Judgment:
These are Departmental appeals relating to the asst. yrs. 1987-88 and 1988-89. As the issues involved are identical, even though the assessee-respondents are different, the appeals are disposed of by this common order for the sake of convenience. The point at issue, which is common to all the appeals, is whether tax chargeable at the maximum marginal rate, in accordance with the provisions of s. 167A, as they stood during the asst. yrs. 1987-88 and 1988-89, are applicable to the assessees-respondents who are "BOI".
2. The assessees filed returns of income, for the asst. yrs. 1987-88 and 1988-89, in the status of BOI claiming that the rate of tax applicable to an individual be adopted. Interest income was offered for taxation. Apart from interest income, the assessees had offered income from gifts and presents said to have been received during the above years. It was stated that the gifts had been offered for tax for want of strict proof. The AO noticed, from the records, that the nucleus for the capital of the BOI was paltry gifts of few thousand rupees received in April, 1978, and 1979. Initially, it was claimed by the assessees that the gifted property was invested in purchase and sale of philatelio and allied materials. Subsequently, the assessees had been offering as income gifts claimed to have been received every year. At the end of the previous year, relevant to the asst. yr. 1987-88, it was found that the capital had swelled to a great extent. It was further noticed that the entire capital had been invested in M/s India Tin Industries or its allied concerns such as M/s Ganeshlal Gopilal, Gouri Industries, Sri Sugar Agencies, Mayura Caps Ltd., Maruthi Tins Ltd. and M/s Chothumal Jayanarayan & Co. Shri S. B. Kakani was the Managing Director of M/s India Tin Industries. The members constituting the BOI who are the respondents here are close relatives of S. B. Kakani. It was also noticed that the assessees have filed the returns in permutation and combination with S. B. Kakani and relatives as joint tenants with an intention to accommodate cash credits in the case of the companies mentioned above in which Kakani and others are interested. He further noticed that the gifts which formed the nucleus for the investments were given by the donors with an intention that the gifts should be owned, held and enjoyed by the assessees as joint tenants without anyone of the donees having, during their lifetime, any specified share in the same as well as in its accretions, until it vested with the last among them by survivorship. He, accordingly, came to the conclusion that the shares of the members of the BOI/AOP were indeterminate and unknown and, hence, tax was to be levied at the maximum marginal rate as per the provisions of s. 167A of the Act. He, however, accepted the income returned by the assessees.
3. Against the levy of tax at the maximum marginal rate as per the provisions of s. 167A, the assessee appealed. It was contended before the CIT(A) that the provisions of s. 167A were applicable only to an AOP and not to a BOI. The assessees, it was submitted, were BOIs and, therefore, the provisions of s. 167A were not applicable. The status of the assessees as BOI was not in dispute before the CIT(A). The CIT(A) was of the view that a plain reading of s. 167A applicable for the assessment years under consideration showed that the maximum marginal rate of tax could be charged only in the case of AOP and not for BOI.He also noted that w.e.f. 1st April, 1989 that concept was extended to BOI also by replacement of s. 167A by s. 167B and that the change was prospective and not retrospective. For the above reasons, the CIT(A) directed the AO to charge the tax at the rate applicable to individuals and not at the maximum marginal rate as was done by the AO. Aggrieved the Revenue is on appeal before us.
4. The original grounds taken by the Revenue, as can be seen from the grounds of appeal, are that the CIT(A) erred in holding that the provisions of s. 167A are not applicable to BOIs. The CIT(A) ought to have noted that in s. 167A the words ".... an AOP (other than a company or a co-operative society)" was used in a wider content to include any BOI also since specific exclusion was made only in respect of companys and co-operative societies. Now, the learned Departmental Representative has filed the following additional grounds of appeal in addition to the grounds already taken in the grounds of appeal, and has numbered the additional grounds as grounds No. 5 to 7 : Ground No. 5 : "..... the CIT(A) erred in holding that being a BOI, maximum marginal rate under s. 167(A) was not applicable in the case of the assessee. On the facts of the case as all the BOIs have acted with a common purpose and intent inasmuch as the funds from all the BOIs (twenty to be specific) have flown to the various firms and companies of the same ground (para 2 of the assessment order) this activity shows that these were actually AOP and not BOI [Kusumben D. Mahadevia vs. CIT (1960) 39 ITR 540 (SC) - Supreme Court in CIT vs. Indira Balakrishna (1960) 39 ITR 546 (SC)]. He should have, therefore, held that actually being AOP, these persons whose returns were deliberately filed in the status of BOI were liable to be taxed at the maximum marginal rate (reliance is placed on Madras High Court in N. P. Saraswathi Ammal & Ors. vs. CIT (1982) 138 ITR 19 (Mad) and McDowell & Co. Ltd. vs. CTO (1985) 154 ITR 148 (SC)." Ground No. 6 : "The CIT(A) has erred in holding that the AO at no stage has held any doubts on the status of the assessee as BOI. He failed to consider that in para 2 of the assessment order the AO has discussed the common activity, intent and purpose of the twenty BOIs with same persons in different permutation and combination and in para 3, he has held that the shares of member of BOI/AOP are indeterminate and unknown and hence, tax is to be levied at maximum marginal rate as per s.
