1. This appeal has come for consideration before this Special Bench, owing to a conflict of views on the interpretation to be placed upon Section 18A of the Gift-tax Act, 1958 ('the Act')- One Bench of the Appellate Tribunal, Hyderabad Bench 'A', in the case of GTO v. Mukta Raghaviah in GT Appeal No. 12 (Hyd.) of 1977-78, had taken the view that the words 'instrument of gift' used in Section 18A, meant each single gift made in an assessment year. But, another Division Bench, which came to hear this appeal involving the same point, was prima facie of the opinion that the expression 'instrument of gift' could include plurality of instrument also. Owing to this conflict in the interpretation of this expression' instrument of gift' appearing in Section 18A, a reference was made to the President of the Appellate Tribunal, for constituting a larger Bench to resolve this conflict.
Hence, the present appeal before this Special Bench.
2. The assessee. an individual, who possessed certain agricultural lands, made four gifts on 24-10-1977 to his daughters. The aggregate value of the four gifts came to Rs. 49,500. He paid Rs. 1,485 by way of stamp duty on all these four gifts. He claimed deduction for the stamp duty paid from the gift-tax levied, by invoking the provisions of Section ISA. The GTO did not allow the assessee's claim on the ground that for the rebate to be allowed under Section 18A, the gift-tax payable in respect of each gift must exceed Rs. 1,000, and since in these cases, the individual gift-tax did not exceed Rs. 1,000, the assessee was not entitled to the rebate. It was his view that the aggregate gift is of no consequence for granting the rebate contemplated under Section ISA. He, thus, levied gift-tax of Rs. 3,450 and demanded it from the assessee without allowing the rebate claimed for.
4. In the present appeal filed before us, various contentions were raised on behalf of the assessee. The first major contention advanced was based upon Section 13(2) of the General Clauses Act, which provided : In all Central Acts and Regulations, unless there is anything repugnant in the subject or context,- was that the expression 'instrument of gift' used in Section ISA should include the plural also. So interpreted, the gift-tax payable in respect of all the gifts made in a year must be aggregated and if that aggregate sum of gift-tax payable exceeds Rs. 1,000, rebate of Rs. 1,000 must be allowed and it would be wrong and against the intent of Section ISA to say that the rebate is available only in respect of each gift. Interpreting the expression 'instrument of gift' to mean, in respect of each gift, would be ignoring the effect of Section 13 of the General Clauses Act. The second argument conceived of, as a supporting argument for the above view, was based upon a decision of the Bombay High Court in the case of A. Phiroj & Co. v. CIT  59 ITR 645, where the Bombay High Court, interpreting the word 'instrument' as used in Section 26A of the Indian Income-tax Act, 1922, held that the instrument of partnership could be a single document, or could be spelt out by several documents, all existing in the relevant account year, which would together form an, instrument of partnership. Based upon this ruling of the Bombay High Court, it was pointed out that all the instruments of gifts must be construed as one single gift, which will have the effect of taking the aggregate amount of gift-tax payable in a year for the purpose of allowing rebate, and not each and every single instrument of gift. Support for this view was also sought to be taken from an earlier decision of the Bombay High Court in the case of Chhotalal Devchand v. CIT  34 ITR 351 for the same view that an instrument of partnership could be constituted by one or several documents. Then by taking us through the order passed by the Hyderabad Bench in the case of Mukta Raghaviah (supra), it was submitted that the Bench, which decided the matter, did not fairly appreciate the meaning of the expression 'instrument of gift'. The Bench, the learned advocate submitted, was not correct in confining the meaning of the expression 'instrument of gift 'to each instrument of gift. According to him, the expression 'instrument of gift' read in the light of Section 13 of the General Clauses Act, should mean 'instruments of gift' in which case the aggregate amount of gift-tax payable should alone be considered and not the gift-tax payable on each of the gifts. He pointed out that since the meaning assigned to the expression 'instrument of gift' had been erroneous, that view requires reconsideration. In this context, he referred us to a decision of the Supreme Court in the case of K.P.Varghese v. ITO  131 ITR 597, for the view that if in construing a statute, any absurdity or mischief results, that construction which would avoid absurdity or mischief must be preferred rather than the literal interpretation which would produce a manifestly absurd and unjust result. The Supreme Court pointed out in this case that the Court may, in given circumstances, even modify the language used by the Legislature or even do some violence to it, so as to achieve the obvious intention of the Legislature and produce a rational construction. Pressing these observations into service, the learned counsel for the assessee stressed that since the object of enacting Section ISA was to give a rebate of tax on gifts made, the interpretation must be liberal so as to include the 'instrument of gift' as referring to 'instruments of gift' so that if the total gifts made in the year are taken, the total gift-tax payable is ascertained and if it happened to exceed Rs. 1,000, which is the minimum prescribed under Section 18A, contemplated rebate could be granted. While on this point he also invited our attention to the decision of the Calcutta High Court in B.B. Sarkar v. CIT  132 ITR 150 where the Calcutta High Court observed : The expression used in a statute should ordinarily be understood in the sense in which it is best harmonious with the object of the statute and which effectuates the object of the Legislature .... (p.
