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TMI Blog1982 (10) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... nd obtained development rebate of Rs. 1,30,386. On 13-11-1974, that is, on the last day of the previous year relevant to the assessment year 1975-76, the assessee closed the development rebate reserve account and transferred the balance to the partners' capital accounts. We are here concerned with the reversal of the entry of Rs. 98,200 which was the reserve created in the previous year relevant to the assessment year 1967-68. The reversal of the entry regarding reserve of Rs. 6,286 created in samvat year 2021 is not in dispute. The ITO held that by crediting the development rebate reserve to the partners' account, the firm violated the provisions of section 34(3)(a), of the Act. Accordingly, he invoked section 155(5) and withdrew the rebat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yway of dividends or profits or for remittance outside India or for the creation of any asset outside India in a period of eight years next following the end of the previous year in which the reserve was created. He urged that the words 'eight years' have to be given the natural meaning, that is, the calendar year. In the present case, the assessee created the reserve in the year ending on 12-11-1966, Eight calendar years ended on 12-11-1974. On 13-11-1974, the assessee transferred the reserve to the partners' capital accounts, that is, the transfer took place after the completion of eight calendar years referred to It was, thus, pleaded that the requirements of section 34(3) had been fulfilled and the ITO should not have invoked the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icity (Supply) Act, 1948 (54 of 1948), or where the ship has been acquired or the machinery or plant has been installed before the 1st day of January, 1958 : Provided further that where a ship has been acquired after the 28th day of February, 1966, this clause shall have effect in respect of such ship as if for the words 'seventy-five', the word 'fifty' has been substituted." The other portions of the section which are not relevant have not been quoted by us. The first condition is about the creation of a reserve. This reserve is to be created out of the profits of the assessee. The point of time by which the requisite reserve was to be created was considered by the Supreme Court in Indian Overseas Bank Ltd. v. CIT [1970] 77 ITR 512. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t's decision, we hold that the word 'year' used in section 34(3)(a) means 'calendar year'. 7. Next, we have to consider whether the above interpretation would lead to any absurd interpretation. The first primary rule of construction is that the literal construction should be followed. Omissions are not to be inferred. It is obvious that there is no warrant for interpreting the words 'eight years' as something other than 'eight calendar years'. The omission of the words 'previous year' cannot be inferred. Next it is to be considered whether there is manifest absurdity or repugnancy in the interpretation in which case the language has to be varied or modified as to avoid inconvenience, but no further. We do not find any absurdity in the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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