167(A) of the IT Act, 1961. It is clear that on the basis of this sustained common activity, the AO has treated these BOIs as AOP." Ground No. 7 : "In view of the additional grounds 5 & 6 and without prejudice to the grounds 2 & 3, it is requested that in view of Madras High Court decision in N. P. Saraswati Ammal & Ors. vs. CIT (1982) 138 ITR 19 (Mad), the decision of the Honble Supreme Court in McDowells case (supra), these BOIs may be held as AOP and may be subjected to maximum marginal rate under s. 167(A) of the Act as it then stood." 5. Admission of the above additional grounds is vehemently opposed by Shri Venkatesan and Smt. Ravi Ratnakumar, appearing for the assessees.
It is argued that AOP and BOI are two different and distinct entities.
Therefore, it is not permitted to treat a BOI and AOP as the same entity in tax matters and tax a BOI at the rate applicable to AOP. The decision of the Madras High Court in the case of N. P. Saraswati Ammal & Ors. vs. CIT (supra), in which the learned Departmental Representative has also relied, especially on the following observations : "..... It is true that in s. 3(31)(v) of the Act, BOI is placed cheek by jowl with AOP in the classified list of persons. But that is no reason to regard the two terms as interchangeable or synonymous. We should seldom impute to the legislature a fancy for mere tautology unless we are driver to that inference by the context or by other factors. It cannot be denied that BOI is a new classification in the fiscal statute. Right from 1939, if not from 1922 onwards, the IT Act had known and recognised the distinct category of taxpayers going by the name of AOI, or AOP." It is further contended that tax statute has to be interpreted strictly. Words which are not in the statute should not be read into it. For this proposition, reliance is placed on the following decisions :Atlas Cycle Industries & Ors. vs. State of Haryana & Anr. (1972) 85 ITR 121 (SC); (v) Goodyear India Ltd. & Ors. vs. State of Haryana & Anr. (1991) 188 ITR 402 (SC).
It is further argued that during the accounting years relevant to the assessment years under consideration, as per the provisions of s. 167A, the provisions of that section were applicable only to AOPs and not to BOIs. It was only subsequently, that is, w.e.f. 1st April, 1989, the s.
167A was omitted and, in its place, a new section, viz., s. 167B, was inserted, including the BOI along with AOP for the purpose of taxing at the maximum marginal rate of tax. It is argued that this amendment should not be said to be retrospective in operation. There is no implication for the retrospective operation of this provision. Unless there is an implication, it is argued, that the amendment should be taken as only prospective and not retrospective. For this proposition, reliance was placed on behalf of the assessee, on the following two decisions :J. P. Jani, ITO vs. Induprasad Devshanker Bhatt (1969) 72 ITR 595 (SC); and It is argued that provisions subsequently inserted cannot be made applicable to the assessees to be taxed at the maximum marginal rate.
It is also argued that the additional grounds taken by the Revenue now do not arise from the order of the CIT(A) at all. The status was not in dispute before the CIT(A). Originally the contention of the Revenue was that the provisions of s. 167A were applicable to the assessees as their shares are indeterminate and unknown. It is contended that even the AO had no intention of treating the status of the assessee as AOP.This is clear from the assessment orders themselves. In number of places the AO has referred the assessee as BOI. It is only almost at the end of the assessment orders he has shown the assessee as BOI/AOP and held that as the shares of the members of BOI/AOP are indeterminate and unknown tax was to be levied at the maximum marginal rate as per provisions of s. 167A. The Revenue cannot take a ground which was not discussed by the CIT(A). Before the CIT(A) there was no dispute about the status. The status of AOP cannot be equated with BOI. For this proposition, the decision of the Madras High Court reported in the case of Saraswathi Ammal vs. CIT (supra), especially p. 25, was relied upon on behalf of the assessees. It is also argued that the BOIs here came into force only when the members received gifts and presents and they had to be deposited in certain companies. There is no business activity carried on by the assessees. There is neither an agreement among the assessees to earn any income or profit. After forming BOI they invested the amount. There was no volition to invest the amounts before the receipt of presents and gifts but the thought came only afterwards.
