TaxTMI 
TaxTMI 
1985 (3) TMI 96
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....yd, have, according to the assessee, current accounts with the assessee-company and that out of the interest paid by the assessee-company on the credit balance standing in the names of these persons in their current accounts, the ITO disallowed the sum of Rs. 17,744 under section 40A(8). It was urged that the amounts deposited by the aforesaid persons in their current accounts with the assessee-company were not for any fixed period and that amounts could be deposited in or withdrawn from the current accounts as and when desired. It was further submitted that it is not a case of fixed deposit and that the interest paid to the aforesaid persons did not fall within the purview of section 40A(8) and, hence, the ITO was not justified in making the disallowance. In support of his contention Shri Poddar relied upon two decisions of Tribunal, Madras Bench 'C' and the Tribunal, Bombay Bench 'B', copies whereof appear at pages 19 to 25 of the paper book filed on behalf of the assessee. 4. The learned departmental representative has on the other hand, stoutly supported the orders of the authorities below on the issue under consideration. It was further submitted that the deposits made by t....
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....ated in clauses (i) to (ix) of Explanation (b). The use of the word 'any' before the word 'deposit' is very significant and it gives widest amplitude to the definition of the word 'deposit'. While constructing certain provision in a statute every word used by the Legislature has to be given a meaning and should not be ignored. The intention of the Legislature has to be gathered from the language used by it. When the language is plain and admits of but one meaning recourse to extraneous matters like the speech of the Finance Minister at the time of introduction of the Finance Bill is not permissible. In taking this view, we are fortified by the decision of the Full Bench of the Kerala High Court in ITO v. K.P. Varghese [1973] 91 ITR 49. it was held in that case that neither the speech of the Minister at the time of the introduction of the Finance Bill nor the instruction issued by the Central Board of Revenue, should be allowed to control the plain words of the section. These observations were made by their Lordships while interpreting the provisions contained in section 52 of the Act. While defining the word 'deposit' in Explanation (b) the Legislature has used the expression 'any ....
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.... reasons already given above. 7. We have perused the order dated 2-2-1980 passed by the Tribunal, Bombay Bench in the case of Michigan Engg. (P.) Ltd. [IT Appeal No. 699 (Bom.) of 1979] a copy whereof appears at pages 23 to 25 of the paper book. The learned members in that case took into account the Finance Minister's speech while coming to the conclusion that the provisions of section 40A(8) are not aimed at payment of interest to private accounts of a purely domestic nature. In that case also interest was allowed by the assessee on the amounts standing in the current accounts of the directors and their family members and friends. That order was followed by the Tribunal, Madras Bench in the case of Shivraj Motors Ltd. [IT Appeal Nos. 444 to 446 (Mad.) of 1981]. The Bombay Bench in the case of Michigan Engg. (P.) Ltd. seems to have followed the 'mischief rule' while interpreting the provisions of section 40A(8). The language of section 40A(8) including the definition of the word 'deposit' is plain and unambiguous. With great respect of the learned brothers who decided the aforesaid cases, we are for the reasons already stated above, unable to agree with the view taken by them. F....
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....mitted that as the embezzlement took place within the accounting period it should be allowed as a deduction this year. In support of this contention reliance has been placed on the decision of the Allahabad High Court in CIT v. U.B.S. Publishers & Distributors [1984] 147 ITR 114. 11. The learned departmental representative has, on the other hand, fully supported the order of the Commissioner (Appeals). The fact that neither any FIR was lodged nor any criminal proceeding was launched against Ashok D. Paul was highlighted before us. It was further submitted that the claim for deduction was wholly unjustified. 12. At page 35 of the paper book, is a copy of the letter dated 19-9-1977 addressed by Shri S. Balasubramanian, advocate to the managing director of the assessee-company enclosing his enquiry report regarding the charges levelled against the regional manager, Madras Branch. A copy of the enquiry report appears at pages 36 to 48 of the paper book. A perusal of this report goes to show that the regional manager did misappropriate the amount of Rs. 35,929. This amount could not be recovered from the regional manager. At page 49 of the paper book is a copy of the legal opinion....