Interpretation of fiscal statute, strict interpretation, legislative intention

( 1 ) THESE references are at the instance of the Revenue. Since the facts and the law involved in all the cases are same or similar, all references are disposed of by this common order.

( 2 ) FACTS as narrated by the Tribunal are as under : assessee-banks filed interest-tax returns for the asst. yrs. 1992-93, 1993-94, 1994-95 and 1995-96 and they were accepted. Subsequently, those assessments were reopened under Section 10 of the Interest-tax Act on the ground that the assessees had failed to declare the entire interest earned on securities. A notice was issued. Assessees again filed returns of interest showing the same figure as was shown in the original returns. Assessees objected to the addition of interest on securities to chargeable interest on the ground that the interest chargeable under Interest-tax act was only interest on loans and advances and securities do not fall within the purview of definition of 'interest' under the Interest-tax Act. Banks' contention was rejected. The entire interest on securities were brought to tax. Appeals were preferred before the CIT (A ). Appeals stood dismissed. Thereafter, banks preferred appeals before the Tribunal. The Tribunal in the leading judgment Canara Bank v. Dy. CIT ruled that interest on securities cannot be brought to tax but only the interest on loans and advances is chargeable to tax. The Tribunal ruled that in its considered view provisions of Section 10a of the interest-tax Act have no application. It has also ruled in the order that the interest on securities cannot be brought to tax but only the interest on loans and advances are chargeable to tax as amended by the Finance Act. The Tribunal ruled that the authorities are not justified in bringing to tax interest on securities for all the four years under appeal.

( 3 ) REVENUE sought for a reference by way of application under Section 256 (1)" of the IT Act.

( 4 ) THE Tribunal after hearing has chosen to refer the following two questions for our opinion :

(a) Whether, on facts and in the circumstances of the case, Tribunal is right in holding that the reopening of assessment under Section 10 of the Interest-tax Act is bad in law ? (b) Whether, on the facts and in the circumstances of the case, Tribunal is right in law in holding that interest on securities does not form part of chargeable interest for the purpose of interest-tax?

( 5 ) HEARD Sri Seshachala, learned standing counsel for the Revenue, and Sri Sarangan and Sri kumar, learned senior counsel for the banks.

( 6 ) SRI Seshachala, learned counsel for the Revenue, would argue that the material on record would require this Court to answer the question of law referred to this Court in the affirmative. He would take us through the material on record to say that the' Tribunal is wrong in its interference and its interpretation with regard to liability of tax in terms of the interest-tax. Learned counsel would argue that Section 10 is squarely applicable to the facts of this case. A notification issued under Section 28 would be an information. He, therefore, says that reopening is in accordance with law.

( 7 ) INSOFAR as the merits of the matter is concerned, he would invite our attention to the various provisions of the Interest-tax Act, IT Act and Public Debt Act to convince us with regard to the second question of law referred to us. He would refer to the objects of Interest-tax Act and in particular he invites our attention to the Indian Securities Act, 1920, Public Debt Act, 1944, the security (Contract Regulation) Act, 1956 and the dictionary meaning of 'loan' in support of his submission. He would argue that Section 2 (7) earlier specifically provided for exclusion with regard to interest on securities. Later on, the exclusion is included. Therefore, according to him, in the light of inclusion of exclusion it has to be an inclusion for the purpose of Interest-tax Act. He would rely on Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT [1997 ]227 ITR1

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