TMI Blog1999 (4) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 20,000 so withdrawn out of NSS account in the statement of total income but it was claimed that the said account be excluded while determining the total income chargeable to tax as the same amount is not in the nature of income. It was also mentioned that same had been shown in the statement of income to avoid levy of penalty/additional tax under section 143 (1A) of the Act. The Assessing Officer did not exclude the said amount while determining the total income and levied tax thereon and also charged interest under sections 234B and 234C of the Act, vide intimation under section 143(1)(a) of the Act. The assessee moved an application under section 154 dated 5-4-1994 and requested the Assessing Officer (hereinafter referred to as Assessing Officer) to delete the said amount of Rs. 20,000 from the total income and detailed reasons were also given for that but Assessing Officer rejected the application of the assessee vide order dated 24-8-1994 on the ground that provisions of section 80CCA, were quite specific and the amount of such withdrawal from NSS account is to be treated as income. The assessee came in appeal before CIT(A) and had taken up the same plea through written su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that all receipts of payments do not necessarily bear the income character. Relying upon the decision of Hon'ble Supreme Court in the case of National Cement Mines Industries Ltd. v. CIT [1961] 42 ITR 69 wherein it has been laid down that unless the receipt falls within the definition of income under section 2(24), it does not change the character. It was submitted by the assessee that withdrawal of the deposit from the NSS account would continue to be of the same character i.e., capital unless the same is specifically brought within the definition of income under section 2(24). It was also the case of the assessee that distinction between capital receipt and revenue receipt though fine, is real. There are certain broad principles which guide to determine the character of receipt as laid down byApex Courtin the case of National Cement Mines Industries Ltd. The assessee's case is that wherever Legislature intended to tax capital and non-revenue receipts, the specific provisions have been made by bringing such capital and non-revenue receipts within the definition of income under section 2(24) of the Act. The assessee submitted that such incorporation under the definition of 'income' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition of 'income' by bringing withdrawals from NSS account into that definition as done in the case of Annuity scheme and in other cases of receipt of capital nature and thus, such withdrawals cannot be taken in the definition of income and not chargeable to tax. 6. The other part of the argument of the assessee is that a receipt can only be treated as income if the same falls within the scope of the charging section. Reference to the latest decision of the Hon'ble Supreme Court in the case of Union of India v. A. Sanyasi Rao [1996] 219 ITR 330/85 Taxman 321 was made in which their lordships have observed that sections 4 to 9 of the Act are the charging sections on the basis of which the income can be assessed for income tax. Section 80CCA falls within Chapter VI-A which was not a charging section. He further invited our attention to provisions of section 4 of the Act which provides that income-tax shall be charged on total income of the previous year. Further, section 5 lays down the scope of the total income to include all income from whatever source derived. The assessee further invited our attention to the definition of 'total income' which is defined under section 2(45) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithdrawal form NSS account is not covered under the definition of income, it may form part of total income of the assessee but the same is not chargeable under section 56(1) or any other head and thus, the same cannot be taxable. In the same connection, reliance was also placed on the decision of Apex Court in the case of Universal Radiators v. CIT [1993] 201 ITR 800/68 Taxman 45 in which their Lordships have laid down as under :--- "Exigibility to tax is not the same as liability to pay tax, the former depends on the charge created by the Act and the latter on computation in accordance with the provisions in the Act and Rules." On the basis of which it was submitted that the Act failed in enacting chargeability of the amount and bringing the above withdrawal from NSS account within the definition of income and if the words of taxing statute fail, then so must the tax. The Courts cannot, help the draftsmen by a favourable construction as laid down in the case of CIT v. Elphinstone Spg. Wvg. Mills Co. Ltd. [1960] 40 ITR 142 (SC). 7. Further plea from the side of assessee is that at present existing, position of section 80CCA indicates that it stopped deeming the withdrawal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount, the same cannot be treated as income. 10. The sum and substance of the argument of the assessee was that action of Assessing Officer to treat the withdrawal from NSS account as income was prima facie illegal and without support of any provisions of the Act and he was not justified in computing the same without specific head of the charge. 11. Ld. DR, as against it, argued that authorities below were justified in taxing the amount of withdrawal from NSS account. Meeting out the first argument of the assessee, the ld. DR submitted that definition of 'income' under section 2(24) of the Act is not exhaustive. It starts with the words: 2(24): 'income' includes :--- (i)....... (ii)........... According to ld. DR, the different sub-clauses of section 2(24) gives the different types of amounts which have been brought into the definition of income by the Legislature but this definition is to be read with the opening words of section 2 itself which provides definitions of different words used in the Act but with the rider which reads as under :--- Section 2: In this Act unless the context otherwise requires ...... 12. According to ld. DR, the words 'unless the context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r child in the income of individual. The other provision referred to was that of provision of sections 68,69 of the Act and that of 115J and it was submitted that the Act had created fiction in respect of these incomes but such income had not been brought in the definition of income under section 2(24) of the Act but that does not mean that such fiction created by this Legislature is meaningless and such income shall not be subject to charge. 