By TIOL News Service

CHENNAI, OCT 16, 2018: THE ISSUE AT HAND BEFORE THE HIGH COURT WAS - Whether the principle of Contemporanea exposito, although an established rule for statutory interpretation, will be inapplicable where the language of the statute is plain & unambiguous. YES IS THE ANSWER.

The bench also noted that if two possible views arise when adjudicating a claim for depreciation, then that view favoring the assessee should be preferred.

Facts of the case

The assessee company filed returns for the relevant AY, wherein it claimed depreciation on printers @ 60%. On assessment, such depreciation was disallowed by the AO, who observed that the printers were not normal ones but were high value ones used for printing large sized banners & advertisements. Thus the AO opined that such printers could not be treated as peripheral to a computer & that such printers could also not perform the functions of a normal computer. On appeal, the CIT(A) noted that the printer could not be used without the computer and thus held it to be part of the computer system. Thus the CIT(A) allowed the depreciation claimed by the assessee. Such findings were confirmed by the Tribunal.

On appeal, the High Court held that,

++ the Division Bench took note of the decision of the Supreme Court pointing out that the 'entry' to be interpreted is in a taxing statute; full effect should be given to all words used therein and if a particular article would fall within a description, by the force of words used, it is impermissible to ignore the description, and denote the article under another entry, by a process of reasoning. It was further pointed out that the rule of construction by reference to contemporanea expositio is a well-established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous;

++ The Commissioner of Income Tax (Appeals) on examining the manner in which the equipment functions by way of video demonstration, recorded that the printer cannot be used without a computer, that is, it is part of the computer system. In the order it has been stated that it can be inferred that the machines "computer printers" under consideration can either be called computers-printers, since a lot of independent functions done by the computers are done by these printers and they can be called an integral part of the computer system. Therefore, the Commissioner of Income Tax (Appeals) came to the conclusion that it should be treated as part of the computer and an accessory to the Computer. This factual finding cannot be dislodged as no material has been placed by the Revenue before this Court. Above all, it should be borne in mind that it is a claim for depreciation and if two views are possible, one which is in favour of the assessee should be preferred. Thus the concurrent findings of the first appellate authority as affirmed by the Tribunal holds that the claim by the assessee at 60% are acceptable.

(See 2018-TIOL-2166-HC-MAD-IT)