TMI Blog1994 (9) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 189 ITR 70. The amount was accordingly disallowed by the Assessing officer and the disallowance was confirmed by the CIT(A). 3. The Id. counsel for the assessee has advanced a novel argument before us. Our attention has been invited to Chapter IV of the IT Act, 1961 dealing with " Computation of total income ". Section 14 gives the classification of the heads of income and contains, inter alia, " D - Profits and gains of business or profession ". Thereafter section 28 enumerates income chargeable to income-tax under the head " Profits and gains of business or profession ". Section 29 lays down how such income shall be computed and is reproduced below for the sake of convenience, as it stood in assessment year 1986-87 : " Income from profits and gains of business or profession, how computed. 29. The income referred to in section 28 shall be computed in accordance with the provisions contained in sections 30 to 43A." 4. The Id. counsel for the assessee submitted before us that " 43B " was substituted for " 43A " by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1-4-1989 only. Thus, as far as assessment year 1986-87 was concerned, the income from business had to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t intended to be subserved by the object of the legislation ascertained from the scheme of the legislation, then, if another construction is possible a part from the strict literal construction, then, that construction should be preferred to the strict literal construction. Where the plain literal interpretation of a statutory provision produces a manifestly unjust result which could never have been intended by the Legislature, the court might modify the language used by the Legislature so as to achieve the intention of the Legislature and produce a rational result. " 4. Saraswati Industrial Syndicate Ltd. v. CIT [1982] 136 ITR 361 (Punj. Har.) : " I am unable to hold that the principles of logic are inapplicable to the Indian Income-tax Act or where two constructions are open, then the preference for the better one may not be enforced by the anomalous consequences that may follow from adopting the order. The interpretation placed on section 41(1) of the Act by the Tribunal appears to me to be so hypertechnical that it rises to the point of being patently erroneous. " 5. CWT v. Man Bahadur Singh [1994] 208 ITR 658 (Raj.) : " A provision of law which affects the rights o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49 ITD 484 (Bom.) : " To put it simply, the profit derived from the export of goods was computed in the following manner : Profits of the business X Export turnover -------------------------------------------------------------- total turnover In the above formula, if freight and insurance were excluded from the ' export turnover ', but not excluded from the ' total turnover ', then certainly an anomaly came to existence inasmuch as the profit derived from export of goods became overstated. It was only to remove the anomaly that Explanation (ba) was inserted by the Finance (No. 2) Act, 1991 retrospectively. However, due to an oversight, the date from which ' total turnover ' became relevant for the purpose of computation of deduction under section 80HHC was taken to be 1-4-1987 and not 1-4-1986. The Patna High Court has held in the case of Jamshedpur Motor Accessories Stores v. Union of India [1991] 189 ITR 70, while considering an amendment of section 43B, that the rule of reasonable construction should be followed and literal construction may be avoided if that defects the manifest object and purpose of the Act. The ratio of that judgment would be applicable to the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of their income-tax assessments, they nonetheless claim the liability as deduction even as they take resort to legal action, thus depriving the Government of its dues while enjoying the benefit of non-payment. To curb such practices, I propose to provide that irrespective of the method of accounting followed by the taxpayer, a statutory liability will be allowed as a deduction in computing the taxable profits only in the year and to the extent it is actually paid. This would result in a revenue gain of Rs. 100 crores in a full year and Rs. 80 crores in 1983-84. " In our opinion, the Id. DR has rightly relied on the decision of the Supreme Court in C. W.S. (India) Ltd.'s case where it was held that a literal interpretation leads to an absurd or an unintended result, the language of the statute can be modified to accord with the intention of the Parliament and to avoid absurdity. In our opinion it will be absurd if the provisions of section 43B are made inapplicable from assessment years 1984-85 to 1988-89 only due to the language of section 29 of the Act. 13. The rule of interpretation to be invoked depends to a great extent on the facts and circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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