Commissioner Of Income-Tax v. Shivalik Drug (Family Trust)

1. This is an income-tax reference at the instance of the Commissioner of Income-tax. The Tribunal, Delhi Bench-B, New Delhi, has referred the following question to this court for its opinion:

“Whether the Tribunal is right in holding that the amounts paid by way of travelling allowance to the trustees by the assessee-trust would not be subject to the provisions of rule 6D of the Income-tax Rules ?”

2. The dispute relates to the assessment year 1982-83. The assessee is a family trust deriving income from manufacture and sale of allopathic and ayurvedic medicines. During the relevant assessment year, it claimed deduction of Rs. 17,824 as travelling allowance expenses. The Income-tax Officer found that the travelling allowance claimed by the assessee was excessive. He invoked rule 6D of the Income-tax Rules and held that travelling allowance as per the aforesaid rule 6D was admissible to the extent of Rs. 29,965. However, in the first appeal as well as in the second appeal, it has been held that rule 6D of the Rules has no application to the facts of the present case. Heard Shri R.K Upadhyaya, learned standing counsel for the parties and Shri Shubham Agarwal, learned counsel for the assessee and respondent. It was contended by learned counsel for the Department that the phrase “any other person” in sub-rule (2) of rule 6D is wide enough to include even the assessee also. He submits that in view of the said phrase, rule 6D(2) is already attracted.

3. Shri Shubham Agarwal, on the other hand, submits that on a true and correct interpretation, the phrase “any other person” will include only such persons, who are akin to “an employee”.

4. Considered the respective submissions of learned counsel for the parties.

5. The question whether a restricted meaning to the words, as suggested by the assessee, to “any other person” should be given is the sole point mooted in the present case. In other words, the doctrine of “ejusdem generis” can be invoked as these words are general in nature and followed by the word “employee” ? The true scope of the rule of “ejusdem generis” is that the words of general nature following specific and particular words should be construed as limited to things which are of the same nature as those specified.

6. When the particular words pertaining to a class, category or genus are followed by general words, the general words are construed as limited to the things of the same points as those specified.

7. In State of Karnataka v. Kempaiah, (1998) 6 SCC 103 : AIR 1998 SC 3047, while interpreting the words “in any other manner” it was held these words (page 3049) “… contains general words which construed literally should receive their full and natural meaning but when they follow specific and particular words of the same genus, it will be presumed that the Legislature has used the general words in a limited sense to convey the meaning implied by specific and particular words. This follows from application of rule of ‘ejusdem generis’.”

8. In Kamlesh Kumar Sharma v. Yogesh Kumar Gupta, (1998) 3 SCC 45 : AIR 1988 SC 1021; [1998] 1 JT 642 SC, while interpreting the word “otherwise” in a group of words “death and resignation” with regard to the question of vacancy, held that the word “otherwise” has to be read as “ejusdem generis”, that is to say, in group similar to death, resignation, long leave vacancy, invalidation, person not joining after being duly selected. Wide and liberal interpretation cannot be given to the word “otherwise”.

9. This court in Commissioner Of Income-Tax v. Modipon Limited (No. 2). (No. 1), [1991] 189 ITR 344 has held that rule 6D does not apply to a foreign technician, who is not an employee of the assessee. This judgment apparently supports the contention of learned counsel for the assessee. It was brought to our notice that a similar view has been taken by the Delhi High Court in Commissioner Of Income-Tax v. Modipon Limited (No. 2). (No. 1), [1995] 212 ITR 420. The first appellate authority has interpreted rule 6D(2) and invoked the doctrine of “ejusdem generis”. We agree that the phrase “any other person” would draw its colour from the preceding word, namely, “employee”. In the case on hand, it cannot be said that the assessee was “an employee” or akin to an employee.

10. In this view of the matter, we answer the question in the affirmative, i.e, in favour of the assessee and against the Department. No order as to costs.