iminal Appeals Nos 102 and 103 of 1958
Appeals by special leave from the judgment and order dated March 28 1958 of the Calcutta High Court in Criminal Appeal No 428 of 1957 and reference section 374 Cr P C No 8 of 1957 arising out of the 1325 judgment and order dated September 21 1957 of the Court of the Sessions Judge of Cooch Behar in Sessions Trial No 2 of 1957 Sept Sessions Sessions Case No 18 of 1957
section K Kapur for the appellants
B Sen P K Ghosh for P K Bose for the respondent
September 19
The Judgment of the Court was delivered by IMAM J
In these appeals the appellants were convicted for the murder of Malchand Bhadani
A charge under section 302 Indian Penal Code had been framed against each of them
The Sessions Judge found that the murder had been committed in the furtherance of their common intention
In his opinion as appellant Bipin Behari Sarkar had actually committed the murder he convicted this appellant under section 302 of the Indian Penal Code
He convicted the appellant Bishnu Charan Saha under section 30234 of the Indian Penal Code
He sentenced both the appellants to death
The appellants appealed to the Calcutta High Court while the Sessions Judge made a reference for the confirmation of the death sentence passed by him
The High Court found the appellants guilty under section 30234 of the Indian Penal Code
It accordingly confirmed the sentence of death imposed on the appellants by the Sessions Judge
According to the prosecution one Tarachand Bhadani had a cloth shop at Mathabhanga in the district of Cooch Bihar
He was joint in business and mess with his two sons Prithiraj and the deceased Malchand
The annual turn over of the shop was between Rs 50000 to Rs 60000
On December 18 1956 Tarachand had gone to Rajasthan and Prithiraj had gone to Falakata Hat
Accordingly at the shop on that day Malchand was the only person in charge of it
At about 8 30 p m after the close of the day s business Malchand was counting the cash in the iron safe in an ante room of the shop when the appellants with one Sanatan Das who was acquitted at the trial 1326 called at the shop
Malchand came out of the anteroom into the shop to attend to these late customers
He had left open the safe and one of its drawers on the floor
The appellants purported to make certain purchases and examined various pieces of cloth
After selection of the cloth they were put into packets
Cash memoes in duplicate were prepared and signed by Malcliand and the appellant Bishnu Charan Saha
The cash memoes had been completely filled in
Two of them had been separated from the cash memo book but before the 3rd cash memo could be detached from the book Malchand was struck down by the appellants with a heavy cutting instrument which they had carried
The neck was so severely cut that the head was nearly severed from the trunk
Just about then a neighbour called out to Malchand by way of casual enquiry before retiring for the night
This so frightened the miscreants that they fled
The money in the open safe was left untouched
The motive for the murder was to steal the money from the safe
On December 25 1956 the police seized a sharp cutting weapon variously described as a sword or a dagger
It was found lying close to some shrubbery near Malchand s shop
It was stained with human blood
It was a practice of the shop of Tarachand Bhadani to despatch from time to time after obtaining Hundis the accumulated proceeds of the business to Calcutta
On the morning of December 18 1956 Prithiraj before he went to Falakata Hat had made enquiries from the firm of Bhairabhan Bhowrilal whether any Hundi was available
As Bhowrilal was not able to supply him the Hundi the cash remained in the shop
The contents of the safe showed that on December 18 1956 before Malchand was murdered there was a sum of Rs 3913 in cash and 8 14 tolas of gold
There was therefore a substantial amount in the safe at the shop which would have been stolen were it not that the miscreants fled after murdering Malchand because of a neighbour calling out to him
The conviction of the appellants as pointed out by the High Court depended entirely on circumstantial 1327 evidence
The High Court did not rely upon the confessional statement made by the appellant Bishnu Charan Saha to a Magistrate as in its opinion it was not a voluntary statement
Reference will be made to the circumstantial evidence upon which the High Court relied in due course
Before we deal with that aspect of the case it is necessary to refer to a submission made on behalf of the appellants concerning the tender of pardon under section 337 of the Code of Criminal Procedure to Bishnu Charan Saha and the failure of the prosecution to comply with the provisions of section 339 of the Code of Criminal Procedure
It was urged that the provisions of section 339 of the Code not having been complied with the trial as vitiated as the appellant Bishnu Charan Saha could not be tried alongwith the appellant Bipin Behari Sarkar
In order to understand this submission it is necessary to state a few facts
Bishnu Charan Saha was arrested at about 3 p m on December 19 1956
His confession was recorded by the Magistrate Mr section C Chaudhury on December 20 1956
