# GURSAHAI SAIGAL v. COMMISSIONER OF INCOME-TAX, PUNJAB

- **Citation:** [1963] 3 S.C.R. 893
- **Court:** Supreme Court of India
- **Decided:** 1960-02-05
- **Bench:** J. L. Kapur, A.'_K. Sarkar, M. Hidayatullah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/gursahai-saigal-v-commissioner-of-income-tax-punjab-2689
- **Pages:** 12

## Headnote

Income Tax-Advance payment-Oonstruction of enactmeut-Rule-Penaltg in addition to liability-Indian Income·
tax Act, 1922 (II of 1922), a.ISA, Sub-sa.(2),(3),(6),(8),(9).
By Sub-s.(8) of s.ISA. "where on making the regular
assesment, the Income-tax Officer finds that no payment of
the tax has been made in accordance with the foregoing
provisions of this section, interest calculated in the manner
laid down in sub-section ( 6) shall be added to the tax as
determined on the basis of the regular assessment". Sub.
section (6l of s.18A provided, "where in any year an assessee
has paid tax under .. sub-section(3) on the basis of his own
estimate, and the tax so paid is Jess than eighty percent or
the tax determined on the basis of regular assessment ...
simple interest at the rate of six per cent per annum from
the first day of January in the financial year in which the
tax was paid up to the date of the said regular assessment
shall be payable by the assessee upon the amount by which
the tax so paid falls short of the said eighty per cent."
The assessee should have under sub-s.(3) of s.18A made
an estimate 0f his income and paid tax according to it but
he did neither. He was thereupon charged with interest
under sub-s.(8) of s.18A.
He contended that interest could
1961
Amir Singh
••
Ram Singh
11Jlll!
1962
Guf'sohai Saigal
••
Oommissioa1r oj
J1;c•m1-Tax PunjtJ6
894
SUPREME COURT REPORTS [1963)
not be so charged because under sub-s.(8) interest could be
charged only in the manner laid down in sub-s. 16) that is
from January l, of a year in which ta" was paid and on th~
shortfall betwem eighty per cent of the tax payable on
regular assessment and the amount actually paid, neither of
which could be done in his case as he had not paid any tax
at all.
Hold, the rule that in a taxing statute one has to look
merely at what is clearly said and that in such a statute
there is no room for any intendment applies only to a taxing
provision and does not apply to a provision not· creating a
charge for the tax but laying down the machinery for its
calculation or i:rocedure for its collection. The provisions
in a taxing statute dcaJing with machinery for assessment
have to be construed by the ordinary rules of construction,
that is to say, in accordance with the clear intention of the
legislature which is to make a charge levied effective.
Cammisaiontr of Income-tax v. Mahaliram Ramjidaa,
A.I.R. 1940 P.C. 124, Inaian Unitea Milla Ltd. v. Commi11ioner of Exctss Profit• Tax, [1955] I S.C.R, 810, Whitney
v. Commisiioners of Inland Revenue, (1925) 10 T. C. 88 and
All•n v. Trehwrn•, (1938) 22 T. C. 15, referred to.
Sub-s. (8) of s. IBA is a provision which lays down the
machinery for the assessment of interest.
Its plain affect is
to impose a liability to pay interest and then it provides that
in calculating the interest the machinery laid down in sub·•·
(6) should be applied. Sub-s. (6) should therefore be r.ad
in a manner which makes it workable and prevents ·the clear
intention of the legislature from being defeated. That subsection should, where it is to be applied because of sub-s. 18),
therefore, be read, as "from the !st day of January in the
financial year in which the tax ought to h~ve been paid" and
in such a case the shortfall contemplated m sub-s. (6) would
be the the entire eighty per cent.
The penalty under sub-s. (9) of s. 18A is in addition to
the liability under sub·ss (6) and (8). Sub-s. (9] does not
arise in the construction of sub-ss. (6) and (8).
CIVIL APPELLATE JuRISDIOTION: Civil Appeals
Noa. 10 to 12 of 1962.
Appeals from the judgment and order dated
February 5, 1960 of the Punjab High Court in
I. T. R. No. 20 of 195~.
. J
3 S.C.R.
SUPREME OURT REPORTS
S95
A. V. Viswanath Sastri and R:Gopalakrishnan
for the Appellant.
1962 -
Gursah•i SGigal
y,
Gopal Singh and R. N. Sachthey for the Res·
pondent.
Co:rmis•ioner of
lnc1me• Tax, Punjab
1962. August 31. The Judgment of the Court
was delivered by
SARKAR, J.-In certain ailsessment proceed