151) Relying upon these observations, the learned counsel's argument proceeded that harmonious construction which would effectuate the object of the Legislature alone must be given, which, according to him, would lead to the only conclusion that the total gift-tax payable in. a year must be ascertained for the purpose of allowing the rebate under Section 18A, which could be done only by taking all the gifts made in a year rather than confining it to each gift and then ascertain whether the gift-tax payable in respect of each of such gifts exceeded Rs. 1,000.
5. Shri P.V. Subba Rao, Chartered Accountant, intervening, had submitted that the charging Section 3 of the Act provided very clearly that gift-tax shall be charged for every assessment year in respect of the gifts made by a person during the previous year, which meant that the gift-tax payable could only be ascertained with reference to the entirety of the gifts made and not in isolation, and when sudh was the mandate of the charging section, to read Section ISA in a different manner would only produce a conflict or antinomy with the charging section, which should always be avoided, as is the mandate given by the Supreme Court in K.P. Varghese (supra), even by going to the extent of removing an absurdity or causing violence to the language if such a reading cause absurdity, and the harmonious construction enjoined upon by the decision of the Calcutta High Court in B.B. Sarkar (supra).
Then, our attention is invited to the Head Note of Section ISA, again, in support of the view that the object was to give credit for the stamp duty paid on 'instrument of gift', which means 'instruments of gift'.
6. The departmental representative, on the other hand, contended that none of these contentions touches the central point whether Section ISA contemplated allowance of rebate on the total gift-tax paid in a year in respect of properties gifted, or the gift-tax payable in respect of the property gifted by an instrument of gift. Reading Section 18A, word by word, the learned departmental representative submitted candidly that the whole object of enacting Section ISA was to give relief in respect of stamp duty payable in respect of each instrument of gift of property from the total gift-tax payable, and not the total stamp duty payable in respect of all the gifts made in a year from the total gift-tax payable, subject to the limits laid down. What he meant to convey was that Section ISA uses the expression an instrument of gift of property in respect of which the gift-tax payable exceeds one thousand rupees'. He pointed out that this is the basic qualification or requirement for the application of Section ISA. On the satisfaction of this basic qualification of gift-tax payable in respect of one instrument of gift of property exceeding Rs. 1,000, the assessee would be entitled to the relief for a deduction from the total gift-tax payable. The basic qualification of the gift-tax payable exceeding Rs. 1,000 in respect of each instrument of gift of property cannot be construed, unless violence is done to the language in a manner not intended by the Legislature or not known to grammar, that it would mean all instruments of gift of property. If 'A', taking an illustration, makes ten gifts in respect of each of which the gift-tax payable exceeded Rs. 1,000, then the stamp duty payable in respect of all those gifts would qualify for rebate. But, if gift-tax payable in respect of some of them happened to be below Rs. 1,000, on the plain language of Section 18A, those gifts would become disentitled for the rebate. He then submitted that the principle laid down by the Supreme Court in K.P. Varghese (supra) or that of the Calcutta High Court in B.B. Sarkar (supra), would apply only to a case where there is a manifest absurdity. Hence, he pointed out that we are reading an absurdity where none existed, only to suit a particular interpretation. In this context, he commended for our acceptance of the view taken by the Bench in the case of Mukta Raghaviah (supra). He also submitted that the Head Note of Section ISA does not give any indication to the issue in question. On the contrary, it is as vague, if at all there is any vagueness to be breathed into this section, which is impossible even to utter, as the words of the main section. Then the purpose of Section 3 and the purpose of Section 18A are so different that harmony between the two is neither intended, nor called for. Section 3 is the charging section, but for which, no gift-tax would be levied at all. Section ISA provided for relief from gift-tax payable, to be ascertained as a consequence of application of Section 3. There is, therefore, nothing in common between the two in order that a harmony should be read into it, in such a way that if Section 3 provided for aggregation of all gifts, Section 18A should also be read as to provide for aggregation.