There must be an intention to form an AOP to earn profit out of the business carried on by it. For this proposition the decision of the Supreme Court in the case of CIT vs. Indira Balkrishna (supra) is relied on. To counter the argument of the learned Departmental Representative that the assessees formed the BOI with a colourable device to avoid payment of tax as held by the Honble Supreme Court of India in the case of McDowell & Co. Ltd. vs. CTO (supra), Shri Venkatesan quoted a decision of the Supreme Court of India in the case of CWT vs. Arvind Narottam (1988) 173 ITR 479 (SC). It is contended on behalf of the assessee that the Revenue has now come with the additional grounds as it is not confident of its original grounds of appeal. On behalf of the assessees, reliance is placed on a decision of this Bench (Single Member) in ITA Nos. 655 to 700/Bang/1989, dt. 5th February, 1993. In that order the Single Member has set aside the order of the CIT passed under s. 263 and held that the status of the assessees is BOI and not AOP. Though the order of the Single Member is not binding on the Division Bench, it is stated that it has got persuasive effect. Finally, he supported the orders of the first appellate authority.
6. We have heard the rival submissions. The first point to be decided is whether the additional grounds raised by the Revenue are to be admitted or not. In the additional grounds, the Revenue contends that the assessees are not BOIs but AOPs and, hence, the rate of tax to be levied is the maximum marginal rate as provided under s. 167A as it stood during the asst. yrs. 1987-88 and 1988-89. As per the original grounds of appeal, the contention of the Revenue is that the status of the assessees is BOI, but the rate of tax mentioned in s. 167A is applicable and leviable on the ground that the shares of the assessees are indeterminate and unknown. It is to be mentioned here that before the CIT(A) the status of the assessee as BOI was not in dispute. In the assessment order also, as stated by the learned representatives of the assessee, the AO has proceeded on the footing that the status is BOI.He has referred the assessees as BOIs in several places in the assessment order. At the end, treating the assessees as BOI and not AOP, the AO has taxed them at the maximum marginal rate as provided for under s. 167A. The CIT(A) has specifically stated, in his appellate order, that the status of the assessees was not in dispute. He held that the tax rates applicable are that applicable for individuals and not that provided for in s. 167A as it stood during the assessment year.
(a) We shall now look into what were the provisions of s. 167A as they stood before replacement of the section by s. 167B, w.e.f. 1st April, 1989. The provisions of s. 167A stood as under : "Where the individual shares of the members of an AOP (other than a company or co-operative society) in the whole or any part of the income of such association are indeterminate or unknown, tax shall be charged on the total income of the association at the maximum marginal rate." The above section was omitted and, in its place, a new section, s.
167B, was inserted by Taxation Laws (Amendment) Act, 1989, w.e.f. 1st April, 1989, which reads as under : "167B(1) : Where the individual shares of the members of an AOP or BOI [other than a company or a co-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India] in the whole or any part of the income of such association or body are indeterminate or unknown, tax shall be charged on the total income of the association or body at the maximum marginal rate." We are in agreement with the argument on behalf of the assessees that the provisions of s. 167A, as they stood during the asst. yrs. 1987-88 and 1988-89, did not speak of BOI but only AOP. It was only in the new section, s. 167B, which was inserted w.e.f. 1st April, 1989, the words BOI were brought into. We are of the considered opinion, as rightly argued on behalf of the assessees, that words which are not there should not be read into the status. Our view is supported by the various decisions on which reliance is placed on behalf of the assessees.Atlas Cycle Industries Ltd. vs. State of Haryana & Anr.
"A taxing provision always receives a strict interpretation for the obvious reason that there must be a clear and express language imposing a tax and indicating the date from which such tax shall come into effect." It is also held by the Honble Supreme Court that there cannot be any taxation by implication.
(c) In the case of CIT vs. Ajax Products Ltd. (supra) also the Honble Supreme Court held : "The subject is not to be taxed unless the charging provision clearly imposes the obligation.
If the words of a statute are precise and unambiguous they must be accepted as declaring the express intention of the legislature.
