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TMI Blog2007 (10) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... the supply of the required quantity of silk fabrics. Likewise, other brokers Jai Kishan and Krishna Kumar deposited a sum of Rs. 25,000 towards advance for supply of required quantity of silk fabrics. The appellant could not arrange the required silk fabrics and, therefore, returned the deposit by making cash payment. In the assessment proceedings, the Assessing Officer noted the following trade deposits found in the assessee's books of account : Name of brokers Amount Date of receipt Date of return (i) Gopal Das Bhaironath 25,000 11-7-89 20-2-90 (ii) Kishan Kumar Rani Bhawani Gali, Varanasi 25,000 11-7-89 2-3-90 (iii) Narayan Das Prahlad Ghat,Varanasi 25,000 10-7-89 20-2-90 (iv) Jai Kishan Chowk, Varanasi 25,000 10-7-89 2-3-90 3. The explanation furnished by the assessee that the brokers have not deposited the money on their accounts but on behalf of the other traders was not accepted and the Assessing Officer concluded that the advances cannot be treated as sale with reference to their capacity also and the entire sum of Rs. 1 lakh was added to the income, by the order dated May 29, 1992. A penalty under section 271E rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tations in legal parlance as has also been judicially held by various pronouncements beginning with Mohd. Akbar Khan (Nawab Major Sir) v. Attar Singh, AIR 1936 PC 171 ; Ram Janki Devi v. Juggilal Kamlapat, AIR 1971 SC 2551 (paragraphs 11 to 13). Reliance was also placed on few decisions under the Income-tax Act pointing out the marked difference in between "loan" and "deposit". The sum and sub-stance of the argument is that the "deposit" as contemplated under section 269T will not include "trade deposit", like the assessee's case. It was submitted that the finding recorded by the Tribunal with regard to the nature of deposit is vitiated as the Tribunal has failed to take into account the fact that the additions made by the Assessing Officer under section 68 of the Income-tax Act was not sustained and was deleted. The penalty proceeding initiated under section 269SS against the persons who made the deposit has also been set aside. If all these facts are taken into account, the Tribunal was not correct in holding that the nature of deposit, in the case on hand, was not a "trade deposit". 6. Sri Bharatji Agrawal, learned senior counsel and also senior standing counsel for the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment) Act, 1987, the Explanation to section 269T was as follows : "Explanation.— For the purposes of this section,— . . . (ii) "deposit" means any deposit of money which is repayable after notice or repayable after a period." The Direct Tax Laws (Amendment) Act, 1987, by enacting section 104 amended section 269T of the Income-tax Act and substituted the Explanation, in clause (ii), the following clause, namely : "'Deposit' means any deposit of money which is repayable after notice or repayable after a period and, in the case of a person other than a company, includes 'deposit of any nature'". It also included 'any person' in sub-section (2) of 269T of the Act. 12. The controversy centres round the interpretation of the above clause in the Explanation (in the present appeal). "Deposit of any nature" in the aforesaid clause shall draw its colour from the words "trade deposit", submits learned senior counsel for the assessee. The theory of ejusdem generis has been pressed into service to support his contention that the phrase includes "deposit of any nature" though widely worded should be interpreted in a narrow sense as was also done by the first appellate authority. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstood. Thus understood, a process akin to stentering/tentering would fall within the meaning of the proviso and, consequently, the benefit of the notification cannot be availed by the respondent." 16. The rule of ejusdem generis is applicable when a particular word pertaining to a class, category or genus are followed by general words. The general words are construed as limited to things of same kind as those specified. This rule reflects an attempt to reconcile incompatibility between specific and general words in view of other rules of interpretation that all words in the statute are given effect if possible, that of the statute is to be construed as a whole and no words in a statute are presumed to be superfluous. 