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TMI Blog1993 (3) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment under the agreement was " during a period of not less than seven years " within the proviso to rule 1(v) of the Second Schedule to the Companies (Profits) Surtax Act, 1964 ( for short " the Act " ). The Act imposed a surtax on so much of the chargeable profits of every company as exceeded the statutory deduction. " Chargeable profits " was defined by section 2(5) of the Act to mean the total income as computed under the Income-tax Act, 1961, and adjusted in accordance with the First Schedule to the Act. " Statutory deduction " was defined by section 2(8) of the Act to mean an amount equal to ten per cent. of the capital of the company as computed in accordance with the provisions of the Second Schedule to the Act or an amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessable for the assessment year 1965-66. The Income-tax Officer rejected the claim of the respondent-company on the ground that the repayment of the term loan was not "during a period of not less than seven years". On appeal the Appellate Assistant Commissioner reversed the findings of the Income-tax Officer and held that the provisions of rule 1(v) of the Second Schedule to the Act were satisfied and as such the respondent-company was entitled to include the term loan for the purposes of computing the chargeable profits. The Department preferred a further appeal to the Income-tax Appellate Tribunal. The Tribunal held that only the last instalment of Rs. 16,00,000 was payable "during a period of not less than seven years" and as such satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s payable within the period of seven years. According to him the period of seven years is obviously a period which is " not less than seven years We are of the view that on a plain reading of the proviso to rule 1(v), Second Schedule to the Act, it is clear that in order to claim the benefit of the said provision, the borrowed money has to be repaid during the period of more than seven years. The only interpretation which can be given to the expression " during a period of not less than seven years " is that the said period should go beyond seven years. The reasoning is simple. The period of seven years would not be complete till the last " minute " or even the last " second " of the said period are counted. In other words, till the last m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Railway Sleepers Supply Co., In re [1885] LJ 54 Ch 720 ; [1885] 29 Ch 204, it was held that the expression "'not less" than a given number of days means " clear days ". It was held that the expression "not less" indicates " a minimum ". In the present case, the whole of the term loan was payable within the period of seven years and as such the loan of Rs. 50,00,000 taken by the respondent-company from the National Grindlays Bank was not qualified for inclusion in the capital base under rule 1(v) of the Second Schedule to the Act. The Tribunal in part and the High Court were not justified in deciding the issue in favour of the respondent-company. Since the order of the Tribunal granting relief to the respondent-company to the extent of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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