that an appeal to the Supreme Court from a judgment, decree, order or sentence of a High Court not covered by clause (2) shall lie only if the Supreme Court grants leave to appeal.
11. An analysis of this Article shows, that in cases covered by Clause (2) an appeal lies to the Supreme Court as of right. Clause (1) no doubt confers jurisdiction on the Supreme Court to hear appeals from any judgment, decree, order or sentence of a High Court. Clause (2) circumscribes the jurisdiction conferred under clause (1). Clause (3) further defines the mode of exercise of jurisdiction conferred under Clause (1), and not covered by Clause (2). A reading of the Article as a whole indicates that any decision, which includes a judgment, decree, order or sentence of a High Court, not covered by clause (2), can only be challenged in appeal only, if, the Supreme Court grants leave. The conditions for the grant of leave by the Supreme Court under clause (3) are broadly three; there must be (1) judgment, decree, order or sentence; (2) of the High Court, and (3) the grant of leave by the Supreme Court under this clause.
12. What requires some consideration is the word 'judgment' in the Article. The Constitution has not defined the word. There is no qualifying word or words before or after it to control its meaning. The rule of interpretation of the Constitution is same as the interpretation of a statute. It is well established rule of interpretation of statute, that curtailment or abolition of jurisdiction of a Court must be by clear language, and when it affects the jurisdiction of the higher Courts the curtailment or its abolition can only be done or taken away by dear, unambiguous and express negative words. Keeping this statutory rule of interpretation in mind, we are to proceed to consider the language of Article 58 of the Constitution of 1962. A glance at the language of the Article reveals a total lack of any word, expression or language leaning towards the restriction or curtailment of the ordinary meaning of the word 'judgment'. If we look closely at the words immediately following the word, 'judgment', we find they are 'decree, order or sentence'. These three words following the word 'judgment' each carry within itself the sense of collusiveness and/or executability. 'Judgment' in our opinion should convey the same sense, meaning any final or conclusive determination on a question either of law or fact.
13. We now turn to Article 60, along with Article 225. We find that the former says that the Supreme Court shall have such other jurisdiction in addition to the jurisdiction conferred on it by the Constitution as may be conferred on it by law. The Article is enabling one. It gives additional jurisdiction to the Supreme Court, if there be any existing or future law. Article 225 preserves and continues in force all laws in force at the time of the commencement of the Constitution. Income-Tax Act no doubt, was one such existing law. Sub-section (2) of section 66A of the Act does provide a right of appeal to the Supreme Court from a judgment of the High Court delivered on reference under section 66 of the Act, if the High Court certifies it to be a fit one for appeal to the Supreme Court. Article 60 has in clear language preserved this additional jurisdiction of the Supreme Court.
14. Reading the Articles together, it is clear that from a judgment of a High Court passed on reference under section 66 of the Income-Tax Act, an aggrieved party has two remedies open to him. He can under section 66A (2) obtain a certificate of fitness from the High Court for appeal to the Supreme Court, or may obtain leave from the Supreme Court itself. So far as the jurisdiction of the Supreme Court is concerned, it can be exercised under both circumstances. There is no language in the Constitution restricting the exercise of jurisdiction under Article 58 in any manner. It is for the Supreme Court to exercise its jurisdiction according to its own-discretion under Article 58. It is no doubt a well recognised practise of the Supreme Court, from which hardly any deviation is made, that when there is any alternative remedy, the Court is reluctant to grant leave, unless the appellant has exhausted all available remedies. This of course, is a question of method, manner and propriety of the exerciser of its jurisdiction, and not a case of lack of jurisdiction.
15. In this regard our attention has been drawn to a decision of the Dacca High Court given in the cases of the Commissioner of Income-Tax East Pakistan Dacca Vs. Messrs. Haji Gaffar Haji Habib Janoo in Reference Case No. 38 of 1959 dated 7th April, 1964, where it has been held that after coming to operation of the Constitution of 1962, no certificate under section 66A(2) is available, and the party aggrieved is only to seek special leave from the Supreme Court. We do not approve of the view of the High Court so far as it hold that S. 66A (2) is not available for grant of certificate of fitness for appeal to the Supreme Court.