Commending for our acceptance, the observations made by the learned Bench in the case referred to above, he submitted that it is open to the Legislature to provide for, in a charging section, levy of tax in a particular manner and, in another section for the rebate of tax on an altogether different manner. The disharmony could not, therefore, mean that one is in conflict with the other, when the purposes of enactment were so different, and then seek the Court to remove it off which would only mean re-enacting the section, for which neither the Tribunal nor the Court has any power. He also submitted that Section 13 of the General Clauses Act had been quoted only for misapplication, ignoring the purport for which provision was made.
7. We have with candour reproduced the above arguments addressed to us by both the assessee and the revenue. On a careful ratiocination, we felt that the view expressed by the earlier Bench, in the case of Mukta Raghavaiah (supra) is the correct one in the sense that it represented the intent of the Legislature. Section 18A provided : 18A. Where any stamp duty has been paid under any law relating to stamp duty in force in any State on an instrument of gift of property in respect of which the gift-tax payable exceeds one thousand rupees, the assessee shall be entitled to a deduction from the gift-tax payable by him of an amount equal to the stamp duty so paid or one-half of the sum by which the gift-tax payable, before making the deduction under this section, exceeds one thousand rupees, whichever is less.
Analysing this section, we get that the following requisites must be satisfied, before a credit for stamp duty paid is asked for and allowed : 1. There must be stamp duty paid under any law relating to stamp duty in force in any State.
2. It must be in respect of 'an instrument of gift of property in respect of which the gift-tax payable exceeds one thousand rupees'.
3. The total gift-tax payable by an assessee in respect of all the gifts made by him in a year must be ascertained.
If these basic requisites are present, then the process for giving the credit for stamp duty would commence and the amount to be given credit for would be the stamp duty so paid or half of the sum by which the gift-tax payable, before making that deduction, exceeds Rs. 1,000, whichever is less. The controversial postulate is the second point referred to above. The language of this condition clearly provides that, take a gift and if in respect of that instrument of gift of property, the gift-tax payable exceeds Rs. 1,000, it would qualify for the credit of stamp duty. Thus, it clearly means that the gift-tax payable in respect of each property gifted must exceed one thousand rupees to qualify for the credit of stamp duty. This would clearly mean that what is contemplated is the gift-tax payable in respect of each of the gifts and not the aggregate of the gifts. The qualification that gift-tax payable must exceed Rs. 1,000 is, therefore, clearly referable to the instrument of gift of property, especially when the instrument of gift of property is again specified by making it clear that it must be such that in respect of which the gift-tax payable exceeds Rs. 1,000. Thus, both the nature of the property and the quantum of gift-tax payable has to be satisfied, relating one to the other (sic).
There is, thus, a link established between the gift-tax payable in respect of each instrument of property and the basic qualification on the satisfaction of which the entitlement for the credit for the stamp duty paid would arise. As pointed out, by the learned departmental representative in his arguments that if there are ten gifts made in respect of each of which the gift-tax payable exceeds Rs. 1,000, the stamp duty paid in respect of those ten gifts would be entitled to the relief but if some of them happen to be such in respect of which the gift-tax payable does not exceed Rs. 1,000 those gifts would not fall within the purview of Section 18A. This appears to us to be the clear meaning of Section ISA. Viewed in this context we are unable to see any absurdity or vagueness in the language used in Section ISA so as to call in aid the dicta laid down by the Supreme Court. Some confusion arose because of the use of the words in Section ISA 'from the gift-tax payable' which, perhaps, gave rise to the argument to link it with Section 3 to say that the total gift-tax payable was contemplated for the purpose of giving the relief. But the purport and the meaning of the expression 'from the gift-tax payable' is very clear to see. The deduction to be given for the stamp duty is from the total gift tax payable. The total gift-tax payable has to be ascertained certainly not with reference to Section ISA, but with reference to Section 3 only.
