GEORGE WILLIAMSON (ASSAM) LTD VS COMMISSIONER OF INCOME-TAX, 1998 PTD-GAUHATI-HIGH-COURT-INDIA 3427 (1996)

(a) Income-tax---

----Repair of machinery and plant---Scope of S'.31---Difference between "repair" and "maintenance"---Motor vehicle is a plant---Amount spent on repair of motor vehicle is deductible under S.31---Indian Income Tax Act, 1961, Ss.31 & 43.

(b) Income-tax---

----Business expenditure--Motor vehicle used for business--Motor vehicle tax is deductible under S.37(3-A) & (3-B)---Indian Income Tax Act, 1961, S.37.

(c) Words and phrases---

----"Repair"---"Maintenance"---Connotation.

In section 43 of the Income Tax Act, 1961, the expression "motor vehicle" has not been specifically mentioned, but the expression "plant" includes motor vehicle. Section 31 speaks about amounts spent on repairs, whereas section 37(3-A) speaks about running and maintenance. The expressions "repair" and "maintenance" are two different expressions. The expression "repair" presupposes certain injury or partial destruction. But the expression "maintenance" does not do so. It means to keep a particular thing in its similar state. The Legislature being fully aware of the difference of expressions, dealt with "the expenses on repairs" in section 31 and "expenses for running and maintenance" in section 37(3-A) and (3-B).

The assessee which owned tea gardens claimed deduction of Rs.1,67,876 bring cost of repair of motor vehicles and Rs.1,12,646 being the amount paid towards tax under the provisions of the Motor Vehicles Act, 1939, for the assessment year 1984-85. The Assessing Officer disallowed the claim. On a reference:

Held, (i) that- the expenditure on repair was deductible;

(ii) that tax was required to be paid not merely because of the owning of the vehicle, but because of its user. Hence, the assessee was entitled to claim deduction of Rs.1,12,646 the amount paid towards motor vehicle tax under section 37(3-A).

R. Gogoi and H. Roy for the Assessee.

G.K. Joshi and U. Bhuyan for the Commissioner.

JUDGMENT

D.N. BARUAH, J.---As per the direction of this Court in Civil Rule No. 17(M) of 1992, the Income-tax Appellate Tribunal has referred the following two questions under section 256(2) of the Income Tax Act, 1961 for short, "the Act"), for opinion of this Court:

"(1) Whether the Tribunal was right in holding that the sum of Rs.1,67,876 being cost of repairs of motor cars was to be taken into consideration for the purpose of section 37(3-A) of this Act?

(2) Whether the Tribunal was right in holding that the sum of Rs.1,12,646 being motor vehicles tax paid during the relevant previous year was to be taken into consideration for the purpose of section 37(3-A) of the Act?"

The assessee, a company incorporated under the Companies Act, owns tea gardens. In running the gardens, the assessee-company uses motor vehicles. For the purpose of maintenance of the vehicles, the assessee- company makes certain expenses. Besides this, the company is also required to pay tax for motor vehicles under the provisions of the Motor Vehicles Act. The present reference relates to the assessment year 1984-85. During the said assessment year, the company claimed deduction of Rs.1,67,876 being the cost of repairs of motor vehicles and Rs.1,12,646 being the amount paid towards tax under the provisions of the Motor Vehicles Act, 1939. The Assessing Officer, however, disallowed the claim. Being aggrieved by the order of the Assessing Officer, the assessee-company preferred an appeal before the Commissioner of Income-tax (Appeals) on various grounds. The Commissioner of Income-tax (Appeals) confirmed the order passed by the Assessing Officer as regards the claim for deduction under section 31 of the Act. Being still aggrieved, the assessee-company preferred yet another appeal before the Income-tax Appellate Tribunal. The Tribunal also confirmed the same. Thereafter, the assessee-company made a request to the Tribunal to refer the above questions which was, however, refused. Situated thus the assessee-company filed an application before this Court which was numbered as Civil Rule No. 17(M) of 1992 and this Court by order dated April 25, 1994, directed the Tribunal to refer the above questions. Hence? the present reference.

