NOORUL ARFIN, J. The Income-tax Appellate Tribunal has stated the following question for the opinion of the High Court: "Whether on the fats and in the circumstances of the case the Tribunal is right in holding that the second proviso to sec--petition 10(z)(vii) does not apply to the income falling under section 12 of the Income-tax Act ?"
2. The assessee-respondent earned income by leasing out its proper--ties known as "Nagina Talkies", which included buildings and machinery. The assessment of this income was made under section 12 of the Income---tax Act, 1922, and, in making the assessment, the Assessing Officer gave benefit of depreciation to the assessee under subsection (4) of this section. The assessee sold away the Nagina Talkies in the charge year 1960-61 for Rs. 3,65,000.00, as against the written down value of Rs. 2,07,593.00, which yielded benefit to the assessee in the sum of Rs. 1,57,407.00. The Assessing Officer brought this amount to tax under the second proviso to clause (vii) of subsection
(2) of section 10 of the Income-tax Act. The assessment was maintained by the Appellate Assistant Commissioner of income-tax, but in further appeal to the Income-tax Appellate Tribunal, the amount of Rs. 1,57,407.00 was excluded from the assessment. On the application of the Commissioner of Income-tax, the Tribunal then stated the question reproduced above for opinion of this Court. The words "income falling under section 12 of the Income-tax Act" in the question do not, in effect, bring out the real contest between the parties. What is at issue is that, where income is assessed under section 12 of the Act and benefit of depreciation is given under subsection (4) of section 12, then, should the amount, received on sale of the properties, in excess of the written down value, he brought to tax under the second proviso to clause (vii) of subsection (2) of section 10 of the Income-tax Act. It is in this sense that we have read the question referred to us by the Tribunal.
3. Section 12 deals with income, profits and gains under head (v) of section 6 of the Act.
Subsections (2) to (6) of section 12 deal with the computation of income under head (v), so as to bring the balance to tax. For the purpose of this case, subsection (4) only is relevant, and we would reproduce it hereunder as it stood on 28th February 1971: "(4) Where an assessee lets on hire machinery, plant or furniture belonging to him and also buildings, and the letting of the buildings is inseparable from the letting of the said machinery, plant or furniture, he shall be entitled to allowances in accordance with the provisions of clauses (iv), (v), (vi) and (vii) of subsection (2) of section 10 in respect of such buildings."
The benefit of depreciation was given to the assessee under clause (vi) of subsection (2) of section
10. Section 10 of the Income-tax Act deals with assessment of profits and gains of business, profession or vocation carried on by an assessee. Subsection (2) provides that such profits and gains shall be computed after making the allowances enumerated in clauses (i) to (xviii). As stated above, clause (vi) deals with depreciation. Then comes clause (vii), which makes provision for allowance of the amount by which the written down value of building, machinery or plant exceeds the price realised on sale, exchange, transfer or compulsory acquisition of such building, machinery or plant. This clause is followed by several provisos, but, in this case, only the second proviso is relevant and reads as under: "Provided further that where the amount for which such building, machinery or plant is sold, transferred or compulsorily acquired, whether during the continuance of the business or after the cessa--petition thereof, exceeds the written down value, so much of the excess as does not exceed the difference between the original cost and the written down valve shall be deemed to be profits of the previous year in which the sale, transfer or compulsory acquisition, as the case may be; took place and the business, profession or vocation in which such building, machinery or plant has been used, shall, for the purposes of subsection (1), be deemed to be carried on by the assessee in the year in which the sale, exchange, or acquisition, as the case may be, took place."