A charge sheet against the appellants and Sanatan Das was submitted by the police on June 20 1957
On June 22 1957 a prayer was made to the Sub divisional Magistrate on behalf of the prosecution that Bishnu Charan Saba may be tendered a pardon under section 337 of the Code of Criminal Procedure and the Magistrate recorded an order to the effect that this appellant was tendered pardon under section 337 of the Code of Criminal Procedure on condition of his making a full and true disclosure of the whole of the circumstances within his knowledge relating to the offence and to every other person concerned whether as principal or abettor in the commission thereof
The Sub divisional Magistrate bad already reported on June 20 1957 to the District Magistrate that both he and the other Magistrate of Mathabhanga should not hold the commitment proceedings as they had had something to do with the investigation
On August 1 1957 the Magistrate Mr Sinha to whom the case had been ultimately transferred recorded an order to the effect that the three accused had been produced before him and that he had seen the Court 1328 Inspector s petition praying that the accused Bishnu be made an approver in the case under section 337 of the Code of Criminal Procedure
This accused had however stated that he made the confessional statement before the Magistrate at Mathabhanga as he had been assaulted by the police and that he did not wish to become an approver
After the completion of the enquiry before commitment the appellants and Sanatan Das were committed to the Court of Session to stand their trial for the murder of Malchand
Section 3391 of the Code provides that  where a pardon has been tendered under section 337 or section 338 and the Public Prosecutor certifies that in his opinion any person who has accepted such tender has either by wilfully concealing anything essential or by giving false evidence not complied with the condition on which the tender was made such person may be tried for the offence in respect of which the pardon was so tendered or for any other offence of which lie appears to have been guilty in connection with the same matter 
The proviso to this sub section prohibits the trial of such person jointly with any of the other accused and that such person shall be entitled to plead at such trial that he had complied with the condition upon which such tender was made
The provisions of this section clearly pre suppose that the pardon which had been tendered to a person had been accepted by him and that thereafter that person had wilfully concealed anything essential or had given false evidence and therefore bad not complied with the condition on which the tender was made to him
Section 337 of the Code under which a pardon is tendered shows that such tender is made on the condition that the person to whom it is tendered makes a full and true disclosure of the whole of the circumstances within his knowledge relative to the offence and to every other person concerned whether as a principal or an abettor to the commission thereof
Sub section 2 of this section requires that every person who has accepted a tender shall be examined as a witness in the court of the Magistrate taking cognizance of the offence and in the subsequent trial if any
1329 It is clear therefore that a mere tender of pardon does not attract the provisions of section 339
There must be an acceptance of it and the person who has accepted the pardon must be examined as a witness
It is  only thereafter that the provisions of section 339 come into play and the person who accepted the pardon may be tried for the offence in respect of which the pardon was tendered if the Public Prosecutor certifies that in his opinion he has either wilfully concealed anything essential or had given false evidence and had not complied with the condition on which the tender was made
In the present case there is nothing on the record to show that on July 22 1957 although Bishnu Charan Saha had been tendered a pardon he had accepted the tender
Indeed the order sheet of the Sub divisional Magistrate of that date does not even disclose that Bishnu Charan Saha had been produced before him
On the other hand when Bishnu Charan Saha and his co accused were produced before the Magistrate Mr Sinha to whom the case had been transferred the prosecution made a prayer to the Magistrate that Bishnu Charan Saha may be made an approver in the case under section 337 of the Code of Criminal Procedure
This would show that upto that time Bishnu Charan Saha had not accepted the tender of pardon made to him by the Sub divisional Magis trate on June 221957
On the prayer of the Prosecutor made to Mr Sinha on August 1 1957 Bishnu Charan Saba flatly denied that he wished to be an approver and had stated that the confessional statement made by him to Mr Chaudhury was not a voluntary one
On the facts of the present case therefore all that is proved is that at one stage of the proceedings a tender of pardon had been made to Bishnu Charan Saba
There was however no proof that that tender had been accepted by him
