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TMI Blog1998 (6) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... section 19A was in force providing for assessment of registered firms and for levy of tax. The share of profits of the partners was assessable in his hands also. Section 19A(2) contemplated that if such share of any partner is a loss, it shall be set off against his other income or carried forward and set off in accordance with the provisions of section 15. Section 15 provides for carrying forward of loss. Under section 19C, the method of computing a partner's share in the income of the firm was given. Sections 19A and 19C were omitted from the Act with effect from April 1, 1994. At the time of amending the Bill in the assembly, the Finance Minister in his Budget speech has stated as under : "Presently, agricultural income derived by a firm is taxed at the hands of the firm ; and the share income of individual partners are taxed again in their hands. I propose to tax the firm's income at a flat rate of 40 per cent. and exempt its partners from liability as is done under the Central Income-tax Act." It is pointed out that this amendment has not been made at par with the Income-tax Act and the provisions of the Bill alone was seen but while the Act was passed there was amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustice, then such construction should be preferred to the literal construction. Furthermore, in the instant case, we are dealing with an artificial liability created for counteracting the effect only of attempts by the assessee to reduce tax liability by transfer. It has also been noted how for various purposes the business from which profit is included or loss is set off is treated in various situations as the assessee's income. The scheme of the Act as worked out has been noted before." Reliance is also placed on the decision in the case of CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412 (SC) : "A statute cannot always be construed with the dictionary in one hand and the statute in the other. Regard must be had to the scheme, context and--as in this case--the legislative history of the provision." Reliance is also placed on the decision in the case of CWS (India) Ltd. v. CIT [1994] 208 ITR 649 (SC), to the effect that while literal construction may be the general rule in construing taxing enactments, it does not mean that it should be adopted even if it leads to a discriminatory or incongruous result. Interpretation of statutes cannot be a mechanical exercise: "....lite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this aspect and we agree with it." Reliance is also placed on the decision in the case of Administrator, Municipal Corporation v. Dattatraya Dahankar, AIR 1992 SC 1846, wherein also it was observed that the mechanical approach to construction is altogether out of step with modern positive approach. The modern positive approach is to have a purposeful construction that is to effectuate the object and purpose of the Act. Reliance is also placed on the decision in the case of K. P. Varghese v. ITO [1981] 131 ITR 597 (SC), wherein the following observations are made: "Now, it is true that the speeches made by the Members of the Legislature on the floor of the House when a Bill for enacting a statutory provision is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the mover of the Bill explaining the reason for the introduction of the Bill can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation was enacted. This is in accord with the recent trend in juristic thought not only in Western countries but also in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the transfer and sub-section (2) applies only where the actual consideration received by the assessee is not disclosed and the consideration declared in respect of the transfer is shown at a lesser figure than that actually received." The learned Government Advocate has also relied on the decision given in the case of Huntsey Estate v. Asst. Commr. of Agrl. I.T (W. P. No. 19572 of 1995, dated June 15, 1995), where the provisions were held valid without there being any infringement to article 14 of the Constitution. I have considered over the matter. The judgment given in the case of J. H. Gotla [1985] 156 ITR 323 (SC), was on the point that the income of the minor child or wife has to be clubbed in the hands of the assessee then the loss which has suffered should be construed as the business loss for setting it off. Under the Income-tax Act, section 16(3) of the Income-tax Act contemplated that in computing the total income of any individual, income of the wife or minor child shall be included. There was no provision in section 16 for setting off of losses. Section 24(2) provided that where the assessee has sustained a loss by him in a business then it could be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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