TMI Blog2003 (8) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on27th March, 1996. The assessee made a request to treat the earlier returns filed on15th Dec., 1993, as a valid return in response to notice under s. 148. It was contended that the first assessment since had already been completed, this was a case of reassessment pursuant to a fresh notice dt.27th March, 1996. Interest under ss. 139(8) and 215/217 of the IT Act could not have been charged for the reason that the reassessment so made was not a regular assessment as defined under s. 2(40) of the Act. 4. Likewise, there was no justification in levy of interest for asst. yr. 1989-90 as that was not the first regular assessment. A reliance has also been placed on the decision of CIT vs. Padma Timber Depot (1988) 67 CTR (AP) 109 : (1988) 169 ITR 646 (AP), where meaning of regular assessment has also been assigned by holding that the assessment made under s. 143(3) r/w s. 147 was not a regular assessment and the levy of interest under ss. 139(8) and 217 was not valid. It was, therefore, contended that the very levy of interest in these two years is unjust and uncalled for. 5. On the other hand, the learned Departmental Representative contends that assessment made for the first tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings when the assessment was made under s. 143(3) r/w s. 147. Such an assessment was held not to be a regular assessment and the levy of interest under s. 139(8) and s. 217 was held as invalid for the asst. yr. 1976-77. 11. In the appellant s case before us the assessment already made stood cancelled. The legal effect of cancellation of such assessment by the learned CIT(A) was that as if no assessment had been made on the assessee. The AO is found to have held valid jurisdiction for initiating proceedings under s. 148 on27th March, 1996, and assessment was completed under s. 143(3) pursuant to such a notice. After the decision of Padma Timber Depot for asst. yr. 1976-77 there has been an amendment in the Act. Such an amendment as stated hereinbefore was applicable to the assessee s case for both the years, i.e., asst. yrs. 1988-89 and 1989-90. Sec. 2(40) of the Act gives a general definition only and it is not the charging section. It is a well-settled principle of construction that a fiscal statute should be construed strictly. This is applicable to taxing provisions such as charging provision and not to those parts of the statute which are general. When the answer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Tribunal where interest under s. 234B was deleted under the identical circumstances as in the case of present assessee before us. We, therefore, direct the AO to delete the interest so charged under ss. 234A and 234B of the Act. 15. In asst. yr. 1989-90 ground No. 3 has not been pressed. The same is dismissed as not pressed. 16. Ground No. 4 in 1989-90 and 1990-91 relates to charging of notional interest on security received against renting of the property. 17. Briefly, the facts are that the assessee let out its property and received deposits from tenants. The AO added interest on such deposits from tenants in the annual value of the property before allowing statutory deduction under the head "income from house property". The assessee agitated such inclusion of interest as annual value/rental income before the learned CIT(A). 18. The assessee s case before the learned CIT(A) is that the assessee received deposits in order to ensure timely payment of rent as well as proper upkeep of the premises. On such deposits no interest was payable by the appellant to its tenant, M/s Lupin Laboratories. It was also contended that the assessee had raised certain loans and the money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o any notional interest on deposit made by tenant could not have been made. Any such addition made by the AO and sustained by the learned CIT(A) is directed to be deleted. Their orders stand modified accordingly. 22. In ground 5, in asst. yr. 1989-90, the assessee has challenged sustenance of addition of Rs. 7,98,597 for the alleged short-term capital gain while in the asst. yr. 1990-91, in ground 3, sustenance of addition of Rs. 1,76,419 for the similar reason is under challenge. 23. In asst. yr. 1989-90, the AO observed that the assessee has disclosed deposits against shops received from 6 parties aggregating to Rs. 12,51,000 as per details given in para 11 of his order. During the assessment proceedings the assessee produced memorandum of agreement of understanding entered into with various persons from whom such deposits were received. The assessee-company has also handed over physical possession of vacant shops to them with a right to enjoy the same along with the appurtenances. The assessee-builder also allowed and conferred upon the depositors an irrevocable right to occupy and use the said shop for any purpose whatsoever without paying any remuneration for use and occup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions, namely, Digamber Jain vs. Sub Registrar AIR 1970 MP 29 and State of Orissa vs. Titager Paper Mills Co. Ltd. AIR 1985 SC 1345, para 117. Extracts of both the judgments are placed on record which read as under: 1. Digamber Jain vs. Sub Registrar AIR 1970 MP 26 The cardinal rule of construction is that a document must be read as a whole, each clause being read in relation to the other parts of the document, and an attempt should be made to arrive at an interpretation which will harmonise and give effect to the other clauses thereof. It is not legitimate to pick-put an expression torn from its context and try to interpret the document as a whole in the light of that expression. Such a forced construction on the document in question cannot but defeat the very object which its executants had in view." These principles have to be applied to understand the scope of the agreement. 2. State ofOrissavs. Titager Paper Mills Co. Ltd. AIR 1985 SC 1345, para 117. "It is well-settled rule of interpretation that a document must be construed as a whole. This rule is stated in Halsbury s Laws of England, Fourth Edn., Vol. 12, para 1469, at p. 602, as follows: Instrument construe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cent of the space to various tenants and 10 per cent was occupied for its own office purposes. Revenue has not challenged this finding. As far as Revenue is concerned, this has become final. Having given right to vacate the shop and assurance to refund the entire deposits without surrendering any right in the land or the property owned by it the learned CIT(A) was not justified to come to the conclusion that assessee has surrendered unfettered right in favour of the tenants. Such a conclusion drawn by the learned CIT(A) was erroneous and contrary to facts. The agreement is found to be in the nature of rent agreement and the overall interpretation of the conditions contained therein does not show that the deposit received by the assessee was in consideration of transfer of rights in the property belonging to it. We, therefore, agree with the assessee that the deposit was not a sale consideration but merely an amount which was refundable at the discretion of the depositors by giving three months notice to the assessee. This was outside the scope of transfer within the meaning of IT Act, 1961, and as such this amount could not have been brought to tax as capital gain in both the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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