9911796707
TMI Blog2005 (6) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... e in India, filed its return of income on March 25, 1997, for the assessment year 1996-97 claiming relief available under the Double Taxation Avoidance Agreement (in short "the DTAA" or "the agreement") entered into between the Republic of Malta and the Republic of India as per section 90 of the income-tax Act (hereinafter referred to as "the Act"). The appellant claimed refund of the entire tax paid for the assessment year 1996-97 amounting to Rs. 1,60,34,863 (rupees one crore sixty lakhs thirty-four thousand eight hundred and sixty-three only). The DTAA was signed on September 28, 1994, and it came into force with effect from February 8, 1995. A formal notification was also published on November 22, 1995, under section 90 of the Income-tax Act. Annexure A-7 is the notification which also stated that the DTAA has entered into force on February 8, 1995, after the notification by the contracting States to each other of the completion of the procedure required under their laws for bringing into force the said agreement in accordance with paragraph 1 of article 29 of the said agreement. The Assistant Commissioner rejected the claim of the appellant. The Commissioner of Income-tax reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tside India under sub-section (1) for granting relief of tax, or, as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee." It is also submitted that the words "calendar year next following that" used in the agreement have to be read in the context and "calendar year next" is not the next calendar year. The expression "calendar year next" is not grammatically correct. Learned counsel for the appellant also submitted that in the absence of punctuations, the word "that" refers to the "fiscal year" and not to the "calendar year." In other words, the words "next following that in which this agreement enters into force" means the next fiscal year following the date on which this agreement enters into force. It cannot mean the next calendar year as the words used are not "next calendar year" but "calendar year next." It was also pointed out that the assessee's request for clarification from the Central Board of Direct Taxes (the CBDT) was referred to the Chief Commissioner of Income-tax and the Chief Commissioner advised the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." The above view was followed in State of West Bengal v. Kesoram Industries Ltd. [2004] 266 ITR 721 (SC); [2004] 2 RC 298 (SC) and CCE v. Acer India Ltd. (No. 2) [2004] 3 RC 421 (SC); [2004] 8 SCC 173 at paragraph 29, at page 183. In Mathuram Agrawal v. State of M.P. [1999] 8 SCC 667. the law is stated in the following terms: "The intention of the Legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and umambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning of the statute which will serve the spirit and intention of the Legislature." It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpretation put upon its enactment by notorious practice may, perhaps, be regarded as some sanction and approval of it." In Craves on Statute Law, Seventh edition, at page 80, it is stated as follows: "The earlier statutes were in the form of charters, and no difference was at first made between the construction of a statute and that of any other instrument. Coke's rule has been adopted by the English courts, and for modern use is best expressed by Lord Esher in Sharpe v. Wakefield [1889] 22 QBD 239, 241: 'the words of a statute must be construed as they would have been the day after the statute was passed, unless some subsequent Act has declared that some other construction is to be adopted or has altered the previous statute'." But, this principle has no application while explaining modern Acts. In Campbell College Belfast (Governors) v. Commr. of Valuation for Northern Ireland [1964] 1 WLR 912 (HL), it was held that the doctrine has to be applied only to the construction of ambiguous language in very old statutes. If the language is plain and unambiguous it has no application even if the Act was passed 100 years ago. Administrative construction, that is, contemporaneous con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into contract based on such wrong clarification. The assessee paid the tax as if double taxation benefit was not available to it. Therefore, the principle of promissory estoppel is not applicable. The assessee approached for refund based on some clarifications issued by the Department which was subsequently corrected by the CBDT. Therefore, the principle of contemporanea expoistio is not applicable in this case. Even if the above principle has any application, it is not always decisive on the question of construction and a wrong construction placed by the administrative authorities need not be followed by the court. With regard to the contention of absence of punctuation, we are of the opinion that even if a comma or any other punctuation mark is put after the words "calendar year next" in article 29(2) of the treaty, it will not convey a meaning helpful to the assessee. The expression "calendar year next following that" cannot qualify the words "fiscal year": even if a comma is put anywhere else. Counsel for the assessee referred to us the maxim "reddendo singula singulis". It is only a guide of interpretation by applying or assigning "each to each". This rule was formulated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the alleged object and policy of the Act." After a careful and close reading of article 29(2) of the treaty in question, we are of the view that it gives only one meaning and there is no ambiguity in the wording used. It is very clear that in India, benefit can be availed of only for the fiscal year starting from April 1, 1996 to March 31, 1997, starting after the first day of the next calendar year following in which the agreement came into force (February 1995). Here the agreement came into force in the year 1995. The next calendar is 1996-97. Hence, benefit can be availed of for the fiscal year starting from April 1, 1996. Benefit can be availed of in the fiscal year starting from April 1, 1996, i.e., the next calendar year (assessment year 1997-98). The words "fiscal year" in India and in Malta are also explained in the agreement. If the interpretation preferred by the assessee is taken, the words "calendar year" were unnecessarily used in the agreement. Further, as per the normal English grammar, the relative pronoun "that" will only refer to the nearest proximate subject otherwise it will be an error of proximity and "that" cannot refer to the fiscal year, but, only to "cal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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