TMI Blog1968 (2) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... in cash or Government securities endorsed to the President of India of value equivalent of 2 1/2% of the value of the work as per his tender rates, into any branch of the Reserve Bank of India or the Imperial Bank of India ......" The opening part of clause 9(1) was: "(1) In order that the work may be carried out efficiently, expeditiously and economically, advance payments may be granted to the contractor after he has furnished a security deposit under clause 2. These advances will be against approved machinery, equipment, materials or structures necessary for the execution of the work and shall be regulated as follows:" Clause 11 reads as under: " In addition to the recovery of 12% mentioned in clause 9 and any other recoveries provided for elsewhere in the contract, a further recovery equivalent to 7 1/2% shall be made from all on account and final bills due to the contractor in respect of work done by him. This additional payment of 7 1/2% by the contractor shall be treated as further security (in addition to the deposit mentioned in clause 2) returnable to him at the end of satisfactory completion of guarantee period. Provided that no security shall be retained on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the requirements of the notification did not apply in the case of " any deposit made by the assessee with the Government under the first part of section 5(2) " and that it was purely a coincidence in the assessee's case that these deposits were in the form of Government securities and even if the deposits had been in some other form or shape they would still be deposits and would be covered by the exemption granted by section 5(2). The Appellate Tribunal of Bombay has, at the instance of the department, reversed the decision of the Appellate Assistant Commissioner and held that the exemption claimed in respect of these amounts deposited by the assessee with the Government of India in the shape of cash and/or Government securities would not be covered by the words used in section 5(2); that in order to entitle the assessee to the exemption claimed in regard to deposits a notification of the Central Government was necessary. If the legislature intended to grant exemption in respect of all deposits then the language used in the sub-section would have been more explicit. They also held on a construction of the sub-section that the three categories of deposits contemplated by secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Government may, by notification in the Official Gazette, exempt from wealth-tax" governs the words "any deposit made by the assessee with the Government". The principal contention on behalf of the assessee is that these words laying down the requirement of a notification in the Official Gazette only govern the second category mentioned above and covered by the use of the words "or in any security of the Government or of a local authority", and not the first category "any deposit made by the assessee with the Government". Counsel next urged that if the above interpretation is correct, then the exemption granted in the case of the first category is "in respect of any deposit" (underlining is ours) and, therefore, it will cover any and every deposit and cannot be limited to any particular class of deposit. To the second contention the answer on behalf of the department has been that the word "deposit" has been used in a special sense and does not cover ordinary commercial or business deposits. Turning to the provisions of sub-section (2), it must be conceded, as urged by counsel for the assessee, that the sub-section could have been couched in happier language and the ideas c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the language and the accepted jargon of finance and business and we should not adopt such an interpretation. It is true that upon the interpretation which commends itself to us, clause (b) would apply to "deposits " in any security of the Government or of a local authority, but if the plain and grammatical construction of the section results in the use of that awkward expression, the court cannot help it. We must accept the phraseology used. We may say also that the expression--"deposit in any security"- is neither so incomprehensible or absurd nor so strained that we must necessarily reject it. In making these provisions it seems to us that the draftsmen always had in mind the several forms of public investments which members of the public usually make with Government or a local authority such as deposits in treasury savings deposit certificates, or deposits in post office savings banks and so on. He was not thinking of ordinary commercial deposits at all such as, for instance, deposits required to be made under commercial contracts with Government for their due fulfilment as in the case before us, or as security for service in Government and so on. We will advert to this poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity", etc. In the second place, it is a cardinal rule of construction of statutes that, except for compelling necessity or where otherwise patent absurdity results, a court should not hold that any word in a statute is a superfluity nor add to the words of a statute, and in the present case we can see absolutely no necessity for doing either. Despite the resultant awkwardness of expression and some confusion of ideas, the intention of the legislature can be clearly gleaned. By clause (b) the legislature intended to exclude from wealth-tax investments in any security of the Government or of a local authority which were to be notified and none other. It suits the case of the assessee to urge that the first clause is a clause by itself and the word "deposit" should be confined only to the first clause but that must necessarily result in our declaring the word "in" superfluous in clause (b) and adding the words "respect of" after the word "in" in clause (b). As between declaring a word in the statute redundant or superfluous or adding words thereto on the one hand, and giving it effect albeit some awkwardness of expression involved, we must adopt the latter course and allow the statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent as to a notification, only applies in the case of securities of the Government or of a local authority. This argument is completely met and negatived by the same words of clause (e) "deposit or security so exempted", because these words show that both deposits and securities can be exempted, i.e., by a notification, but counsel's argument is that for a deposit no notification is at all necessary. Clause (e), therefore, is a double-edged weapon. In some measure it cuts across the argument on behalf of the department, but it also completely destroys the argument on behalf of the assessee. We have already said that the whole sub-section is unhappily worded and we may now add, in the light of what we have said, it could bear re-drafting. The attempt to compress different and conflicting ideas in one complex paragraph (as the sub-section is) has neither made for clarity of ideas nor good syntax. An argument was advanced on the basis of the punctuation marks. It may be mentioned that in the first clause up to the semi-colon(;) after the words "wealth-tax" there do not appear to be any punctuation marks at all and that would rather support the argument on behalf of the department th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in this conclusion the Tribunal was right. We have already said that upon any reading of the sub-section the subject of the second category defined by the words "in any security of the Government or of a local authority" is deposit "and it is in the context of those words that the word "deposit" must be construed. If we are right in this construction then "deposit.... in any security of the Government or of a local authority" cannot possibly mean deposit of any security of the Government or of a local authority. The deposits made by the assessee would not, therefore, be covered by the sub-section and would not be entitled to exemption. But the point of greater importance is that the word "deposit" used in sub-section (2) of section 5 does not appear to have been used in the ordinary sense of a commercial deposit, in the context in which it is used. That this is the correct construction to be placed on the words used in sub-section (2) is further clear from the exception contemplated by the sub-section (in clause (c)) by the words "not specified in clause (xvi) or clause (xvia) of sub-section (1)". The draftsman of the statute, therefore, had in contemplation deposits in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion would be in respect of private commercial deposits made by individuals with the Government under business contracts or other commercial transactions entered into with the Government, e.g., deposits which are liable to be returned when their purpose is served. We are also in agreement with the view expressed by the Tribunal that, if the exemption granted was of so general a character as was sought to be canvassed before us, it would have been granted in clearer language than that employed in sub-section (2) of section 5. We may by way of analogy also refer to parallel provisions in another fiscal enactment, viz., the Indian Income-tax Act. Section 10 of the Income-tax Act of 1961 deals with the subject of exclusion of income from the total income and sub-clause (ii) of clause (15) deals with a number of categories of deposits or investments, but all the contemplated categories of deposits are deposits with different departments of the Government permitted to be invested or deposited and in that context the concluding clause of sub-clause (ii) limits the non-inclusion "to the extent to which the amounts of such certificates or deposits do not exceed in each case the maximum am ..... X X X X Extracts X X X X X X X X Extracts X X X X
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