We have heard Mr. R. Gogoi assisted by Mr. H. Roy, learned counsel appearing on behalf of the assessee, and Mr. G.K. Joshi assisted by Mr. U. Bhuyan, learned standing counsel appearing on behalf of the Revenue.

Regarding question No.l, the submission of Mr. Gogoi is that the matter relating to expenses made towards repairs does not come within the purview of section 37(3-A) inasmuch as it speaks only about running and maintenance of the car. Mr. Gogoi further submits that the appropriate section is section 31 where it has been specifically mentioned that so far the repairs are concerned the assessee will be entitled to get deduction as mentioned in section 31 of the Act. Mr. Joshi, on the other hand, vehemently opposes this. Drawing our attention to subsections (3-A) and (3-B) of section 37 of the Act, Mr. Joshi submits that for expenses made for running and maintenance of motor car subsection (3-A) of section 37 will be applicable in the present case. Refuting the submission of Mr. Joshi, Mr. Gogoi draws our attention to section 43 of the Act. This section indicates that in sections 28 to 41 and in this section, unless the context otherwise requires "plant" includes vehicles. Therefore, relying on subsection (3) of section 43 where the expression "plant" has been defined, Mr. Gogoi submits that motor vehicle is also vehicle within the expression "plant".

On the rival contentions of learned counsel appearing on behalf of the parties it is to be seen whether the assessee is entitled to claim deduction under section 31 of the Act. Section 31 reads thus:

31. In respect of repairs and insurance of machinery, plant or furniture used for the purposes of the business or profession, the following deductions shall be allowed---

(i) the amount paid on account of current repairs thereto;

(ii) the amount of any premium paid respect of insurance against risk of damage or destruction thereof."

It is true that expression "motor vehicle" has not been specifically mentioned, but the expression "plant" defined under section 43(3) includes vehicle, which in our opinion, includes motor vehicle. Section 31 speaks about amount spent on repairs, whereas section 37(3-A) speaks about running and maintenance. In our opinion, the expressions "repairs" and "maintenance" are two different expressions. In this connection, we may refer to the dictionary meaning of the expressions "repairs" and "maintenance". As per Black's Law Dictionary (Fifth Edition), "repair" means" to mend, remedy, restore, renovate. To restore to a sound or good state after decay injury dilapidation, or partial destruction". Whereas the meaning of the expression, "maintenance" is "Act of maintaining, keeping up, supporting .... "From the dictionary meaning of these two expressions it is very clear that the expression "repair" presupposes certain injury or partial destruction. But the expression "maintenance" does not do so. It means to keep a particular thing in its similar State. Therefore, in our opinion, the Legislature being fully aware of the difference of expressions, dealt with "expenses on repairs" in section 31 and "expenses for running and maintenance" in section 37(3-A) and (3-B).

In view of the above, we answer question No. l in the negative, in favour of the assessee and against the Revenue.

As regards question No.2, Mr. Gogoi submits that the tax is paid on the basis of ownership and, therefore, it comes under the provisions of section 37. Mr. Joshi, however, challenges this. According to him motor vehicle tax is not paid on the basis of ownership, it is required to be paid only when the vehicle plies.

We have gone through the provisions of the Assam Motor Vehicles Taxation Act, 1936. On reading of section 4 as well as section 8, it is abundantly clear that the tax is paid on the user of the vehicle in the State of Assam. Therefore, in our opinion, tax is required to be paid not merely because of owning of the vehicle, but because of its user.

In view of the above, we are of the opinion that the assessee is entitled to claim deduction of Rs.1,12,646 the amount paid towards motor vehicles tax, under section 37(3-A). Therefore, we answer question No.2 in the affirmative, in favour of the Revenue and against the assessee.

A copy of this judgment under the signature of the Registrar and the seal of the High Court shall be transmitted to the Income-tax Appellate Tribunal, Guwahati.

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