TMI Blog1993 (3) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 per cent on total sales, the ITO worked the sale price of the goods purchased from Government at Rs. 2,72,482 which came to 22 per cent of the gross turn-over. Consequently he disallowed proportionate expenses of Rs. 39,555. The disallowance was confirmed in appeal. 3. Relying on CIT v. Maharashtra Sugar Mills Ltd. [1971] 82 ITR 452 (SC), CIT v. Indian Bank Ltd. [1965] 56 ITR 77 (SC), CIT v. Bhopal Sugar Industries Ltd. [1970] 78 ITR 209 (MP) and Addl. CIT v. Nizam Sugar Factory [1981] 127 ITR 423 (AP), A. Sanyasi Rao v. Government of Andhra Pradesh [1989] 178 ITR 31 (AP), Sri Venkateswara Timber Depot v. Union of India [1991] 189 ITR 741 (Ori.) and Sat Pal Co. v. Excise Taxation Commissioner [1990] 185 ITR 375 (Punj. Har.) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted cases and, therefore, the order under appeal called for no interference. 5. Sections 44AC and 206C were inserted by Finance Act, 1988 w.e.f. 1-4-1989 and 1-6-1988 respectively. Section 44AC makes special provision for computing profits and gains from the business of trading in certain specified goods, under the head "Profit and gains of business or profession". It starts with a non obstante clause "notwithstanding anything to the contrary contained in sections 28 to 43C". According to sub-section (1) of section 44AC in the case of purchase of timber, obtained under a forest lease, the profit and gains are deemed to be 35 per cent of the purchase price, while in the case of timber obtained by any mode other than under a forest lease, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g) of the Constitution. The theory of "reading down" is a rule of interpretation resorted to by courts where a provision, read literally, seems to offend a fundamental right or falls outside the competence of the particular Legislature. Reading down meanings of words with loose lexical amplitude is permissible as part of the judicial process. 7. The effect of applying the rule of "reading down" would necessarily be that section 44AC need not be struck down but it should be read not as an independent provision but as an adjunct to and as explanatory to section 206(C). On such construction section 44AC would not dispense with sections 28 to 43C absolutely. The non obstante clause in section 44AC(1) "notwithstanding anything to the contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would, therefore, accept assessee's contention and direct the ITO to disallow expenses of Rs. 38,478 only under section 44AC(3) and modify his assessment order accordingly. Ground nos. 1 2(a), 2(b) and 2(c) are decided in that manner. (2) Disallowance of Rs. 3000 9. An addition of Rs. 3,000 in the sales-tax paid timber account was made on the ground that stock register and quantitative details were not maintained and the g.p. rate declared in this account was also low. 10. Mr. Singhvi urged that purchases and sales were fully vouched and the same g.p. could not have been maintained for all the years. I, however, find that in the sale bills complete details of goods sold i.e., size, kind, width etc. had not been given and in the absen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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