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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 ..... appellant is carrying on the business of silk fabric. One Sanjay Kumar Agrawal asked Shree Narain and Gopal Das, brokers of silk fabrics for the supply of special kind of silk fabrics. These brokers placed order with the appellant for the supply of required quantity of silk fabrics which was otherwise not easily available in the market. The assessee demanded a sum of Rs. 25,000 from both the brokers towards advance for 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and consequently, the levy of penalty under section 271E of the Act for violation of the provisions of section 269T is invalid. The words "deposit of any nature" in the definition of "deposit" occurring in clause (ii) of the Explanation to section 269T of the Act as amended by the Direct Tax Laws (Amendment) Act, 1987, relevant to the assessment year in question, should be interpreted in a narrow sense. The doctrine of "ejusdem generis" shall be applicable while giving a meaning to the word "deposit". "Deposit" and "loan" are two different connotations 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 vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81. Its heading was amended subsequently by the Finance Act, 1984 and for the words "mode of repayment", the words "mode of acceptance, payment or repayment" were introduced. The heading of the said Chapter now reads as follows : "Requirement as to mode of acceptance, payment or repayment in certain cases to counteract evasion of tax". The heading of the said Chapter, if it is on any importance, is suggestive of the fact that the said Chapter was introduced by the Legislature keeping in view to check the evasion of tax. 10. Prior to the Direct Tax Laws (Amendment) 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 ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise v. Maharashtra Fur Fabrics Ltd. [2002] 7 SCC 444, wherein it has been held as follows (page 446) : "It is a well-established principle that general terms following particular expressions take their colour and meaning as that of the preceding expressions, applying the principle of ejusdem generis rule, therefore, in construing the words 'or any other process', the import of the specific expressions will have to be kept in mind. It follows that the words 'or any other process' would have to be understood in the same sense in which the process, including tentering, would be understood. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1908. 20 . With reference to section 269T of the Act, a decision of the Delhi High Court in Baidya Nath Plastic Industries P. Ltd. v. K. L. Anand, ITO [1998] 230 ITR 522, noticing the distinction between "loan" and "deposit", held that a loan transaction is not covered within the definition of "deposit" under section 269T as it then was. It was a case prior to the commencement of the Direct Tax Laws (Amendment) Act, 1987. At the material time clause (ii) to the Explanation to section 269T reads as follows : "'deposit' means any deposit of money which is repayable after notice or repayable after a period." 21. Obviously, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r finds support from the use of word "includes" as well as of "any". 24. The apex court in Lucknow Development Authority v. M. K. Gupta [1994] 80 Comp Cas 714 ; [1994] 1 SCC 243 has held that the word "any" is a word of wide amplitude. Its dictionary meaning is "one or some or all". Referring to Black's Law Dictionary it has been stated as follows (page 722) : " In Black's Law Dictionary it is explained thus, the word 'any' has a diversity of meaning and may be employed to indicate 'all' or 'every' as well as 'some' or 'one' and its meaning in a given statute depends upon the context and the subject-matter of the statute." 25 . It was 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e operational computer separately as a result of which the buyers may have to incur extra charges. The customers, thus, may not be able to get the benefit of the information contained in the operational computer loaded in the factory. Furthermore, it may encourage in loading of pirated softwares in the computer." 28. In Hansraj and Sons v. State of Jammu and Kashmir [2002] 128 STC 203 (SC) ; [2002] 6 SCC 227 ; AIR 2002 SC 2692 the rule of strict construction of a taxing statute was recommended. 29 . We are also not oblivious of the fact that when the statutory provision is reasonably akin to only one meaning, the principle of strict construction may not be adhered to. 30 . 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation to return is very much included in the word "deposit", as noted above. It is not in dispute that the assessee has shown these deposits in his account books as deposit. We are conscious that it is true that nature and quality of receipt and not the head under which it is entered in the account books would prove decisive. If a receipt is a trading receipt, the fact that is not so shown in the account books of the assessee would not prevent the taxing authority from treating it as a trading receipt. (see Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 (SC) ; [1973] 31 STC 254 (SC) and Punjab Distilling Industries Ltd. v. CIT [1959] 35 ITR 519 (SC)). But the fact remains that the so far as the assessee is concerned, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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