Fictions should not be stretched beyond the purposes for which they were enacted." At p. 747, their Lordships have quoted the observations of Rowlatt, J.in Cape Brandy Syndicate vs. IRC 12 Tax Cases thus : "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in nothing is to be implied. One can only look fairly at the language uses." (d) Their Lordships of the Honble Supreme Court of India have held, in the case of Keshavji Ravji & Co. vs. CIT (supra), thus : "As long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention of the legislature cannot then be appealed to whittle down the statutory language which is otherwise unambiguous. If the intendment is not in the words, it is nowhere else.
The need for interpretation arises when the words used in the statute are, on their own terms, ambivalent and do not manifest the intention of the legislature." (e) In the case of CIT vs. R. J. Trivedi & Sons (supra), their Lordships of the Madhya Pradesh High Court held as under : "In a taxing statute, the rule of strict construction has to be applied and only expressed words in the Act can justify an interpretation against the assessee. The Court is not entitled to read words into an Act unless a clear reason for it is to be found within the four corners of the Act itself." (f) In the case of Goodyear India Ltd. vs. State of Haryana & Anr.
(supra), the Supreme Court held : "It is not permissible to construe a fiscal provision by making assumptions and presumptions ...... It is well settled that a reasonable construction of the taxing statute should be followed and literal construction may be avoided if that defeats the manifest purpose and object of the statute." 7. Now we have to see whether the decisions relied on behalf of the Revenue are applicable in this case or not. The decisions are CIT vs.
Indira Balkrishna (supra) and N. P. Saraswathi Ammal & Ors. vs. CIT (supra).
(i) In the case of CIT vs. Indira Balkrishna (supra), the co-widows of a Hindu governed by the Mitakshara law inherited his estate which consisted of immovable properties, shares, money lying in deposit and a share in a registered firm. The Tribunal found that they had not exercised their right to separate enjoyment and that except for receiving the dividends from the shares and the interest from the deposits jointly, they had done no act which had helped to produce the income. The question was whether the three widows could be assessed in the status of an "AOP" within the meaning of s. 3 of the IT Act, in regard to the income derived from the properties inherited by them. On a reference, the High Court held that they could not be assessed as an AOP. On appeal, the Honble Supreme Court held : "(i) that co-widows succeeded as co-heirs to the estate of their deceased husband and took as joint tenants with rights of survivorship and equal beneficial enjoyment; they were entitled as between themselves to an equal share of the income. Though they took as joint tenants, no one of them had a right to endorse an absolute partition of the estate against the others so as to destroy their right of survivorship. But they were entitled to obtain a partition of separate portions of the property so that each might enjoy her equal share of the income accruing therefrom.
(ii) That s. 9(3) of the IT Act applied in regard to the income from the immovable property, since they had an equal share in the income.
(iii) That, as there was no finding that the three widows had combined in a joint enterprise to produce income, and as they had done no act which had helped to produce the income, it could not be held that they had the status of an AOPs within the meaning of s. 3 of the IT Act." The facts of the case decided by the Supreme Court support the case of the assessee rather than the contention of the Revenue. Therefore, the decision reported in CIT vs. Indira Balkrishna (1960) 39 ITR 546 (SC) can be made applicable herein favour of the assessee.
(ii) In our opinion, the facts in the case decided by the Madras High Court (N. P. Saraswathi Ammal & Ors. vs. CIT (supra), are entirely different. In that case, one P bequeathed his business of bus service to his widow and four sons under his will. As all the sons were minors at the time of Ps death, the widow took charge of the operation of the bus service during their minority and this position continued even after some of the sons attained majority. The ITO treated the widow, her three adult sons and the minor as an AOP and charged the income from the transport business to tax as a single unit of assessment in their hands. The AAC confirmed the assessment. In the further appeal before the Tribunal, the Department raised a new plea that even if the widow and the children could not be treated as an AOP, they could still be regarded as a "BOI" and charged to tax as such as a single unit of assessment. The Tribunal entertained this new plea raised on behalf of the Department and sustained the assessments made, treating the widow and her children as a BOI and directed the ITO to amend the assessments accordingly. On a reference, the Madras High Court held that the Tribunal had the discretion to entertain the new plea raised on behalf of the Department.
(iii) In the above case, the assessee had contended that she was not liable to be assessed either as AOP or BOI but only in individual capacity. In this case the facts are clearly distinguishable. Even otherwise, there is no difference in the tax effect even if the assessees were assessed as BOIs or AOPs. Hence, we hold that this case law does not help the case of the Revenue at all.