Such being the situation it could not be said that there was in existence an effective pardon under section 337 and that its provisions applied to the facts of the present case
Consequently no question arises about the applicability of section 339 to the proceedings before the Magistrate holding an enquiry before commitment or to the trial of the appellants because the 1330 provisions of section 339 can only come into operation if there is in existence an effective pardon under section 337 of the Code
In our opinion on the facts of the present case there is no foundation for the submission which had been made
Coming now to the circumstantial evidence in the case upon which the High Court relied for upholding the conviction of the appellants which may be summed up as follows 1 The evidence clearly established that the appellants were local men who lived or worked not far from Malchand s shop
They accordingly had the means and the opportunity of knowing the state of things obtaining at his shop at a particular date
2 The association of the appellants and Sanatan Das immediately prior to the murder
3 The evidence of their movements towards the direction of Malchand s shop
4 The evidence concerning their presence in the shop of Malchand shortly before the latter was murdered
5 The evidence concerning the appellant Bipin Bihari Sarkar hurrying away from the direction of Malchand s shop closely followed by the appellant Bishnu Charan Saha
6 The evidence of injuries on the palms or fingers of the appellants found at the time of their arrest which took place within 24 hours or shortly thereafter of the murder
7 The evidence of the presence of human bloodstains on the shirt of Bishnu Charan Saha and bloodstains on the wrapper of Bipin Behari Sarkar with burnt holes at places where the stains were found
8 The cash memoes with the signatures of the appellant Bishnu Charan Saha
9 In the opinion of the doctor the nature of the injuries on Malchand showed that probably he was overpowered by someone first and then another person pressed the weapon against his neck
The matter for consideration is whether the circumstantial evidence as stated above is sufficient to prove 1331 that the appellants had participated in the murder of Malchand
Two findings of the High Court may be stated at this stage before the circumstantial evidence is referred to
One concerned the cash memoes signed by Bishnu Charan Saha and the other concerned the colour of the wrapper worn by Bipin Behari Sarkar when he was seen by Kali Mohan Sarkar P W 7 going away from a place near the shop of Malchand after the murder
The cash memoes bore the date 11 12 56 and not 18 12 56
The High Court gave good reasons for holding that the date 11 12 56 was wrongly entered in these cash memoes after examining the account books of Malchand s shop and the other circumstances in the case as well as the admission of Bishnu Charan Saha that on December 18 1956 between 1 30 and 2 p m be had caused three cash memoes to be issued in the shop of Malchand
We find ourselves in complete agreement with the findings of the High Court in this respect
The wrapper worn by Bipin Behari Sarkar at the time he was seen by Kali Mohan Sarkar was described by the witness as blue in colour whereas in fact the recovered wrapper from the house of this appellant was green in colour
The High Court thought and in our opinion rightly that what was in fact green in colour might have appeared to be blue to a witness when seen at night by him
A mistake in describing the colour accurately in the circumstances of the present case did not materially affect the evidence that Bipin Behari Sarkar was wearing a wrapper at the time he was seen at a spot near Malchand s shop after the murder
Further reference to the wrapper will be made when we consider the case of this appellant
Mohan Lal Sarma P W 4 had stated that at about 8 pm on December 18 1956 he had seen the appellants and Sanatan Das sitting in the latter s shop
Bishnu Charan Saha was the first to leave the shop
10 or 15 minutes later Bipin Behari Sarkar and Sanatan Das left after padlocking Sanatan s shop
The evidence of this witness had been fully accepted 169 169 1332 by the High Court
Sudhir Ranjan De P W 8 deposed that in the evening of December 18 1956 at about 7 30 pm he had seen Bishnu Charan Saha passing in front of Gostha s shop which was nearly opposite Malchand s shop
He had on his body a Sujni Chaddar
4 or 5 minutes later Bipin Behari Sarkar and Sanatan Das were seen going in the same direction
The High Court believed the evidence of this witness
It came to the conclusion that on the evidence of Mohan Lal Sarma and Sudhir Ranjan De it was established that at about 8 pm the appellants and Sanatan Das were moving towards Malchand s shop
There was no doubt some discrepancy about the timing but as was pointed out by the High Court the witnesses were giving the time approximately and did not purport to give the exact time
Kumud Lal Saha P W 2 deposed that at about 8 30 pm on December 181956 he saw the appellants and Sanatan sitting with Malchand in the latter s shop
Malchand was at that time placing cloth for their inspection
