What is a MONTH?
ON the formation of Telangana, Union Minister Ghulam Nabhi Azad said, "One month does not mean 30 days .”Well, that is politics - we are into taxation and what does one month mean in taxation?.
For example, in Customs, Central Excise and Service Tax, an appeal is to be filed with the Tribunal within three months from the receipt of the impugned order. Now does this mean 90 days or three calendar months?
A Special Bench of the ITAT was called upon to decide this issue recently. The issue referred to the Special; Bench was,
"Whether for the purpose of Section 54EC of IT Act, 1961, the period of investment of six months should be reckoned after the date of transfer or from the end of the month in which transfer of capital asset took place?"
The ITAT Special Bench found that the term 'month' is not defined in The Income Tax Act; so they examined the term "month"as per General Clauses Act, 1897 which says-
"Section 3 defines - (35) "month"shall mean a month reckoned according to the British calendar"
The Tribunal wisely observed,
In British Calendar a month is a unit of period used in a Calendar. It may not be out of context to mention that this system was invented by Mesopotamia. An average length of a month is 29.53 days; but in a calendar year there are 7 months with 31 days, 4 months having 30 days and one month has 28/29 days. It can be possible that under common parlance probably it meant a lunar month but in calculating the specified number of months that had elapsed after occurrence of a specified event then a General Rule is that the period of a month ends on the last day. Therefore, a month ends by the last date of that month.
The Tribunal after scrutinising a few sections of the Act found that on some occasion the Legislature had not used the terms "Month"but used the number of days to prescribe a specific period. For example in Section 254(2A) First Proviso it is prescribed that the Tribunal may pass an order granting stay but for a period not exceeding one hundred and eighty days. The Tribunal noted, "This is an important distinction made in this statute while subscribing the limitation/ period. This distinction thus resolves the present controversy by itself."
The Central Excise Act has similar provisions. As per Section 35B(3), an appeal is to be filed within three months , while as per Section 35C(2A) Proviso, the Tribunal is to dispose of the appeal within one hundred and eighty days . If three months were to be ninety days, the Legislature would have used 'ninety days' instead of 'three months' .
The Special Bench of the ITAT concluded that in the absence of any definition of the word ' month' in The Act, the definition of General Clauses Act 1897 shall be applicable. The Tribunal clarified that it was neither a liberal nor a literal interpretation of the Statute but it is a matter of "purposive construction of statute"or "constructive interpretation of statute”.