16. We now take the contentions of Mr. Hossain He has referred to a number of decisions to say, that judgment given by the High Court under section 66 of the Income-Tax Act is of advisory nature, and as such, it is not a judgment within the meaning of Article 58, and so no leave could be granted upon such judgment. He has mostly relied on the decision of the Privy Council in the case of Tata Iron Steel Co. Ltd., Vs. Chief Revenue Authority, Bombay, 50 Indian Appeals 212. The other decisions relied on by him are: Commissioner of Income-Tax Vs. Arunachalm Chettiar, 1953 (23) I.T.R. 180; Sri Mahant Harirar Gfr Vs. Commissioner of Income Tax Bihar and Orissa, 1941 (9) I.T.R. 246; Ramnath Ram Prasad Vs. Commissioner of Income-Tax U. P. 1964 (54) I.T.R. 777; Jamnadas Prabhudas, Bombay Vs. Commissioner of Income-Tax Bombay City, 1952 (22) I.T.R. 150; Chandi Prasad Chokhani Vs. State of Bihar, 1961 (43) I.T.R. 498; Provincial Library Vs. Commissioner of Income-tax East Pakistan, PLD 1958 (S.C.) 81; Harjina & Co. (Pak) Ltd., Karachi Vs. Commissioner of Income Tax (Central) P.L.D. 1963 Karachi, 996.
17. We like to deal with Tata's case, as Mr. Hossain has banked his argument mainly relying on this decision. An appeal to Privy Council was sought from the High Court of Bombay from a judgment on reference made under section 51 of the Indian Income-Tax Act, 1918. The question fell for consideration was whether the judgment passed under the said section, was a final judgment under Chapter 39 of the Letters Patent of the Bombay High Court. It is to be remembered that an appeal to the Privy Council under Chapter 39 would lie from any final judgment made on appeal or in the exercise of the original jurisdiction. The Privy Council held that such judgment was advisory and no appeal lay, as it was not a final judgment within the relevant provisions of Letters Patent. We are in full agreement with the view expressed by the Privy Council that a judgment given by the High Court in Income tax reference is not a final judgment passed on appeal in terms of Chapter 39 of Letters Patent of the Bombay High Court. The same language of Letters Patent of the Calcutta High. Court is there. This decision however does not help us. Firstly, we are to interpret the Constitution of an independent country. The constitution is Supreme. It is suijuris. The language of the Constitution is to be interpreted in a manner unhampered and untrammeled by any extraneous language or authority. Secondly, the language of the Article 58 is completely different from those of Letters Patent which was before the Privy Council for interpretation. The distinguishing nature to be remembered is that in Article 58 there is no qualifying words like 'on appeal' or 'final'. This authority therefore does not assist us in interpreting the language of Article 58. We do not find anything in the decision of the Privy Council such militates with the interpretation given by us on this Article. Furthermore, sub-section (5) of section 66 of Income- Tax Act clearly says that the Revenue is bound by the judgment passed by the High Court on reference under this section. There is no scope for interpreting the language of the Act otherwise, when the language is clear and unambiguous.
18. In PLD 1958 (S.C.) 81, Article 58 never came for consideration. The only question before Supreme Court was in regard to a pre-constitution judgment on reference under the Income-tax Act; and it was held that no appeal lies under clause 39 of Letters Patent or under section 109 of the Code of Civil Procedure and that the Supreme Court's Jurisdiction to entertain statutory appeal arising under Income Tax Act is limited to sub-section (2) of S. 66A of the Act. This decision is not at all relevant for our purpose.
19. The other decisions cited by Mr. Hossain need not be referred to in detail, as they all related to the competence of appeal to the Supreme Court of India under Article 133 or Article 136 of the Indian Constitution. Article 133 of the Indian Constitution provides an appeal to the Supreme Court from a final order in a civil proceeding. Article 136 of the Indian Constitution confers on the Supreme Court jurisdiction to hear appeals on the grant of leave by it not only from a High Court but from a Tribunal as well. The distinguishing language is obvious enough for us to abstain from dilating on those authorities any further.
20. Mr. Hossain somewhat feebly wanted to submit that since under the Income-Tax Act no appeal can be taken to the Supreme Court except on obtaining from the High Court a certificate of fitness, so by implication, he says, the jurisdiction to the Supreme Court has been curtailed to grant special leave. The submission is wholly fallacious. The language of the Constitution, the highest legal document, cannot be governed or controlled by the language of subordinate legislation. There is no language in the Constitution to give colour to such interpretation. No further discussion is called for. The preliminary point of Mr. Hossain fails.
21. We now come to the merit of the leave order granted by the Supreme Court. The question framed and answered by the High Court and that of the leave order can be split into two, and we shall proceed to deal with the question accordingly. It is whether the assessee, who is a tenant can in the absence of any undertaking to that effect, claim deduction for conversion of white cement flooring into mosaic flooring under section 10(2)(ii) of the Act; and whether the assessee as a tenant can also claim deduction under section 10(2)(V) of the Act.
22. As regards the first part of the question it is obvious that under section 10(2) (ii) a tenant can claim full deduction, if he can show an undertaking of repairs between him and the landlord. The language is wide enough to include the repairs of capital nature so it answer the term 'repairs'. In the present case, the assessee has never claimed that it had any undertaking with the owner of the premises. In fact, it abandoned the claim under this head before the Tribunal. The Tribunal has clearly stated that both parties took their stand on the pro-provision of S. 10(2) (v). In this view of this matter, we do find it necessary to discuss the question further except to observe that there is no language in this section preventing a tenant from claiming benefit of all the clauses of the sub-section (2) viz. clauses (ii), (v) and (xvi) if any of these or all, is or are, applicable to the claim of the assessee.