The High Court referred to the various criticisms levelled against the testimony of this witness and after dealing with them came to the conclusion that the witness was a truthful witness and that his evi dence established that the appellants were at the shop of Malchand at about 8 30 pm and that Malchand was last seen alive with them
The evidence of Khum Chand Bothers PW 3 proved that at about 8 30 pm on the night of Malchand s murder he had called out Malchand   Malchand  but had received no reply
Kali Mohan Sarkar P W 7 proved that at about 8 pm on the night in question when he was going home he met the appellant Bipin Behari Sarkar who was going away hurriedly from the direction of the Bazar
On some enquiry made by the witness this appellant stated that he had been pressed by a call of nature
Thereafter the appellant Bishnu Charan Saha was seen coming behind Bipin Behari Sarkar
Bipin Behari Sarkar had on his person a blue coloured wrapper
The spot at which he had met the appellant Bipin Behari Sarkar was at a distance of about 100 cubits to the south of the passage meant for sweepers 1333 of Malchand s house
He had heard Bishnu Charan Saha calling out  Hei Hei  to Bipin Behari Sarkar 
The evidence of these witnesses which had been accepted by the High Court established that the appellants were seen going in the direction of Malchand s shop
Thereafter they were seen with Malchand at his shop
Subsequent to that Bipin Behari Sarkar was seen going away hurriedly at a place not far from Malchand s shop followed by Bishnu Charan Saha who was calling out to him  Hei Hei 
The last time that Malchand was seen alive was in the company of the appellants
The existence of the cash memoes which were stained with human blood with the signatures of Bishnu Charan Saha clearly established that at least Bishnu Cliaran Saha must have been present at the time of the murder because the cash memoes were being made out for him and they were stained with human blood which shows that Malchand was murdered while he was handling the cash memoes
It had been further proved that Bishnu Charan Saha had on him certain injuries of which one was an incised injury
The evidence of the doctor was that this injury could have been caused by the same instrument with which the neck injury of Malchand had been caused
It had been further established that the shirt of Bishinu Charan Saha was stained with human blood
The explanation offered by Bishnu Charan Saba for the injuries on his person was not accepted by the High Court and in our opinion rightly
Bishnu Charan Saha had stated to the doctor at the time of his examination that injury No 1 was caused as the result of contact with a grass cutting dao and injuries Nos 2 and 3 by having drawn his hand over a rough piece of wood but to the doctor this explanation was unacceptable inasmuch as this appellant was not a left handed person a fact which appeared clear from his formation and development
When examined under section 342 of the Code of Criminal Procedure Bishnu Charan Saha told the Court that 2 days prior to his examination by the doctor lie had been cutting straw for his cattle with his left hand when his daughter aged about 1334 4 came up from behind and pushed him which resulted in the injury to his finger by its contact with the dao and that he had also received injuries on the back of his finger by striking it against a piece of wood
So far as the shirt stained with human blood which was found on his person at the time of his arrest was concerned Bishnu Charan Saha seriously disputed the identity of the shirt
The identity of the shirt however had been clearly established
His explanation to the Court was that some of the stains had been caused by betel spit and that one or two might have been caused by some drops of blood falling on the shirt at the time he had sustained his injuries
This explanation was also not accepted by the High Court and we think rightly
The evidence therefore established that so far as Bishnu Charan Saha was concerned he was seen in the company of Bipin Behari Sarkar and Sanatan Das near about 8 p m
He was seen shortly thereafter as were the other two going in a direction which was towards the shop of Malchand
He was seen along with the other two persons at the shop of Malchand at about 8 30 pm
Thereafter he was seen not far from the shop of Malchand going in the same direction as Bipin Behari Sarkar and calling out to him
The cash memoes at Malchand s shop had been signed by him
He had injuries on his person consistent with their having been caused while the murder of the deceased took place
The shirt that he was wearing at the time of his arrest was stained with human blood for which he gave no reasonable explanation
In our opinion the sum total of the evidence against Bishnu Charan Saha established beyond any reasonable doubt that he had participated in the murder of Malchand
Coming now to the case of Bipin Behari Sarkar the evidence against him is the same as against Bishnu Charan Saha about the movements towards the shop of Malchand presence at the shop of Malchand and being seen going away at a place near the shop of Malchand and the existence of injuries on his person
In addition there was the evidence that a wrapper was seized the next morning after his arrest with marks of 1335 burning round which there were traces of blood