We have reproduced this proviso as it stood on 28th February, 1971, as, in our opinion, any changes which may have been made in the proviso after the assessment have no material bearing on our decision. It will be noted that under this second proviso so much of the excess as does not exceed the difference between the original cost and written down value of building, machinery or plant, when sold, transferred or compulsorily acquired shall be deemed to be profits of the previous year in which the sale etc. Took place. We have seen that under subsection (4) of section 12 of the Income-tax Act, in the computation of income under the head "from other sources", benefit of allowances enumerated in clauses (iv), (v), (vi) and (vii) of subsection (2) of section 10 is given to the assessee. The question, therefore, arises whether in cases where depreciation allowance is given to the assessee under subsection (4) of section 12 read with clause (vi) of subsection (2) of section 12, so much of the excess as does not exceed the difference between the original cost and the written down value of the buildings should be brought to tax. The Tribunal, in its appellate order, relied on an Indian Case, The Commissioner of Income-tax, Madhya Pradesh v. Nandlal Bhandari & Sons (Private) Ltd. ((1963) 47 I T R 603), in which the view was taken that the second proviso to clause (vii) of subsection (2) of section 10, is, in effect, the charging provision, and therefore, cannot be imported into section 12 merely because subsections (3) and (4) of section 12 give benefit to an assessee of allowances mention--ed in clauses (iv), (v), (vi) and (vii) of subsection (2) of section 10, we do not think that for the decision of this case it is necessary to enter into a discussion of the nature of the second proviso, that is, whether it is a charging provision or computation provision. In our opinion, the deci--sion in this case should rest on the language used in subsection (4) of section 12. This subsection, as also subsection (3), provide that the assessee "shall be entitled to allowances in accordance with the provisions of clauses (iv), (v), (vi) and (vii) of subsection (2) of section 10 . . . . ." The two material words are "entitled" and "allowances". The word "allow--ance" is an ordinary word of the English language and means rebate, deduction, or discount, though Mr. S. A. Nusrat, the learned counsel for the Department, made an effort to show that in some cases this word may also mean "additions". But we have to construe the word "allowances" in the context in which it has been used in the Income-tax Act, 1922. Sub--section (2) of section 10 provides that the profits and gains of business, profession or vocation shall be computed after making allowances enume--rated in clause (i) to clause (xviii). The clear meaning of these words is that in the computation of income, profits and gains under section 10, rebate or deduction should be given or made as provided in the various clauses of subsection (2). The other material word in subsection
(4) as well as in subsection 3) of section 12 is "entitled". The second proviso to clause (vii) of subsection (2) of section 10 creates a liability to tax of certain amounts. When the word "entitled" is used in subsection (4), as also in subsection (3) of section 12, what is intended is that the assessee should be given benefit of rebates or deductions, not that he should be subjected to any liability.
No one can be said to be "entitled" to liability. The word "entitled" cannot, in the context of the provisions of section 12, which are before us, go with liability to tax. Of course, the case may have been different if subsection (4), or even subsection (3) of section 12 had been framed in such language as is used in subsection (2) of section 10, when it provides that profits or gains shall be computed after making the allowances enumerated in clauses (i) to (xviii). If subsections (3) and
(4) had merely said that income from other courses shall be computed after making allowances mentioned in clauses (iv), (v), (vi) and (vii) of sub-- section (2) of section 10, it would then, perhaps, be possible for the Department to contend that the whole of the clause (vii), with all it provisos, became incorporated in section 12, and, therefore, under the second proviso the amount which represents excess between the written down value and the sale price was taxable in the same manner as is provided for profits and gains under section 10 of the Act. But neither subsection (4), nor subsection (3), are framed in this kind of language, what is stated therein is merely this-that the assessee shall be entitled to allowances in accordance with the provisions of clauses (iv), (v),
(vi) an (vii) of subsection (2) of section 10. In fiscal statutes the meaning has to be ascertained from the plain language of the statute and "nothing is to be read in, and nothing is to be implied" in such statutes. Merely because reference is made in subsection (4), as also in subsection (3) of section 12 to clause (vii) of subsection (2) of section 10, it cannot be implied that the provisos, including the second proviso to this clause, should also be read in these subsections. The use of the words "entitled to allowances" excludes the application of the second proviso to cases which fall under subsections (3) and (4) of section 12, so that the excess representing the difference between the written down value and the sale price of the buildings referred to in subsection (4) of section 12 of the Act cannot be brought to tax.
4. Accordingly, our answer to the question stated by the Tribunal is in the affirmative.
K.B.A.