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TMI Blog2019 (3) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and it also shows that right from the beginning, there was such intention of the Parliament. The Court is expected to keep in mind some principles of interpretation when such point comes for interpretation. The language of each provision may be restricted to its own object. Many a times when there are two provisions, both the provisions can be allowed to run in parallel lines though there may be conflict on the surface. The Court needs to interpret the statute in such a way that the provision is not rendered meaningless. If the Court gives only limited meaning to a provision it may result in non-compliance of the provisions in entirety and to that extent, the intention of the Legislature gets defeated. In the present matter, in view of the explanation given and also the intention, which can be gathered from Section 179 itself, it can be said that the word “Tax” used in Section 179 was to be used also for penalty and interest. If the word “ Tax” is not read in that way, there will be loss of interest and penalty to the State Exchequer. The provision is made to see that the amount is recovered from the directors when the company is not able to make the payment of the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-Tax Act,1961, on 16.08.2010 for recovery of income tax, interest and penalty and the total amount was ₹ 336.84 lakh. The amount was assessed for the years 1995-96, 1996-97 and 2002-2003 and this order was against both the Company and the Directors. In the petitions, it is contention of the directors that word tax used in Section 179 of the Income-Tax Act, 1961, does not include penalty and interest and so these amounts cannot be recovered from them. Argument was advanced only on that point. Learned counsel for the Income Tax Department supported the order made against the directors. 3. The respondent-authority has given finding that the word 'tax' used in Section 179 of the Income-Tax Act, 1961 includes both the penalty and the interest. It is further held that in view of the explanation added to Section 179 the tax includes penalty and interest. 4. The provision of Section 179 of the Income-Tax Act, 1961, along with explanation runs as under :' '179. (1) Liability of directors of private company in liquidation. Notwithstanding anything contained in the Companies Act,1956 [1 of 1956] [where any tax due from a private company in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88A, 189, 220, 221(1) etc and also placed reliance on the observations made by the Apex Court in the case of Harshad Shantilal Mehta Vs. Custodian reported a t (1998) 231 ITR 871 Supreme Court. 6. In the case of Dinesh Tailor cited (supra), the Division Bench used the observations made by the Apex Court, which are as under : 33. Tax, penalty and interest are different concepts under the Act. The definition of 'tax' under section 2(43) does not include penalty or interest. Similarly, under section 156, it is provided that when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing Officer shall serve upon the assessee a notice of demand as prescribed. The provisions for imposition of penalty and interest are distinct from the provisions for imposition of tax. The learned Special Court Judge, after examining various authorities in paragraphs 51 to 70 of his judgment, has come to the conclusion that neither penalty nor interest can be considered as tax under section 11(2) (a). We agree with the reasoning and conclusion drawn by the Special Court in this connection 7. The Division Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion any policy of insurance in the main sub-clause must mean a policy based on human life and that too where periodical premia are payable and as such annuity on life which consists of lump sum investment followed by deferred annual or monthly payments is excluded. It is impossible to read the italicized words in the proviso in this manner which has the effect of unduly narrowing down the expression any policy of insurance used in the main sub-clause, which as indicated earlier, is of very wide import covering all types of insurance policies like life, marine, fire etc. In the first place the main provisions [Sub-clause (vi)] was enacted in 1957 and continued to operate for 17/18 years till March 31, 1975, without any qualification and as such it will be absurd to attribute to the Legislature, because of the insertion of the proviso (containing the italicized words) in 1975, an intention of having used the wide expression 'any policy of insurance' throughout all this period in a narrow sense as suggested. Secondly, if the main provision and the proviso are read together the italicised words do not suggest that any narrow construction, much less as urged, was intended a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent will have to be taken care of while deciding the issue as to whether the amendment was clarificatory or substantive in nature and, whether it will have retrospective effect or it was not so. 15. In Principles of Statutory Interpretation, 11th Edn. 2008, Justice G.P. Singh has stated the position regarding retrospective operation of Statues as follows: The presumption against retrospective operation is not applicable to declaratory statues. As stated in Craies and approved by the Supreme Court: For modern purpose a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The usual reason for passing a declaratory Act is to set aside what Parliament deems to have been a judicial error, whether in the statement of the common law or in the interpretation of statutes. Usually, if not invariably, such an Act contains a preamble, and also the word declared' as well as the word' enacted'. But the use of the words' it is declared' is not conclusive that the Act is declaratory for these words may, at times, be used to introduce new rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retrospective operations is not applicable to declaratory statutes. In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is to explain an earlier Act, it would be without object unless construed retrospectively. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is wellsettled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. An amending Act may be purely declaratory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect. 15. Though retrospectivity is not to be presumed and rather there is presumption against retrospectivity, according to Craies (Statute Law, 7th Edn.), it is open for the Legislature to enact laws having retrospective operation. This can be achieved by express enactment or by necessary implication form the language employed. If it is a necessary implication from the language employed that the legislature intended a particular section to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that the word 'Tax includes penalty and interest and as the burden of proof is shown on the directors to prove that they were not negligent etc., then it follows that the directors can be held responsible to pay penalty and interest when the company was liable to pay the penalty and interest. The non-obstante clause with which Section 179 starts shows that the provisions of Company Act 1956 will not come in the way of fastening the liability created by Section 179 on the directors and it also shows that right from the beginning, there was such intention of the Parliament. 13. The Court is expected to keep in mind some principles of interpretation when such point comes for interpretation. The language of each provision may be restricted to its own object. Many a times when there are two provisions, both the provisions can be allowed to run in parallel lines though there may be conflict on the surface. The Court needs to interpret the statute in such a way that the provision is not rendered meaningless. If the Court gives only limited meaning to a provision it may result in non-compliance of the provisions in entirety and to that extent, the intention of the Legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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