Unlike the case of Bishnu Charan Saba no signatures of his were found on the cash memoes
It is a matter for consideration whether in the case of this appellant  any reasonable doubt could arise as to his guilt
It was urged that mere movements towards the shop of Malchand his presence at the shop of Malchand and his being seen going away at a place near the shop of Malchand would not be sufficient circumstantial evidence to convict him
So far as the injuries were concerned the doctor had admitted that they could have been caused by a split bamboo
The doctor had at no time stated that they could have been caused by the same weapon which caused injuries to the neck of Malchand
The existence of the injuries therefore was no additional incriminating circumstance from which any conclusion could be drawn against this appellant
So far as the wrapper was concerned there was no evidence that the burnt marks found on it were not there before December 18 1956
Although blood stains had been found on this wrapper it had not been established that they were human blood stains
The wrapper was also therefore n0 additional incriminating circumstance against this appellant
It is however to be remembered that this appellant was with Bishnu Charan Saha and that Malchand was last seen alive in the company of the appellants
The murder of Malchand had already taken place when this appellant followed by Bishnu Charan Saha was seen going away hurriedly at a spot near the shop of Malchand and Bishnu Charan Saha was calling out  Hei Hei  to him
It is remarkable that this appellant was seen not only at the shop of Malchand but near that shop after he bad been murdered and that he was found to have injuries oil his person when he was arrested at 10 30 pm on December 19 1956
It would be a remarkable coincidence that both he and Bishnu Charan Saha should have injuries on their persons so shortly after the murder
Bipin Behari Sarkar denied ownership of the wrapper
His explanation was not that the burnt marks on the wrapper were there before December 18
1336 This wrapper had blood stains
They were too small in quantity to enable a Serologist to determine their origin but it is remarkable that wherever the bloodstains were found on the wrapper an attempt had been made to burn out those marks
Unfortunately for the appellant his attempt to burn out the bloodstains on the wrapper was not entirely successful
This was in our opinion an incriminating circumstance against this appellant
The circumstantial evidence taken as a whole leaves no room for a reasonable doubt in our minds about the guilt of this appellant
In our opinion the High Court rightly found the appellants guilty under section 30234 of the Indian Penal Code
It could not be said that the sentence of death for a murder of the kind proved in this case was unduly severe
The appeals are accordingly dismissed
Appeals dismissed


Summary:
Section 40b of the Income Tax Act 1961 as it stood at the relevant time prohibited deduction of interest salary bonus commission or remuneration paid by the firm to the partner
Explanation 1 introduced thereto by the Taxation Laws Amendment Act 1984 which took effect from 1st April 1985 provided that where interest is paid by a firm to a partner who has also paid interest to the firm the amount of interest to be disallowed shall be limited to the net amount of interest paid by the firm to the partner
Circular No 33DXXV 24 of 1965 issued by the Central Board of Direct Taxes provided that where a firm pays interest to as well as receives interest from the same partner only the net interest can be stated to have been received or paid by the firm
The assessee appellant a registered partnership firm in the accounting year for the assessment year 1975 76 paid interest to the partners on the amounts standing to their respective credits
It also received from the partners interest on their borrowings from the firm
The Income tax Officer 244 while disallowing the amount of interest paid to the part ners did not set off the interest received from them on their borrowings
The Appellate Assistant Commissioner allowed the claim of the appellants that only the net inter est paid to the partners after setting off the interest received from them was to be disallowed
The Appellate Tribunal affirmed the appellate order
The High Court an swered the reference in favour of the Revenue on the view that the Tribunal was not justified in holding that net interest should be disallowed under section 40b of the Act
In these appeals by special leave it was contended for the appellants that a the sole object of section 40b was having regard to the special features and legal incidents of a partnership to enable the assessment of the real income  of the firm and did not require or compel the exclusion of the cross interest paid by a partner in determining the quantum to be disallowed b the extent of the embargo under section 104b of the 1922 Act on the disallowance of interest paid to a partner was judicially interpreted and ascertained in Sri Ram Mahadeo Prasad vs CIT All