23. The second limb of the question is partly a question of law, and partly of fact. The question of law is whether there is anything in the language of S. 10, either in sub-section (2) (ii) or (2) (v) which limits a tenant from claiming the benefit of either or both. We are required to see the applicability of sub-section 2(v). First, we are to look at sub-section (2) (iv) to understand the meaning of this clause. It says that an assessee is entitled to" get the benefit of allowances in respect of insurance of building amongst others used for the purpose of business etc and in clause (v) an assessee can claim deduction for such building, meaning that mentioned clause (iv) for current repairs. 'Such building mentioned in clause (v) therefor refers to building used for the purpose of business. The language is clear to allow deduction for 'current repairs' under clause (v) to an assessee, he be an owner or a tenant, if the building is used for business purpose. There is no denying the fact, that the Cinema building is used for the business of the assessee. The assessee as tenant can claim benefit under any or both the clauses, if he can satisfy that either or both the clauses under sub-section (2) is or are applicable to the claim made by him. And that brings us to the question of fact, whether the claim is current repairs under s. 10(2) (v).
24. The stand of the appellant on the question of conversion of white cement flooring into mosaic flooring as current repairs is contradictory inasmuch as the tenant assessee claimed deduction for Oil Painting of Cinema walls as well and the Department conceded that claim as current repairs. They however challenged the mosaic work as current repairs, on the ground that it was a capital expenditure. The controversy depends to be decided on the facts and circumstances of each case and so it is more a question of fact and is inference from facts than a question of law.
25. 'Current repairs' as contained in section 10(2) (v) of the Act admits of no precise definition, nor can any precise definition be attempted. It is always dependent upon particular facts and circumstances of each case and to be seem whether the exigency of the circumstances demanded a work to be done by the assessee for the purpose of the business. Some broad outlines no doubt have been suggested without attempting to dogmatise them. The work done must have firstly, correlation with the necessity of the business of the assessee, and secondly, the work undertaken will be in the nature of restoration, or keeping the working condition or preservation of the asset and not an addition or improvement of the asset or premises, and thirdly, the work will be needed at an interval of time, not necessarily a short interval.
26. We now turn to the authorities Samuel Jones & Co. (Devenvale, Ltd.) Vs. Commissioner of Inland Revenue (1951) 32 Tax Cases 513. In this case, the Chimney of a paper factory had fallen into a dangerous disrepair. The assessee demolished the chimney and replaced it with a new one. Upholding the stand of assessee, it was held that the replacement of the Chimney was not an important part of the factory. It was taken to be repairs.
Rodeshia Railway Ltd., Vs. Income-tax Collector, Bachuanaland Protectorate (1933) (LT.R.) 227. In this case out of a total length of 394 miles of Railway track, 74 miles were affected and of which 34 miles were replaced by new Rails and new sleepers, and for 40 miles of the track old rails were relaid and entire sleepers replaced. It was held to be repairs on the ground that it was necessary to remedy several years of wear and tear for neglect, even though for several years coming such expenditure would not be necessary.
New Shorrock Spinning and Manufacturing Co. Ltd., Vs. The Commissioner of Income Tax Bombay, North, 1956 (30) I.T.R. 338. In this case, the assessee replaced after sixty years looms which are machinery for weaving cotton cloth. Chagla, CJ. held it to be current repairs, on the ground that the need arose for its replacement, may be after long interval, still it was needed to keep the machinery of the factory in working condition.
Commissioner of Income Tax, Dehli. Vs. Ramkrishna Steel Rolling 1974 (95) I.T.R. 24. In this case, the tin roof of the factory was replaced with asbestos roof, and it was held, to be current repairs.
The ratio decidendi of the authorities are in accord with the view expressed by us. The Tribunal and the High Court concurrently found that Gulistan Cinema is a top class Cinema Hall, and it required first class upkeep of its premises and fittings. It has been held that the white cement flooring had deteriorated within six years of construction in 1953, and it needed repairs in 1959. That tenant assessee to keep the standard of a top class Cinema converted the flooring into mosaic flooring. It was done to make the flooring more attractive in keeping with the high standard. The cost of mosaic flooring has been found to be only 25% higher than white cement flooring. Upon these facts, the High Court, in the circumstances, held it to be current repairs and so concurred with the Tribunal. The conclusion drawn from the facts found by the High Court flows naturally. from them, it is neither arbitrary nor capricious. There is hardly any to disturb this finding of the High Court. The appeal is dismissed but without any order as to costs.