G.K. CHOKSI & COMPANY versus COMMISSIONER OF INCOME TAX, GUJARAT

Citation: [2007] 12 S.C.R. 561 · Decided: 27-11-2007 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Dismissed

Judgment (excerpt)

G.K. CHOKSI & COMPANY 
v. 
COMMISSIONER OF INCOME TAX, GUJARAT 
NOVEMBER 27, 2007 
[ASHOK BHAN, HARJIT SINGH BEDI AND 
V.S. SIRPURKAR, JJ.] 
Income Tax Act, 1961: S.32(1)(iv): 
Depreciation by way of deduction-Assessee-Firm of Chartered 
A 
B 
c 
Accountants constructing a building for its employees-Claiming 
depreciation of 40% in terms of provision u/s 32(1)(iv)-Rejected by 
ITO on ground that benefit under the provisions applicable to an 
assessee carrying business and not available to professionals- D 
Reversed by appellate authority-Tribunal restoring the order of ITO-
Confirmed by High Court-On appeal, held, the word business 
appearing in s. 32(1)(iv) cannot be construed so as to include 
"profession" as well-In terms of provisions under clause 32(1) 
legislature intended to restrict the benefit under the provisions to E 
assessee carrying on business only-Inclusion of profession within the 
scope of expression business would be doing violence to provisions of 
the Act-Such an interpretation not permissible in law-Interpretation 
of Statutes-Legislative intendment-Construing of 
Words & Phrases: 
'Business' and 'Profession '-Meaning of in the context of 
S.32(1)(iv) of the Income Tax Act, 1961. 
F 
The question which arose for determination in the present appeal G 
was as to whether in the facts and circumstances of the case the 
assessee-appellant, a Chartered Accountant's firm would be entitled 
to deduction under Section 32(1)(iv) of the Income Tax Act, 1961. 
561 
H 
~ '• 
562 
SUPREME COURT REPORTS 
(2007] 12 S.C.R. 
' 
A 
Appellant-Firm contended that Section 32 of the Income Tax Act 
relates both to "business" as also "profession"; that the assessee 
carrying on profession would be entitled to the depreciation under 
Section 32(1)(iv) though the word "profession" does not find mention 
in sub-clause (iv); That the words "business" and "profession" are 
B defined separately under the Act; and the definitions under the Act are 
subject to the context and can be read interchangeably at least one term 
carrying on within its fold other term if the context so requires; That, 
the word "business" appearing in sub-clause (iv) of Section 32(1) in the 
context clearly refers to both "business" and "profession"; That, the 
c word "business" is used in the context of employees and is clearly 
intended to cover both "business" as also "profession"; That Section 
32(1) (iv) should be given a purposive interpretation to extend the benefit 
to the professionals as well; That if two opinions are possible, then the 
one in favour of the assessee should be adopted and that Barendra 
D Prasad Ray's case is clearly applicable to the facts of the present case 
and the High Court has erred in distinguishing the same. 
Revenue submitted that Section 32(l)(iv) of the Att cannot be 
made applicable to professionals, as there is no reference in this sub-
E clause to the assessees who are in profession; That sub-section (1) of 
Section 32 lays down general conditions or basic requirements on 
fulfillment of which an assessee shall become eligible for deduction as 
provided in the various clauses which follow; That, from the scheme of 
the section various clauses would operate on further specific conditions 
F laid down in each such individual clause(s); Thatthough Section 32(1) 
refers to both "business" and "profession", the sub-sections, namely, 
(i) and (iv) would not be controlled by it; and ThatBarendra Prasad Ray's 
case has no application to the facts of the instant case since in the said 
case, this Court was dealing with a situation arising under Section 9 of 
G the Act which deals with income deemed to accrue or arise in India. 
Dismissing the appeal, the Court 
r-
HELD: 1.1. Section 32(1) of the Income Tax Act does not help the 
appellant in any way to construe the word "business" appearing in sub-
H section 32(1 )(iv) to include "profession" as well. The legislature intended 
) 
G.K. CHO KS I & COMP ANY v. COMMISSIONER OF 
563 
INCOME TAX, GUJARAT 
to have different scope for business and profession in Section 32(1). If A 
the legislature had intended to include "profession" in the word 
"business", then there was no need to mention two differentwords, i.e., 
"business" or "profession" in Section 32(1) of the Act. 
[Para 12] (569-C, D, E] 
1.2. Section 32(1) of the Act stipulates that on buildings, machinery, B 
plant or furniture which is owned by an assessee and used for the 
purposes of"business or profession", dep

Excerpt shown. Read the full judgment & AI analysis in Lexace.