and when the legislature re enacted those provisions in section 40b of the 1961 Act in substantially the same terms legislature must be held to have used that expression with the same implications attributed to it by the earlier judi cial exposition c the interest paid to a partner on the capital brought in by him and the interest received from a partner on his borrowings from the firm were both integral parts of a method adopted by the partners for adjusting the division of profits and in that sense both payments partook of the same character and it would be permissible to take both the payments into consideration in quantifying the interest and treat only such excess if any paid by the firm as susceptible to the exclusionary rule in section 40b d the circular of the Central Board of Direct Taxes which was statutory in character was binding on the authorities and the High Court was in error in taking a view of the legal position different from the one indicated in it and e the amendment of 1984 inserting Explanation 1 in section 40b though later in point of time constitutes a legisla tive exposition of the correct import of the provision and so construed offers a guide to the correct understanding of the provisions in section 40b in their application to the earlier years as well
Allowing the appeals the Court HELD 11 As long as there is no ambiguity in the statu tory language resort to any interpretative process to unfold the legislative intent becomes impermissible
The supposed intention of the legislature cannot then be ap pealed to whittle down the statutory 245 language
If the intendment is not in the words used it is nowhere else
255E F Doypack Systems Pvt Ltd vs Union of India   referred to
12 Section 40 of the Income Tax Act 1961 opens with the nonobstante clause and directs that outgoings such as interest salary bonus commission or remuneration specifi cally enumerated in cl
b shall not be deducted in comput ing the income chargeable under the head profits and gains of business or profession
The words used therein on their own terms are plain and unambiguous
They manifest the intention of the legislature and must therefore be applied as they stand
255D E F G 256B 13 Artificial and unduly latitudinarian rules of con struction with their general tendency to give the tax payer the breaks  are out of place where the legislation has a fiscal mission
Taxation is regarded as a potent fiscal tool of State policy to achieve equitable distribu tion of the burdens of the community to sustain social services
256C D Thomas M Cooley Law of Taxation Vol 2 referred to
14 The test of real income  as one on which the opera tion of section 40b could be sought to be limited is not a reliable one
It might on its own extended logic validate a set off of the interest paid to one partner against interest received from another and likewise interest received from one partner on some other dealings between him and the firm against interest paid to another partner on his or her capital contribution and thus lead to positions and results whose dimensions and implications are not fully explored
It must not therefore be called in aid to defeat the funda mental principles of the law of income tax
257 A 256A 256G 257D1 State Bank of Travancore vs CIT  at 155 referred to
21 When words acquire a particular meaning or sense because of their authoritative construction by superior courts they are presumed to have been used In the same sense when used In a subsequent legislation In the same or similar context
257G HH Ruckmaboye vs Lulloobhoy Mottichund Moore s Indian Appeals Vol
5 p 234 at 250 referred to
22 However the rules of interpretation are not rules of law
they 246 are mere aid to construction and constitute some broad pointers
The interpretative criteria apposite in a given situation may by themselves be mutually irreconcilable
It is the task of the court to decide which one in the light of all relevant circumstances ought to prevail
258E F Maunsell vs Olins and Utkal Contrac tors  Joinery vs State of Orissa  at 330 referred to
23 The decision in Sri Ram Mahadeo Prasad vs CIT All proceeded on a construction of the relevant provision ies 104b of the 1922 Act and on what the High Court considered as affording to the assessee a fair treatment
It did not rest on any special or technical connotation of the word interest  nor any special legal sense which that word could be said to have acquired by the earlier judicial ascertainment of its amplitude
The appeal to this principle of construction in the instant case is therefore out of place
258D E 31 To the extent the statute expressly or by necessary implication departs from the general law the latter can not be invoked to displace the effect of the statute
But if there is no such statutory departure the general principle operating in that branch of law would determine the nature of legal relationship
261F H Sir Francis Bennion on Statutory Interpretation p 350 354 referred to
In the case of partners therefore to the extent not prohibited by section 40b of the Act the incidents of the general law of partners would be attracted to ascertain the legal nature and character of a transaction