(iv) Reliance has also been placed by the learned Departmental Representative on the same Madras High Court decision to show what is meant by "BOI" and "AOP". This is what is stated by their Lordships of the Madras High Court : "BOIs is a new classification in the fiscal statute. Right from 1939, if not from 1922 onwards, the IT Act had known and recognised the distinct category of taxpayers going by the name of association of individuals or association of persons (AOP). Although the expressions were left undefined, Courts used to associate this class of persons with certain attributes, chief amongst which was their being associated in a common endeavour for producing taxable income. This at once excluded from the category those who found themselves thrown together by the accident of their birth, by the accident of anothers death, by the accident of testamentary dispositions, and so on. To hold, therefore, that a BOI must be equated to an AOP would be to disregard the stage-by-stage evolution of the statutory classification of the different kinds of taxpayers under s. 2(31) of the IT Act, 1961. The difference between an association and body is too pronounced to be slurred over. While an association might well connote an active element of combining or associating, a body would include even a comparatively inert mass of people or institution. The only essential attributes of a BOI are that there should be a plurality of individuals and they must, in the gross, have a nexus to a source of income. This conception at once excludes the crucial characteristics which we associate with an AOP, such for instance, as a common intention and a common activity to produce taxable income. In other words, persons who do nothing but stand and wait may not be an AOP; but, they may yet be a BOI, if they stand together, and wait for something to be shared between them. It would be a matter for the IT authorities as well as the Tribunal and the Courts to consider the facts in each case to find out if any given group of people are to be regarded as a BOI or not. The individuals concerned may have something or other in common which brings them together with reference to an income or its source. It may be common intention; it may be common holding out; or it may be a sharing of common spoils. The list is not exhaustive. Nor is it necessary that all these characteristics must be present in every case. Much might depend on the relationship in the gross to the income or to the income-yielding asset in question." (v) The learned Departmental Representative also placed reliance on the definition of "person" in s. 2(31) of the IT Act. The section defines "person" as including an individual, an HUF, a company, a firm, an AOP or a BOI, whether incorporated or not, a local authority and every artificial juridical person, not falling within any of the preceding sub-clauses. According to the learned Departmental Representative, the definition includes "AOP" or "BOI" and a BOI is not separate from AOP.The legislature thought that these two terms must go together, the learned Departmental Representative contended. Hence, he submitted that before the omission of s. 167A and bringing into existence s. 167B, it has to be held that AOP also included BOI. In this case, the assessees have shown the status as BOI with a colourable intention of avoiding payment of tax. As stated earlier, on behalf of the assessee, to counter the above argument of the learned Departmental Representative, reliance is placed on the decision of the Supreme Court in the case of CWT vs. Arvind Narottam (supra) especially the last portion of the decision at pp. 486 and 487, where Sabyasachi Mukharji, J. observed : "I agree with the judgment of the learned Chief Justice. There is, however, one aspect of the matter on which some arguments were advanced at the time of hearing of this case, to which I would like to advert.
Dr. V. Gauri Shankar, appearing on behalf of the Revenue, made an appeal before us stating that we should really construe the three trust deeds together and see the game of the hidden purpose behind these trust deeds which were, in fact, for the sole and exclusive benefit of the assessee. He drew our attention to the observations of Justice Chinnappa Reddy, with which other learned Judges of the Full Bench agreed in McDowell & Co. Ltd. vs. CTO (1985) 154 ITR 148 (SC). He invited us to hold that having regard to the taxing statute, the tax avoidance device should be exposed. Justice Chinnappa Reddy has noticed the change in judicial attitude to tax avoidance devices. Justice Reddy mentioned that in the country of its birth, the principles of Westminster, of condoning tax avoidance have been given a decent burial. In that very country, the phrase tax avoidance is no longer condoned or looked upon with sympathy.
It is true that tax avoidance in an underdeveloped or developing economy should not be encouraged on practical as well as ideological grounds. One would wish, as noted by Reddy J., that one could get the enthusiasm of Justice Holmes that taxes are the price of civilization and one would like to pay that price to buy civilisation. But the question which many ordinary taxpayers very often, in a country of shortages with ostentatious consumption and deprivation for the large masses, ask us, does he with taxes buy civilisation or does he facilitate the waste and ostentation of the few. Unless waste and ostentation in Government spending are avoided or eschewed, no amount of moral sermons would change peoples attitude to tax avoidance.
