TaxTMI 
TaxTMI 
1962 (7) TMI 58
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....ore the department was that there should be a deduction from the said amount in accordance with certain departmental instructions published in the Income-tax Manual, to which reference will be made later. These instructions were, however, deleted from the Manual in its 10th edition, which was the edition in force during the relevant assessment year. The Additional Income-tax Officer, City Circle II, Madras, refused to give relief to the assessee on the basis of the departmental instructions contained in the previous Manual, but was of the opinion that the Explanation to section 8 of the Act, which came into force on and from April 1, 1956, would afford a guide in granting the necessary relief to the assessee. He, therefore, applied the said Explanation and computed the taxable amount of the assessee under this head, interest on securities, in the sum of ₹ 59,498. There was an appeal to the Appellate Assistant Commissioner by the assessee in which the contention urged was that the instructions in the Manual should be followed despite the fact that they were deleted in the latest Manual. The Appellate Assistant Commissioner took the view that the Explanation to section 8 of the....
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....rgeable under section 9, where the total income of the co-operative society does not exceed twenty thousand rupees and the society is not a housing society or an urban consumer's society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power :" Sub-clause (v) of section 14(3) cannot apply as the amount of income from securities exceeds ₹ 20,000 in this case. It will now be convenient to refer to the departmental instructions, the aid of which is sought by the assessee. These instructions are found at pages 248-249, Part III, Income-tax Manual, issued in 1946 ; "In the case of a co-operative society (including a co-operative bank) whose business income has been exempted from tax under section 60 of the Income-tax Act a proportionate amount of interest will be allowed against the income from interest on taxed and tax-free securities. This interest will bear the same proportion to total interest paid as the capital invested in securities bears to the total working capital." The amount of investment in Government securities forming the source of income under section 8 of the ....
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.... for the purpose of investment in the securities by theassessee……….. Explanation.-In the case of a banking company,- (a) the amount which bears to the aggregate of its expenses as are admissible under sub-section (2) of section 10…….the same proportion as the gross receipts from interest on securities (inclusive of tax deducted at source) chargeable to tax under this section bears to the gross receipts from all sources which are included in the profit and loss account of the company, shall be deemed to be the sum reasonably expended by it for the purposes of realising such interest;. . . . . . . (b) money borrowed shall include moneys received by way of deposits; and that amount which bears to the amount of interest payable on moneys- borrowed the same proportion as the gross receipts from interest on securities (inclusive of tax deducted at source) chargeable to tax under .this Section bears to the gross receipts from all sources which are included in the profit and loss account of the company, shall be deemed to be interest payable on money borrowed for the purpose of investment in the securities by the assessee." The proportion of t....
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....ull payment of his share of taxes on any portion of his property must, on that account, be clearly defined and founded upon plain language ..... no implication will be indulged in for the purpose of construing the language' used as giving the claim for exemption, where such claim is not founded upon the plain and clearly expressed intention of the taxing power." In Inland Revenue Commissioners v. Ross & Coulter [1948] 1 All ER 616, at page 625, Lord Thankerton, delivering the judgment of the House of Lords, stated the principle thus: "Counsel are apt to use the adjective 'penal' in describing the harsh consequences of a taxing provision but if the meaning of the provision is reasonably clear the courts have no jurisdiction to mitigate such harshness. On the other hand if the provision is capable of two alternative meanings the courts will prefer that meaning more favourable to the subject." There is certainly no equity about a tax. It will not be open to the taxpayer burdened with tax under an enactment to claim exemption from the Act or immunity from the operation of the Act on grounds of analogy or on the ground that exemption under the Act though s....
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....otor bodies and it had since 1924 used the direct cost method of ascertaining the cost of work-in-progress under which the cost of direct materials and labour alone was taken into account. For the years 1951-52,1952-53, 1953-54, assessments were made on the company to income-tax on the footing that the cost of works-in-progress should be arrived at by the "on-cost" method under which a proportion of indirect expenses, that is, factory and office expenses, etc., was added to the direct cost. The Special Commissioners found that the accountancy profession was satisfied that either method would produce a true figure of profit for income-tax purposes and that which method should be used was a matter of policy for the decision of the directors of the company. The Commissioners decided, however, that in order to arrive at a true figure of the cost of work-in-progress a proportion of factory over-heads but not of other indirect expenses should be taken into account. It was held that on the facts and findings there was no justification for requiring the company to change from its practice of using the direct cost method. That was a case in which the only 'question was how the....