Meaning of “Having regard to”

The meaning of having regard to under section 43D of the Income Tax Act is not defined in the act itself. But we can take guidance from decisions by various high courts. Here are excerpts of courts orders in which the Hon’ble High Court tried to explain the meaning of having regard to.

Meaning of having regard to

The phrase “having regard to” used in section 43D of the Income Tax Act came up before various high courts as detailed under :

1. Hon’ble Mumbai High Court explained the meaning of “having regard to” while delivering judgment in Gic Housing Finance Ltd. Vs. Addl. Cit [2011] 45 sot 318/140 ttj 203/10 taxmann.Com 50 (mum.) as under :

Meaning: It cannot be said that the expression ‘having regard to’ used in section 43d of the act, means that the rule making authority should amend the rules as and when the guideline of nhb are revised.

2. Hon’ble Supreme court u/s 104 to 109 explained the meaning of “having regard to” while delivering judgment in CIT Vs. Gangadhar Banerjee & Co. (P.) Ltd. [1965] 57 ITR 176 (sc) as under :

Meaning: By using the words ‘having regard to’, the statute, while making sure that ‘losses and smallness of profits’ are never lost sight of, requires all matters relevant to the question of unreasonableness to be considered. Capital losses, if established, would be one of them.

3. Hon’ble Supreme court u/s 104 to 109 explained the meaning of “having regard to” while delivering judgment in Delhi Farming & Construction (P.) Ltd. Vs. CIT [2003] 128 taxman 374/260 ITR 561 (sc) as under :

Meaning: The words ‘having regard to’ used in section 104 do not restrict the consideration only to two matters indicated in the section as it is impossible to arrive at a conclusion as to reasonableness by considering only the two matters mentioned isolated from other relevant factors.

4. Hon’ble ITAT-Bombay u/s 104 to 109 explained the meaning of “having regard to” while delivering judgment in Nathani Steel (P.) Ltd. Vs. First Ito [1984] 10 itd 112 (bom.-Trib.) as under :

Meaning: Section 105 does not require actual payment within the prescribed time. It envisages only ‘distribution’ within the said time and actual payment is not an essential element thereof.

Section 43D of Income Tax Act

Special provision in case of income of public financial institutions, public companies, etc.

43D. Notwithstanding anything to the contrary contained in any other provision of this Act,—

(a) in the case of a public financial institution or a scheduled bank or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank or a State financial corporation or a State industrial investment corporation 96[or a deposit taking non-banking financial company or a systemically important non-deposit taking non-banking financial company], the income by way of interest in relation to such categories of bad or doubtful debts as may be prescribed97 having regard to the guidelines issued by the Reserve Bank of India in relation to such debts;

(b) in the case of a public company, the income by way of interest in relation to such categories of bad or doubtful debts as may be prescribed98 having regard to the guidelines issued by the National Housing Bank in relation to such debts,

shall be chargeable to tax in the previous year in which it is credited by the public financial institution or the scheduled bank or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank or the State financial corporation or the State industrial investment corporation or 99[a deposit taking non-banking financial company or a systemically important non-deposit taking non-banking financial company or] the public company to its profit and loss account for that year or, as the case may be, in which it is actually received by that institution or bank or corporation or company, whichever is earlier.

Explanation.—For the purposes of this section,—

(a) “National Housing Bank” means the National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987);

(b) “public company” means a company,—

(i) which is a public company within the meaning of section 31 of the Companies Act, 1956 (1 of 1956);

(ii) whose main object is carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes; and

(iii) which is registered in accordance with the Housing Finance Companies (NHB) Directions, 1989 given under section 30 and section 31 of the National Housing Bank Act, 1987 (53 of 1987);

(c) “public financial institution” shall have the meaning assigned to it in section 4A2 of the Companies Act, 1956 (1 of 1956);

(d) “scheduled bank” shall have the meaning assigned to it in clause (ii) of the Explanation to clause (viia) of sub-section (1) of section 36;

(e) “State financial corporation” means a financial corporation established under section 3 or section 3A or an institution notified under section 46 of the State Financial Corporations Act, 1951 (63 of 1951);

(f) “State industrial investment corporation” means a Government company within the meaning of section 6173 of the Companies Act, 1956 (1 of 1956), engaged in the business of providing long-term finance for industrial projects;

(g) “co-operative bank”, “primary agricultural credit society” and “primary co-operative agricultural and rural development bank” shall have the meanings respectively assigned to them in the Explanation to sub-section (4) of section 80P;

4[(h) the expressions “deposit taking non-banking financial company”, “non-banking financial company” and “systemically important non-deposit taking non-banking financial company” shall have the meanings respectively assigned to them in clauses (e), (f) and (g) of Explanation 4 to section 43B.]

Updated up to Finance Act 2021.