Orissa High Court
Commissioner Of Income-Tax vs Orissa State Warehousing Corporation on 8 February, 1993
Equivalent citations: [1993]201ITR729(ORISSA)
Author: A. Pasayat
Bench: A. Pasayat
JUDGMENT A. Pasayat, J.
1. At the instance of the Revenue, the following questions have been referred to this court under Section 256(1) of the Income-tax Act, 1961 (in short,"the Act"), by the Income-tax Appellate Tribunal, Cuttack Bench, Cuttack (in short, "the Tribunal") :
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the interest received by the assessee from the banks on fixed deposits was exempt under Section 10(29) of the Income-tax Act, 1961 ?
(2) Whether, on the facts and in the circumstances o'f the case, the Tribunal was justified in holding that the interest received from the banks on fixed deposits was incidental to or consequential to the activities of the business of the assessee and was not taxable under the head 'Income from other sources' and, thus, exempt under Section 10(29) of the Income-tax Act, 1961?"
2. The reference is in respect of the Orissa State Warehousing Corporation (hereinafter referred to as "the assessee") which is a statutory authority under the Agriculture and Co-operation Department of the Government of Orissa. It is established under the Warehousing Corporations Act, 1962. For the assessment year 1983-84, besides its business income, the assessee received Rs. 1,74,383 as interest on fixed deposits made in different banks. During the relevant period the assessee had also paid total interest of Rs. 1,08,063 to the banks. The resultant difference of Rs. 66,320 was brought to tax by the Income-tax Officer, Ward-A, Bhubaneswar (hereinafter referred to as "the Assessing Officer"). According to the Assessing Officer, the amount in question was not exempt under Section 10(29) of the Act. In appeal, the Commissioner of Income-tax (Appeals), Orissa, affirmed the conclusions of the Assessing Officer. On further appeal by the assessee, the Tribunal was of the view that the income in question was exempt under Section 10(29). On being moved by the Revenue, the questions as indicated above have been referred to this court for opinion.
3. According to Mr. R. P. Kar, appearing for the Revenue, the Tribunal was not justified in treating the interest income as exempt under Section 10(29) because the expression "any income"appearing in Section 10(29) is relatable only to that part of the income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities. It does not refer to any other income. Mr. S. Ray, appearing for the assessee, on the other hand, contended that a restricted meaning would frustrate the purpose for which Section 10(29) has been enacted. According to him, the articles and memorandum of association of the corporation permit investment of surplus funds in banks and the amounts kept in fixed deposits and other deposits in banks have nexus with the earnings from letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, and, therefore, the income has been rightly held to be exempt by the Tribunal.
4. For resolution of the dispute, it is necessary to refer to Section 10(29) of the Act which reads as follows :
"10. Incomes not included in total income. --In computing the total income of the previous year of any person, any income falling within any of the following clauses shall not be included. . . .
(29) in the case of an authority constituted under any law for the time being in force for the marketing of commodities, any income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities ; , . ."
5. The provision consists of one single sentence. In it, the term "marketing of commodities"has been used at two places. In the beginning, it has been used to indicate the purpose for which the authority should have been constituted. In the last clause, this term has been used to indicate the purposes for which godowns or warehouses are to be let out in order to gain the exemption. For claiming exemption, it must be proved that the income derived by an authority constituted for the marketing of commodities is income which is derived from letting of godowns or warehouses for the purposes specified in that Section which are for storage, processing or facilitating the marketing of commodities. If the letting of godowns or warehouses is for any other purpose, or if income is derived from any other source, such income is not exempt. Section 10 groups in one place various incomes which are exempt from tax. The incomes enumerated in this Section are not only excluded from the taxable income of the assessee but also from his total income. In other words, they are not to be taken into computation for the purpose of determining either the taxable income or the rate of tax. As the description of the Section indicates, the incomes enumerated in this Section are "not included in total income ". Chapter III wherein Section 10 appears is nomenclatured as "Incomes which do not form part of total income". According to Section 2(45), "total income"means total amount of income referred to in Section 5, computed in the manner laid down in the Act. Exemption granted under the Act is of two kinds. Certain incomes are exempt from charge and are also excluded from the assessee's total income, for example, the income exempted under Sections 10, 10A, 10B, 11, 12, 13A, etc. Certain other incomes are exempted from income-tax but they are to be included in the assessee's total income; for example, the sums exempted under Section 86 which are expressly declared by Section 66 to be includible in the assessee's total income.
6. Though the burden is on the Revenue authorities to show that a receipt constitutes income and the same is liable to tax under the statute, the onus of showing that a particular class of income is exempt lies on the assessee. Unlike some of the clauses which deal with income of an authority or institution from any source, the exemption provided in Clause (29) deals with an authority and income from a particular source. Unlike clauses (20A), (21) and (22), it deals with income derived by any authority undertaking a particular enterprise. There is a clarification in Clause (29) about the income which is exempt. The clarification is laid down by the words "derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities". Therefore, to claim exemption, the assessee has to prove that the income is derived by an authority constituted for the marketing of commodities from the letting of godowns or warehouses for the purposes specified in Section 10(29), i.e., storage, processing or facilitating the marketing of commodities. If the letting of godowns or warehouses is for any other purpose, and if the income is derived from any other source such income is not exempt under Clause (29).
