JUDGMENT
1. Pursuant to a judgment passed by this court under Section 256(2) of the Income-tax Act, 1961 (briefly, "the Act"), the Tribunal referred the following question for our opinion ;
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally correct in holding that the assessee's one-fourth share in the composition fee of Rs. 53,179 was an admissible deduction under Section 24(1)(ii) from his property income ?"
2. The relevant facts as gleaned from the order of the Tribunal relating to the assessment year 1972-73, inter alia, are that the assessee has a one-fourth share in a building, namely, "Agarwal Building", situated at Mall Road, Kanpur. The assessee claimed deduction of Rs. 13,924 for the assessment year 1972-73 representing the assessee's share of composition money paid to the Cantonment Board. The plot on which the said building is situate was purchased in the year 1963 by the assessee and others from the original owner. The original lease deed was of the year 1932 and there was a condition that the construction would be completed within two years. The original owner got time extended to make construction up to November, 1963. Before the expiry of that period, the assessee applied for further extension and pending these proceedings started construction of the building. Though reply from the Government was awaited, the building was completed. In 1968, certain objections were raised to the construction being made without a valid extension of time and thereafter the assessee and three co-owners paid Rs. 53,179 as compounding fee.
3. Of the aforesaid amount, the assessee claimed deduction in respect of Rs. 13,924 representing one-fourth liability of the assessee. The Income-tax Officer disallowed the claim of the assessee. On appeal, the Appellate Assistant Commissioner (for short, "the A. A. C.") also refused the claim of the assessee because the payment had been made for breach of the conditions of the lease by the owners, of the house property.
4. On further appeal, the Tribunal held that claim of Rs. 13,924 was clearly deductible under Section 24(1)(ii) of the Act.
5. The short question for consideration is whether the claim of the assessee was deductible under Section 24(1)(ii) of the Act which when properly read, runs as follows :
"24(1). Income chargeable under the head 'Income from house property' shall, subject to the provisions of Sub-section (2), be computed after making the following deductions, namely :--....
(ii) the amount of any premium paid to insure the property against risk of damage or destruction."
6. What is deductible under Section 24(1)(ii) is premium paid to insure property against risk of damage or destruction. The cardinal principle of law is that fiscal laws should be interpreted strictly. The plain language employed in Clause (ii) of Section 24(1) clearly indicates that this provision covers insurance premium because insurance cover is taken to hedge against risk of damage or destruction. Further, the building to be constructed within the stipulated period and, therefore, the owners of the building had to compound the case with the lessor and then they were called upon to pay the compounding fee. No doubt, compounding fee is nothing but a sort of penalty imposed for non-compliance with the terms of the lease, such penalty is not paid to cover the risk of damage or destruction. Had the owners of the building not compounded then unless otherwise provided, the property would have been forfeited by the lessor and the lessor would have dealt with the building in the manner, permissible by law. Therefore, it cannot be said that the compounding fee was paid to cover the risk of damage or destruction.
7. A statutory provision, particularly, a provision of the Income-tax Act should be read as far as possible confining to the plain language without importing any foreign words and subtracting any word therefrom. On a strict interpretation as it should be Section 24(1)(ii) simply allows deduction of an amount of any premium paid to insure property against risk of damage or destruction. Payment of compounding fee is surely not in the nature of the deductions permissible by Section 24(1)(ii) of the Act.
8. For the reasons, we do not agree with the view taken by the Appellate Tribunal that the amount is deductible under Section 24(1)(ii).
9. The above question is, therefore, answered in the negative, that is, in favour of the Revenue and against the assessee.
10. The records of this case be sent to the Appellate Tribunal within fifteen days to enable it to pass an order conformably to our decision.