After ascertaining the gift-tax payable as per Section 3, from the gift-tax payable so ascertained the relief from stamp duty has to be given by invoking the provisions of Section ISA. There is, therefore, no conflict at all between sections and Section ISA. Both are operating in two different fields. One does not encroach upon the other. As correctly pointed out, on behalf of the revenue, the Head Note of Section ISA far from being an aid to support the interpretation canvassed for on behalf of the assessee, does lend support to the argument advanced for the revenue. It says 'Credit for stamp duty paid on instrument of gift', which would mean that the Legislature's intention was to allow credit for stamp duty paid on each of the instruments of gift in a year. If the intention had been different, the Legislature, perhaps, would have used the words 'Credit for stamp duty paid on the instruments of gift made in a year'. The absence of such words is indicative of the fact that what was contemplated was to give credit in respect of stamp duty only in respect of each instrument of gift and plurality of the instruments was not meant. We may at this stage say in passing that as per the latest ruling of the Supreme Court in K.P. Varghese (supra), the Head Note or the marginal note to a section, though it cannot be referred to for the purpose of construing the section, can be relied upon as indicating, as, what the Supreme Court described, 'the drift of the section', or to show what the section is dealing with. It certainly cannot control the interpretation of the words of a section, particularly when the language of the section is clear and unambiguous. It is to be remembered that it is a part of the statute and, therefore, it has a function to perform and this function is 'prima facie furnishing some clue as to the meaning and purport of the section'. Therefore, though a reference to the marginal note cannot be made for the purpose of construction, it can be relied upon to indicate the drift to the section and as we see, the drift of the section is to allow credit for stamp duty paid in respect of each of the gifts of property made. It is also not proper, as pointed out by the learned departmental representative, to call in aid Section 13 of the General Clauses Act. That section opens with the words 'In all Central Acts and Regulations unless there is anything repugnant in the subject or context'. In order that subsections (1) and (2) should apply, there should be repugnancy in the Act. The function of an interpretation clause is not to substitute one set of words for another, or to apply the meaning of the term 'under all circumstances'.
It merely indicates the intention of the Legislature that the words could be interpreted in the plural wherever the circumstances require that should be so construed. This is the ruling of the Madras High Court in Sambata v. Narayana AIR 1951 Mad. 920. If that is the intention of enacting Section 13 of the General Clauses Act, that has to be applied only where the circumstances require. Here, Section ISA did not provide for any indication or suggestion, in the language that it used, that there is a possibility for aggregation of all the gifts made in order that the total gift-tax payable is ascertained, and that if it exceeded Rs. 1,000, the assessee could be given the relief of stamp duty payable. Applying the law laid down by the Madras High Court, we have to hold that the singular cannot, in all circumstances, include plural, but only in certain circumstances, and those circumstances are not present here in this case.
8. Before we part with this point, we may have to refer to the decisions of the Bombay High Court, relied upon. That is the very soul of the argument of the learned conusel for the assessee. Those decisions revolved on the question as to what constitutes an instrument of partnership for the purpose of granting registration under the Income-tax Act. The question was whether there could be several documents embodying the terms and conditions of the partnership to which the partners have agreed or should they all be referred to in one single document. The Court had ruled that it is not necessary that all the terms and conditions that the partners have agreed to should be reduced to writing in one single document. Those conditions and terms could be ascertained from several documents in which case all those documents put together would constitute one instrument as spelling out the conditions and terms of the partnership and, therefore, satisfies the requirements of Section 26A of the 1922 Act which provided that there must be a partnership under an instrument of partnership. The decision given for a totally different purpose, cannot be imported into the interpretation of Section ISA to say that an instrument of gift should be read as several instruments of gifts. The decisions of the Bombay High Court in A, Phiroj & Co. (supra) and Chhotalal Devchand (supra) may perhaps apply in a case where the terms of the gift are embodied in more than one document so that all those documents put together could be regarded as one instrument of gift, but not for the purpose of interpretation as to whether Section ISA would apply to one instrument of gift or several instruments of gifts. If this interpretation is accepted, it would make the connecting link that the gift-tax payable in respect of each of such gifts exceeding Rs. 1,000 (sic) would be a qualification which would never be possible to implement.
9. For these reasons and for the reasons mentioned already in the decision of the Bench in Mukta Raghaviah (supra) we are of the opinion that Section ISA thus contemplates that rebate of tax thereunder, can be allowed only if the gift-tax in respect of each of the instruments of gift exceeds Rs. 1,000 and not to the case where the gift-tax payable in respect of all the gifts made in the year exceeds Rs. 1 ,000. We, therefore, endorse the view expressed by the Bench and decline to accept the opposite view canvassed for.