In any event, however, where the true effect on the construction of the deeds is clear, as in this case, the appeal to discourage tax avoidance is not a relevant consideration. But since, it was made, it has to be noted and rejected." (vi) In this case, originally, the Department had no case that the assessee have claimed the status as BOI with a colourable intention to avoid tax payment. Hence, we hold that the decision reported in McDowell & Co. Ltd. vs. CTO (supra) is not applicable to the facts of the present case.
(vii) The learned Departmental Representative also relied on the passage, which we have already quoted, in (iv) above, while discussing the case law and contended that the assessees are AOPs and have to be assessed under s. 167A at the maximum marginal rate for the asst. yrs.
1987-88 and 1988-89. We are not impressed by this argument of the learned Departmental Representative for the reason that during the assessment years under consideration, it was s. 167A which was in existence and that section was applicable only to AOPs and not to BOIs.
The assessees here are BOIs. The assessees formed the BOI only to deposit the amounts received by way of gifts and presents. But an AOP is normally formed with an intention to do an activity for the purpose of earning profit. Such an activity is absent in the case of a BOI.Therefore, the assessee here cannot be termed as AOP.(viii) Further, when the original s. 167A was in existence, we hold that the legislature never intended to include BOI in its stride to tax at the maximum marginal rate. It was only to (sic-include) BOIs also, s. 167A was omitted and a new s. 167B was brought into existence. Had it been the intention of the legislature that BOIs should also be taxed at the maximum marginal rate it could have stated so in s. 167A.Intentions cannot be read unless it is made clear.
(ix) Further, similar issue came up before the Single Member of this Bench, for asst. yrs. 1985-86 and 1986-87, who decided, in his order dt 5th February, 1993, that the status of the assessee is BOI. The question to be decided there was whether the assessees were BOIs or AOPs. In that order, the Single Member has held that the status of the assessee was never disputed by the CIT, as contended by the learned Departmental Representative. It was also held that if once it was held that the status of the assessee shown in the return of income was correct then the provisions of s. 167A, as it stood during the assessment year in question, could not be applied as the same would apply only to AOP. By Taxation Laws (Amendment) Act, 1989, s. 167A is omitted and it was substituted by s. 167B, w.e.f. 1st April, 1989, by which the words "BOI" are also added in the section. This clearly means that in the section which stood earlier to 1st April, 1989, the legislature has treated AOP differently from that "BOI". The Single Member thus cancelled the order passed by the CIT under s. 263. On behalf of the Revenue, it is argued that the decision of the Single Member is not binding on the Division Bench. But we hold that though the decision is not binding on us it has a persuasive effect. We hold that the above order supports the case of the assessees that they are only BOIs and not AOPs.
(x) Further, in the assessment order, in several places, the AO has referred the assessees as BOI. Therefore, it is clear that his intention was to assess the assessee as BOI. But as he found that the shares of the assessees are indeterminate and unknown he wanted the maximum rate of tax to be applied under s. 167A. But he cannot do so because as the provisions of s. 167A stood it was only AOPs which were to be taxed at the maximum marginal rate.
(xi) To sum up, our view is that the additional grounds (numbered as 5 to 7) raised by the Revenue do not arise out of the order of the CIT(A); that the status of the assessees has already been taken as BOI by the AO as well as the CIT(A); that the provisions of s. 167A as they stood at the relevant time, i.e., prior to 1st April, 1989, were applicable only to AOP; that the legislature has treated BOI and AOP separately. Hence, the additional grounds raised by the Revenue are not admitted for consideration on merits.
8. Coming to the original grounds of appeal, it is the contention of the Revenue that the provisions of s. 167A, as they stood before the omission by Taxation Laws (Amendment) Act, 1989, w.e.f. 1st April, 1989, are applicable to BOI also. We have already held that BOI and AOP are different and distinct entities. In s. 167A BOI is not made a mention at all. Therefore, the words BOI cannot be read into s. 167A.Sec. 167A was omitted and, in its place, a new section, viz., s. 167B, was inserted, w.e.f. 1st April, 1989. This new section included both the entities AOP and BOI. It is stated in s. 167B that maximum marginal rates are applicable to both AOP and BOI. That being so, we hold that s. 167A which stood prior to its replacement are not applicable to the assessees before us as they are BOIs. Hence, we hold that the CIT(A) is justified in holding that maximum marginal rate as mentioned in s. 167A is not applicable to the assessees here and that the rate applicable is that applicable to individuals. We, therefore, uphold the orders of the CIT(A) for the asst. yrs. 1987-88 and 1988-89 in the case of all the assessees before us.