TaxTMI 
TaxTMI 
2003 (9) TMI 74
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....tablished are: "1. To establish, promote, conduct, manage, maintain, improve, regulate, run, work and control the different types of schemes for encouraging the habit of savings and wise economy amongst the public on scientific, practical lines and also help men, women and children for their economical, social and educational welfare through its schemes. The company shall carryon business as per the guidelines of the RBI directives but shall not carry on business of chain letters, prize chit schemes, money circulating schemes, chit funds auction, nor the banking business as defined under the Banking Regulation Act, 1949, or any other scheme banned by any law. 2. To buy, sell, invest or otherwise deal in securities, bonds or fixed deposits issued by any institution, body corporate, corporation, established or constituted under any Central or State enactments or in other securities in which the company may be required to invest under any law in force." This appeal is being pressed on three grounds which are stated in the memorandum of appeal. The facts of the case are narrated in detail in the orders of the income-tax authorities and the Tribunal, and we shall refer to them ....
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....Act, under the head 'Interest on securities'. (ia) interest referred to in sub-section (18) of section 42 of .the Reserve Bank of India Act, 1934 (2 of 1934) ; (ii) discount on treasury bills." After its amendment in 1991 the definition of "interest" in section 2(7) reads : "'interest' means interest on loans and advances made in India and includes, (a) commitment charges on unutilised portion of any credit sanctioned for being availed of in India; and (b) discount on promissory notes and bills of exchange drawn or made in India, but does not include (i) interest referred to in sub-section (18) of section 42 of the Reserve Bank of India Act, 1934 (2 of 1934) ; (ii) discount on treasury bills." Shri Bharati Agarwal, learned counsel for the appellant, contended that since the earlier definition of interest in section 2(7) specifically excluded interest on securities from the definition of interest, while the new definition of the word "interest" does not specifically exclude interest on securities, the legislative intent was obviously that now interest on securities will also be treated as interest within the meaning of section 2(7). We do not agree. ....
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....st look to the general scope and purview of the statute, and at the remedy sought to be applied, and consider what was the former state of the law, and what it was that the Legislature contemplated" was made while construing a non-taxing statute. The said rule had only a limited application in interpreting a taxing statute. It follows from this decision that the mischief rule laid down in Heydon's case [1584] 3 Co. Rep. 7a has only a limited application to taxing statutes. Hence there is no question of looking into the legislative intent or spirit of the law in a taxing statute. We have only to see the actual words used. In other words, in a taxing statute we have to go by the letter of the law, and not its spirit or intent. The new definition of the word "interest" in section 2(7) is in two parts. Firstly, it says that "interest" means interest on loans and advances. Secondly, it includes two other items in the definition of the word "interest". In our opinion, the only correct interpretation of this provision can be that firstly nothing is interest except interest on loans and advances. Secondly, two other categories are also included in the definition of the word "inter....
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.... held by the Supreme Court in the case of Krishi Utpadan Mandi Samiti [1993] Supp 3 SCC 361 (II) is that agricultural produce in section 2(a) of the U. P. Krishi Utpadan Mandi Adhiniyam will not only include the items mentioned in that provision but also such items in the processed form. This decision does not mean that the expression" agricultural produce" can be given its natural meaning. It can only be given the meaning as defined in section 2(a), namely, that agricultural produce will only mean the items mentioned in section 2(a) of the Mandi Adhiniyam and also such items in processed forms, but it obviously does not mean that other items which are not mentioned in section 2(a) will also be deemed to be included. This decision therefore does not help the appellant in any way. Sri Agarwal then relied on a decision of the Supreme Court in Regional Director, Employees' State Insurance Corporation v. High Land Coffee Works of P. F. X. Saldanha and Sons [1991] 79 FJR 281 ; [1991] 3 SCC 617. In our opinion that decision too has no relevance to the present case as the Supreme Court there was considering the definition of the words "seasonal factory" in section 2(12) of the Employees S....
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.... any credit sanctioned for being availed of in India, and discount on promissory notes and bills of exchange drawn or made in India. We are not concerned with these two additional categories in the present case. Hence, in our opinion, "interest" in the new section 2(7) only means interest on loans and advances, and we cannot give it an extended meaning as contended by learned counsel for the appellant. The next question, which arises in this appeal, is as to whether the respondent is a financial company under section 2(5B) of the Interest-tax Act. Section 2(5B) of the Interest-tax Act as it stands today defines a financial company as follows: "(5B) 'financial company' means a company, other than a company referred to in sub-clause (i), (ii) or (iii) of clause (5A), being- (i) a hire-purchase finance company, that is to say, a company which carries on, as its principal business, hire-purchase transactions or the financing of such transactions; (ii) an investment company, that is to say, a company which carries on, as its principal business, the acquisition of shares, stock, bonds, debentures, debenture stock, or securities issued by the Government or a local authority, o....
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....ner of Income-tax (Appeals) on object No.2 contained in the assessee's memorandum and articles of association is absolutely misplaced because the Commissioner of Income-tax (Appeals) has missed to take note of the words 'in which the company may be required to invest under any law in force', appearing in the last sentence of object No.2. The nature of investment to be made under this object was not at the option or choice of the assessee but was to be made as per the requirement of any law for carrying on the business listed in object No. 1. From the Banking Regulation Act, the R. B. I.'s directions for the residuary non-banking companies (RBI) Directions, 1987 -copy placed at pages 31 to 60 of the assessee's paper book-and the R. B. L's letter dated September 16, 1987, written to the assessee, we have no doubt about the nature or status of the assessee-company which, in our view, was definitely that of a 'residuary non-banking company' and since it was not carrying on any other business except as listed under object No.1, the conditions for a company to be a miscellaneous company as defined under section 2(5B)(vi) were not satisfied. Consequently, prior to the insertion of sect....