14. The ld. DR submitted that their lordships of Hon'ble Supreme Court in the case of Bhagwan Das Jain v. Union of India [1981] 128 ITR 315/5 Taxman 7, had all occasion to decide the controversy as to what the expression 'income' denotes and their lordships concluded that dictionary meaning of this word is 'a thing that comes in'. Income may also be defined as gain derived from land, capital or labour or in two or more of these. Even in its ordinary economic sense, the expression 'income' includes not merely what is received or what comes in by exploiting the use of a property but also what one saves by using it oneself. That which can be converted into income can be reasonably recorded as giving rise to income. The other citation referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be extended to assessee. 19. We have considered the rival submissions and carefully gone through the case law as referred to by respective representative of the parties. 20. Before we proceed to discuss the respective contentions of the ld. representatives of both the parties, it will be beneficial to point out that provisions of section 80CCA of the Act were brought to the statute through the Finance Act, 1987 with a view to provide incentive to the net savings to be made by different types of assessees. The language used by the Legislature in the above section 80CCA is relevant and we reproduce the relevant portion to understand the very import of the above language. It reads as under :--- "Deductions in respect of deposits under National Savings Scheme or payment to a deferred annuity plan. 80CCA : (1) where an assessee, being --- (a) an individual, or (b) a Hindu undivided family, has in the previous year --- (i) deposited any amount in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf or (ii) paid any amount to effect of keep in force a contract for such annuity plan of the Life Insuranc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging the withdrawal from NSS account in the above definition. To appreciate this contention, we have to look into the very scheme of the Act and for that the definition of income as given under section 2(24) is to be examined with context to the very section 2 of the Act. The very purpose for bringing the definition section in every enactment is to coin definitions for phrases used in that Act as a definition is intended to serve as a device of shortening sections and to simplify legislative expression for saving a great deal of space and elimination of the repetition of long cumbersome identification. The 'income' has been defined by section 2(24) as under :--- "2(24): 'Income' includes --- (i) Profit and gains (ii) Dividend (iii) ..................... etc. Here, the word 'includes' is significant one and we have to see as to what it indicates. There are two form of interpretation clause, in one where the word defined is declared to 'mean' so and so, the definition is explanatory and prima facie restrictive. in the other, where the word defined is declared to 'include' so and so, the definition is extensive. When the Legislature wants to enlarge the natural meaning of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Addl. CIT v. K. Rama Brahman Sons (P.) Ltd. [1978] 115 ITR 369, as any thing which can properly be described as income and is taxable under the Act unless expressly exempted. While interpreting the word 'income', their Lordships have gone to the extent by not only including the natural and ordinary meaning of that word but even included artificially categories of the income in the definition of income and reference may be made to the decision of CIT v. Jaora Oil Mill [1981] 129 ITR 423 (MP) where their Lordships have opined that the word definition of income in section 2(24) is an inclusive definition and it covers even such items which are not income in the natural sense of the word; even in its broadest connotation, 'income' refers to monetary return 'coming in' and is conceptually contrary to loss. On the basis of above case law, word 'income' is to be interpreted in view of the definition given above by different High Courts in which word 'income' is not only used in its natural ordinary sense but even included artificial categories of income in it 24. Further, the definition of income is to be read subject to the qualifying expression used in section 2 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections 22 and 23 of the Act. 26. Not only this, it is also relevant to point out that provisions of section 32A provides deduction in respect of investment allowance in a particular year and the Legislature had provided in section 155(4A) that in case machines purchased out of the reserve created under section 32A of the Act are disposed of within a specified period, the total income of the assessee is to be re-computed bringing the amount of investment allowance so deducted to tax. From the above, it is clear that if any deduction is allowed to any assessee on a particular count and if assessee violates the specific provisions, the amount of deduction so allowed is brought to tax without bringing corresponding insertion of such amount in the definition of income provided under section 2(24) of the Act. The same ratio is applicable to the provisions of section 80CCA and sub-section (1) provides a deduction and sub-section 2 which is read to be with the sub-section (1) provides that such deduction shall be chargeable to tax in the year of withdrawal. Both these sections cannot be read in isolation but subsection 1 is interdependent with sub-section 2 and the very intention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure in its wisdom has created fiction under section 80CCA(2) of the Act, then such amount of receipt withdrawn from NSS shall be the deemed income forming part of total income of the assessee and that appears to be the reason that Legislature must have not brought the proposed amendment to section 2(24) bringing the above withdrawal from NSS account under section 2(24). 28. We do agree with the preposition of assessee that receipt by itself is not sufficient to tax but it is only receipt of revenue nature which is income and can be attracted tax and receipt of capital nature does not, normally, come within the net of the Act as laid down by their lordships in the case of CIT v. Krishna Industrial Corpn. [1973] 92 ITR 261 (AP). But the fact remains if any fiction is created by the Legislature, then the amount, if made taxable by creating a fiction, the nature of that receipt shall not be capital but that will be income as Legislature had made that amount as 'deemed income' for charging of tax. 29. We also agree that sections 4 to 9 of the Act are charging sections but as discussed above, the above deemed income is also chargeable under section 5 of the Act and there remains no l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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