17. As has been judicially laid down, the rule applies when (i) the statute contains an enumeration of specific words, (ii) the subject of enumeration constitutes a class or category, (iii) that class or category is not exhausted by the enumeration, (iv) the general terms following the enumeration, and (v) there is no indication of a different legislative intent. (see Amar Chandra Chakraborty v. Collector of Excise, AIR 1972 SC 1863 and Grasim Industries Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iously, at that time the word "loan" was not there in the definition of "deposit". The same view as of the Delhi High Court mentioned above has been reiterated by the Madras High Court in A. M. Shamsudeen v. Union of India [2000] 244 ITR 266. Reference to the above case law, in our opinion, does not in any manner advance the case of the appellant assessee. It was rightly pointed out by Sri Bharatji Agrawal, learned senior standing counsel for the Department that the present is not a case of loan. It was neither the case of the assessee at any stage that it was a loan transaction nor the Department contends that the transaction in question is a loan. The entry of deposit finds place in the account books of the assessee, admittedly in the name of four persons, mentioned above. In paragraph 3 of the memo of appeal, though drafted by counsel, it has been stated that the appellant later on when could not arrange the required silk fabrics, on the insistence of the brokers, returned the payment in cash. At this juncture, Sri Upadhyay, learned senior counsel contends that it was a business transaction and not the deposit as commonly understood. The submission is that it was in the nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held therein that the word "any" was used in the statute which was under consideration before the apex court in wider sense extending from one to all. Keeping the above principle in mind, reverting back to clause (ii) to the Explanation, it is evident that here also the word "any" has been used in a wider sense. The said conclusion can be supported from the fact that the object of section 269T is not to tax any income. In other words, it is not a charging section. Its object, on the other hand, is to counteract the evasion of tax in certain cases. The said object finds place in the long title of Chapter XX-B itself. The said section only provides a mode of repayment of certain deposit either by bank draft or account payee cheque with a view to plug the leakage of revenue. In this regard the circular issued by the Board clarifying its object may also be taken into consideration to understand the motivating force for the interpretation of section 269T. 26. Section 269T as it originally enacted was found by the Department being circumvented in various ways including the following one, as explained by the Departmental Circular No. 551, dated January 23, 1990 (see [1990] 183 ITR (St.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Artificial rules to give the taxpayer the "breaks" are not out of place for taxations is now not an "impertinent intrusion into sacred rights of private property". See Oxford University Press v. CIT [2001] 247 ITR 658 (SC) ; [2001] 3 SCC 349. 31. Furthermore, for the purpose of interpretation of a taxing statute the fiscal philosophy, a feel of which is necessary to gather the intent and effect of its different clauses, should be applied. (see K. P. Varghese v. ITO [1981] 131 ITR 597 (SC) ; [1981] 4 SCC 173 ; [1981] SCC (Tax) 293. 32. It is also an acknowledged legal position that while construing a taxing provision, if the object is to prevent tax evasion and the Legislature uses the word capable of comprehensive import, the court cannot proceed on an assumption that the words used in a restricted sense so as to defeat the avowed object of the Legislature. 33. In C. A. Abraham v. ITO [1961] 41 ITR 425 (SC) ; AIR 1961 SC 609, it was held as follows (headnote) : "In interpreting a fiscal statute a court cannot proceed to make good the deficiencies if there being any ; the court must interpret the statute as it stands and in case of doubt in a manner favourable to the taxpayer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned, the said entry may be regarded as admission in the account books unless explained otherwise, which is not a case here. 36. In CIT v. Bazpur Co-operative Sugar Factory Ltd. [1988] 172 ITR 321, the apex court has held though in a slightly different context which reads as follows (headnote) : "The essence of deposit is that there must be a liability to return it to the party by whom or on whose behalf it is made on the fulfillment of certain conditions." 37. Viewed as above, the use of the words "any deposit", in our opinion, has been used to cover all sorts of deposits and "trade deposit" also. A restricted meaning, as suggested by learned senior counsel for the assessee, if given to exclude the trade deposit, if any within the purview of the words "any deposit" the very object of the enactment of section 269T would be frustrated. Not only this, every time a fixed question as to whether the deposit in question is a "trade deposit" or is a "deposit" simpliciter would arise and will have to be adjudicated upon by the authorities concerned which will lead to uncertainty as well as it will amount colossal wastage of time and energy both of the assessee as well as of the taxin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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