TMI Blog2010 (8) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Officer that the aims and objectives of the assessee-trust would make it charitable within the meaning of section 2(15) of the Income-tax Act, 1961 (hereinafter referred to as the Act ). However, notwithstanding the fact that the assessee fulfils these conditions, the Income-tax Officer refused to grant the benefit of section 11 of the Act to the assessee on the ground that the assessee had infringed the provision of section 13(1)(d) of the Act. This opinion of the Assessing Officer was influenced by the act of the assessee in making investment in secured debentures of Indian Rayons, secured convertible bonds of Voltas Ltd. and unsecured bonds of Telco. The view of the Assessing Officer was that the income derived from debentures was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecure a sum of money. The order of the learned Appellate Assistant Commissioner was therefore, eminently justified. 2. At this stage the Department moved an application under section 256(1) of the Act seeking reference to this court which was rejected by the Tribunal. After facing this rejection, the Department approached this court under section 256(2) of the Act and in that application, this court directed the Tribunal to refer the following question of law for the opinion of this court, along with statement of case : Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in allowing the benefit of section 11 of the Income-tax Act to the assessee when it had made inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes debenture stock, bonds and any other securities of a company, whether constituting a charge on the assets of the company or not. The same is the meaning given in the English Companies Act of 1948 (section 455). Palmer would state that the term `securities' in the definition clause is apparently used in a sense slightly in excess of its strict legal meaning. Lindley J. observed in an early case British India Steam Navigation Co. v. IRC [1881] 7 QBD 165 at pages 172-173 : `What the correct meaning of debenture is I do not know. I do not find anywhere any precise definition of it. We know that there are various kinds of instruments commonly called debentures. You may have mortgage debentures, which are charges of some ki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essarily-called on the face of it a debenture, and providing for the payment of, or acknowledging the indebtedness in, a specified sum-say, 100-at a fixed date, with interest thereon. It usually-but not necessarily-gives a charge by way of security, and is often-though not invariably-expressed to be one of a series of like debentures. But the term, as used in modern commercial parlance, is of extremely elastic character, for (1) it is sometimes used, both by lawyers and businessmen, to describe an instrument which is not called, on the face of it, a debenture, e.g., a bond ; (2) it is used of an instrument which is not one of a series. A single debenture may be issued to one man ; (3) it is not the less a debenture beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the instrument itself, and, without the assistance of any precise legal definition form the best opinion we can whether the instrument is or is not a debenture'. 4. Thus, the court was of the opinion that in the absence of any definition of debenture in the Income-tax Act, reliance could be placed upon the definition given in section 2(12) of the Companies Act and also the common parlance in which this term is understood. Even the Madras High Court in the case of CIT v. Lakshmi Vilas Bank Ltd. The reference appears to be to [1997] 228 ITR 697 (Mad) had an occasion to deal with this very aspect and it also categorically held that as the Income-tax Act does not define debenture , to understand the meaning of this term, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, that would not mean that when we deal with the investment in debentures , which also clarifies for exemption, we have to give a restrictive meaning to the term debenture more particularly when this term is not defined under the Act. It is a trite principle of interpretation that in the absence of any definition given to a particular term in a statute, the meaning which is to be given to the said term is the meaning which is understood in common parlance. The Supreme Court in the case of Noorie Manure Mill v. Commissioner, Trade Tax [2007] 10 SCC 478 ; [2007] 7 VST 545 (SC) observed as under (page 552) : In absence of any definition of the term in the statute, the meaning thereof as understood in common parlance for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
