Assess and Assessment

In the The Bombay Life Assurance Society Ltd. Vs. The Council, Corporation of Madras, , a Division Bench of this Court, had occasion to consider the words “assess” and “assessment” under the Madras City Municipal Act IV of 1919. The following passage in the judgment is worth reproduction, as it is instructivc:–

  1. In my opinion, it will be most unsafe to draw any inference from the mere use of the words ‘assess’ or ‘assessment’. These words do not have one and an only meaning and connotation. In taxation statutes, the word ‘to asses’ is sometimes used as meaning ‘to fix the amount of tax’; sometimes in the sense ‘to impose the tax’ and sometimes to mean ‘to value or calculate for taxation.’ The word ‘assessment’ in the Indian Income Tax Act does not have the same meaning throughout the Act. Lord Romer in (1938) 6 ITR 414 (Privy Council) observed:

One of the peculiarities of most Income Tax Acts is that the word “assessment” is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the taxpayer.

In ‘income tax Comrs. v. Gibbs’, 1942 AC 402, Viscount Simon L.C. said:

The word “assessment” is used in our Income Tax Code in more than one sense. Sometimes, by “assessment” is meant the fixing of the sum taken to represent the actual profit for the purpose of charging tax upon it. In another context the “assessment” may mean the actual sum in tax which the tax payer is liable to pay on his profits. These two things are of course not the same It is remarkable that these two separate meanings of the word “assessment” may occasionally be found within the bounds of a single section.

Lord Macmillan in the same case makes the following caustic comment,

verbal consistency is the last virtue than can be attributed to a Code which uses so vital a term as “assessment” in not less than eight differing senses.

If this be so where qualified persons draft the enactment in their own language, it is idle to expect draftsmen using a foreign language to be consistent in the use of the word ‘assessment’. We respectfully follow the dictum of Lord Wrenbury that,

No reliance can be placed upon an assumption of accuracy in the use of language in these Acts (Kensignton Income Tax Comr. v. Aramayo, (1916) 1 AC 215 : 84 LJKB 2169.

That the words ‘assessed’ and ‘assessment’ have been used in the City Municipal Act indiscriminately to import different processes in taxation can be demonstrated by a few references.

Rigby L.J. in dealing with the word ‘assessed’ with reference to water rate remarked:

The word “assessed” means “reckoned on the value.” It is not accurate to say “assessed on the premises”; but it is not very far from accurate to say that a water rate is a rate assessed upon the lessees in respect of the house (Re: Fleyd v. Lyons & Co. (1897) 1 Ch. 633 : 66 L J Ch 350.

In Kalawati Devi Harlalka Vs. Commissioner of Income Tax, West Bengal and Others, , it was observed by the Supreme Court that the word “assessment” could bear a very comprehensive meaning and it could comprehend the whole procedure for ascertaining and imposing liability upon the tax payer. The Court was proceeding to consider some of the provisions of the Income tax Act, 1961. A similar view was expressed by another Bench of the same court in S. Sankappa and Others Vs. The Income Tax Officer, Central Circle II, Bangalore, . It was pointed out that in some sections, the word “assessment” was used only with reference to computation of income, and in other sections it had the more comprehensive meaning.

In a case under Travancore Cochin General Sales Tax Rules, the Supreme Court observed that “assessment” is a comprehensive word and could denote the entirety of proceedings which are taken with regard to it and did not mean a final order of assessment alone unless there was something in the context of a particular provision which compelled such a meaning being attributed to it. (Vide The Sales Tax Officer, Ernakulam v. Sudarsanam Iyengar and Sons AIR 1970 SC 911.

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