7. It is submitted that a restricted meaning would defeat the purpose for which Section 10(29) was enacted and a liberal construction would encourage the authorities which are engaged in the activities of marketing commodities to expand. We find no substance in this argument. While interpreting a taxing statute, equitable considerations are entirely out of place. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute, in the light of what is clearly expressed ; it cannot imply anything which is not expressed ; it cannot import provisions in the statute so as to supply any assumed deficiency. One has to look at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing has to be read in, nothing is to be implied. One can only look fairly at the language used. In case of reasonable doubt, the construction most beneficial to the subject is to be adopted. But even so, the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. The underlying principle is that the meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the court as to what is just or expedient. The expressed intention must guide the court. If the intention of the Legislature is clear and beyond doubt, then the fact that the provisions could have been more artistically drafted cannot be a ground to treat any part of a provision as otiose. Though in recent times there has been change from emphasis on grammatical meaning to intention of the Legislature or purpose of statute, yet if the words are ambiguous, uncertain or any doubt arises as to the terms employed, the court has a paramount duty to put upon the language of the Legislature a rational meaning. In the past, the judges and lawyers spoke of a golden rule by which statutes were to be interpreted according to the grammatical and ordinary sense of the word. They took the grammatical or literal meaning unmindful of the consequences. Even if such a meaning gave rise to unjust results which the Legislature never intended, the grammatical meaning alone was held to prevail. They said that it would be for the Legislature to amend the Act and not for the court to intervene by its innovation. During the last several years, the golden rule has been given a farewell. Now the words of the statute are examined rationally. If the words are precise and cover the situation at hand, there is no necessity to go any further. The court expounds those words in the natural and ordinary sense of the words. As indicated above, in case of ambiguity and uncertainty, every word, every Section and every provision is examined. The statute is examined as a whole. The necessity which gave rise to the Act is also examined. Mischiefs which the Legislature intended to redress are looked at. The court will not consider any provision out of the framework of the statute. It will not view the provisions as abstract principles separated from the motive force behind. The provisions have to be considered in a manner so as to ensure coherence and consistency within the law as a whole and to avoid undesirable consequences. This adventure, no doubt, enlarges the court's discretion as to interpretation. But it does not imply power to the court to substitute its own notions of legislative intention. It implies only a power of choice where differing constructions are possible and different meanings are available. (See Kehar Singh v. State (Delhi Admn.), AIR 1988 SC 1883). In Goodyear India Ltd, v. State of Haryana [1991] 188 ITR 402 ; AIR 1990 SC 781, it has been observed that, on numerous occasions, it has been said that fiscal laws must be strictly construed, words must say what they mean, nothing should be presumed or implied, these must say so. The true test must always be the language used.
8. Literally, exemption is freedom from liability, tax or duty. Fiscally, it may assume varying shapes, specially in a growing economy. For instance, tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective, etc. That is why its construction, unlike charging provision, has to be tested on a different touchstone. In fact, an exemption provision is like any exception and on normal principles of construction or interpretation of statutes, it is construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment State Revenue. But once exception or exemption becomes applicable, no rule or principle requires it to be construed strictly. Truly speaking, a liberal and strict construction of an exemption provision is to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause, then it being in the nature of exception, it is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. (See Union of India v. Wood Papers Ltd., AIR 1991 SC 2049). Liberal construction of a statute so as to effectuate the object thereof can be taken recourse to while interpreting a particular provision when two opinions are capable of being held. (See CIT v. Cellulose Products of India Ltd. [1991] 192 ITR 155 ; AIR 1991 SC 2285).
9. But the case at hand is not a case of ambiguity. As observed by the apex court in Keshavji Ravji and Co. v. CIT [1990] 183 ITR 1 ; AIR 1991 SC 1806, as long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention of the Legislature cannot then be applied to whittle down the statutory language which is otherwise unambiguous. If the intendment is not in the words used, it is nowhere else. The need for interpretation arises when the words used in the statute are, on their own terms, ambivalent and do not manifest the intention of the Legislature.
10. The language used in Section 10(29) is so clear and unambiguous that there is no scope for accepting the submission of learned counsel for the assessee that the plain meaning is to be given a go-by.
11. In view of the analysis made by us, the first question referred is answered in the negative, against the assessee and in favour of the Revenue. In view of this answer, there is no necessity to answer the second question which is merely academic.
12. The reference is accordingly disposed of. No costs.
D.M. Patnaik, J.
13. I agree.