This is quite apart from distinguishing the substance  of the transaction from its form 
But the legal effect of a transaction cannot be displaced by probing into the substance of the transaction
The Court however is not precluded from treating what the transaction is in point of fact as one in point of law also
262C D 263A B Sargaison vs Roberts 1969 45 Tax Cases 612 CIT vs Gillanders Arbuthnot  Co  Narayanappa vs Krishtappa   CIT vs Chidambaram  Lindley on Partnership 14th Edn p 30 Regional Director Employees State Insurance Corporation Trichur vs Ramanuja Match Industries and Ellis vs Joseph Ellis  Co referred to
32 If interest paid by the firm to a partner and the inter est in 247 turn received from the partner are mere expressions of the application of the funds or profits of the partnership and which having regard to the community of interest of the partners are mere variations of the method of adjustment of the profits they could be treated as part of the same transaction if otherwise in general law they admit of being so treated
The provisions of section 40b do not exclude or prohibit such an approach
263B D If instead of the transactions being reflected in two separate or distinct accounts in the books of the partner ship they were in one account the quantum of interest paid by the firm to the partner would to the extent of interest on drawings of the partner stand attenuated
The mere fact that the transactions were split into or spread over to two or more accounts would not by itself make any difference if otherwise
the substance of the transaction was the same
263D E Official Liquidator vs Lakshmikutty   referred to
Even the idea of a set off itself which presupposes a duality of entities may be out of place in the very nature of the relationship between a firm and its partners where the former is a mere compendious reference to the latter
But even to the extent the income tax law which identifies the firm as a distinct entity and unit of assessment goes the idea of set off may be invoked in view of the mutuality implicit in the putative duality inherent in deeming the firm as a distinct entity under the Act for certain pur poses
The fiction may have to be pushed to its logical conclusions
263H 264B 33 Where a strict literal construction leads to a result not intended to subserve the object of the legisla tion another construction permissible in the context should be adopted
Therefore though equity and taxation are often strangers attempts should be made that these do not remain always so
More so a taxing statute being not different from other statutes it is not to be construed differently
The duty of the Court is to give effect to the intention of the legislature
264C E F G H 265A CITv
JH Gotla and AGV Carlton Bank  referred to
34 Accordingly where two or more transactions on which interest is paid to or received from the partner by the firm are shown to have the element of mutuality and are referable to the funds of the 248 partnership as such section 40b should not be so construed as to exclude in quantifying the interest on the basis of such mutuality
If that be so the interest if any paid to a partner by the firm in excess of what is received from the partner could alone be excluded from deduction under section 40b
265B C CIT vs TV Ramanaiah  Sons AP approved
CIT vs OMSS Sankaralinga Nadar  Co Mad overruled
The Central Board of Direct Taxes cannot pre empt a judicial interpretation of the scope and ambit of a provi sion of the Income Tax Act by issuing circulars on the subject
A circular cannot even impose on the tax payer a burden higher than what the Act itself on a true interpreta tion envisages
Nor can it detract from the Act
The task of interpretation of the laws is the exclusive domain of the courts
The circulars do not bind them
265E F 266D 265F G H State Bank of Travancore vs CIT   re ferred to
Since the circular of 1965 broadly accords with the view taken on the true scope and interpretation of section 40b as regards qualification of interest it is unnecessary to examine whether or not such circulars are recognised legiti mate aids to statutory construction
266E F 5
An Explanation  is generally intended to explain the meaning of certain phrases and expressions contained in a statutory provision
There is no general theory as to the effect and intendment of the Explanation except that the purpose and intendment of the Explanation are determined by its own words
An Explanation depending on its language might supply or take away something from the contents of a provision
An Explanation may also be introduced by way of abundant caution in order to clear the meaning of a statuto ry provision and to place what the legislature considers to be the true meaning beyond controversy or doubt
266G 267B In the instant case the notes on clauses appended to the Taxation Laws Amendment Bill 1984 say that clause 10 which seeks to amend section 40will take effect from 1st April 1985 and will accordingly apply in relation to the assess ment year 1985 86 and subsequent years
In view of the express prospective operation and effectuation of the Expla nation 249 it is not necessary to examine its possible purpose any further
267C E