## Text

3 S.C.R.
SUPREME COURT REPORTS
893
to file their written statements and then appropriate
issues should be framed and the suits tried and
disposed of in the light of the findings on those
Issues in accordance with law.
Under the unusual
circumstances in which the litigation has thus secured a further lease of life, we dire1Jt that the costs
incurred so far should be borne by the parties.
Appeal allowed.
Oases remitted
GURSAHAI SAIGAL
v.
COMMISSIONER OF INCOME-TAX, PUNJAB
(J. L. KAPUR, A.'_K. SARKAR and
M. HIDAYATULLAH, JJ.)
Income Tax-Advance payment-Oonstruction of enactmeut-Rule-Penaltg in addition to liability-Indian Income·
tax Act, 1922 (II of 1922), a.ISA, Sub-sa.(2),(3),(6),(8),(9).
By Sub-s.(8) of s.ISA. "where on making the regular
assesment, the Income-tax Officer finds that no payment of
the tax has been made in accordance with the foregoing
provisions of this section, interest calculated in the manner
laid down in sub-section ( 6) shall be added to the tax as
determined on the basis of the regular assessment". Sub.
section (6l of s.18A provided, "where in any year an assessee
has paid tax under .. sub-section(3) on the basis of his own
estimate, and the tax so paid is Jess than eighty percent or
the tax determined on the basis of regular assessment ...
simple interest at the rate of six per cent per annum from
the first day of January in the financial year in which the
tax was paid up to the date of the said regular assessment
shall be payable by the assessee upon the amount by which
the tax so paid falls short of the said eighty per cent."
The assessee should have under sub-s.(3) of s.18A made
an estimate 0f his income and paid tax according to it but
he did neither. He was thereupon charged with interest
under sub-s.(8) of s.18A.
He contended that interest could
1961
Amir Singh
••
Ram Singh
11Jlll!
1962
Guf'sohai Saigal
••
Oommissioa1r oj
J1;c•m1-Tax PunjtJ6
894
SUPREME COURT REPORTS [1963)
not be so charged because under sub-s.(8) interest could be
charged only in the manner laid down in sub-s. 16) that is
from January l, of a year in which ta" was paid and on th~
shortfall betwem eighty per cent of the tax payable on
regular assessment and the amount actually paid, neither of
which could be done in his case as he had not paid any tax
at all.
Hold, the rule that in a taxing statute one has to look
merely at what is clearly said and that in such a statute
there is no room for any intendment applies only to a taxing
provision and does not apply to a provision not· creating a
charge for the tax but laying down the machinery for its
calculation or i:rocedure for its collection. The provisions
in a taxing statute dcaJing with machinery for assessment
have to be construed by the ordinary rules of construction,
that is to say, in accordance with the clear intention of the
legislature which is to make a charge levied effective.
Cammisaiontr of Income-tax v. Mahaliram Ramjidaa,
A.I.R. 1940 P.C. 124, Inaian Unitea Milla Ltd. v. Commi11ioner of Exctss Profit• Tax, [1955] I S.C.R, 810, Whitney
v. Commisiioners of Inland Revenue, (1925) 10 T. C. 88 and
All•n v. Trehwrn•, (1938) 22 T. C. 15, referred to.
Sub-s. (8) of s. IBA is a provision which lays down the
machinery for the assessment of interest.
Its plain affect is
to impose a liability to pay interest and then it provides that
in calculating the interest the machinery laid down in sub·•·
(6) should be applied. Sub-s. (6) should therefore be r.ad
in a manner which makes it workable and prevents ·the clear
intention of the legislature from being defeated. That subsection should, where it is to be applied because of sub-s. 18),
therefore, be read, as "from the !st day of January in the
financial year in which the tax ought to h~ve been paid" and
in such a case the shortfall contemplated m sub-s. (6) would
be the the entire eighty per cent.
The penalty under sub-s. (9) of s. 18A is in addition to
the liability under sub·ss (6) and (8). Sub-s. (9] does not
arise in the construction of sub-ss. (6) and (8).
CIVIL APPELLATE JuRISDIOTION: Civil Appeals
Noa. 10 to 12 of 1962.
Appeals from the judgment and order dated
February 5, 1960 of the Punjab High Court in
I. T. R. No. 20 of 195~.
. J
3 S.C.R.
SUPREME OURT REPORTS
S95
A. V. Viswanath Sastri and R:Gopalakrishnan
for the Appellant.
1962 -
Gursah•i SGigal
y,
Gopal Singh and R. N. Sachthey for the Res·
pondent.
Co:rmis•ioner of
lnc1me• Tax, Punjab
1962. August 31. The Judgment of the Court
was delivered by
SARKAR, J.-In certain ailsessment proceedings under the Indian Income-tax Act, 192!~, the
assessee was charged with interest under sub-sec.(8)
of I!. 18A of that Act. That sub section provided
that in the cases there mentioned interest calculated in the manner laid down in sub·sec. (6) of
s. ISA shall be added to the tax assessed. The
assessee contends that he could not be made liable
to pay the interest as in his case it could not be
calculated
in the manner indicated. The only
question that arises in this appea I is whether this
contention is right.
The asaessee's contention was rejected by the
Appellate Commissioner but not by the Appel·
late
Tribunal.
The respondent Commissioner
thereupon obtained a referaPce of the following
question to the High Court of Punjab for its decision :
"Whether, on a true construction of
sub-Sections(6),(S) and(9) of Section ISA of the
Indian Income-tax Act, the interest referred
to in sub-Section (S) is chargeable for failure
on the part of an assessee to submit an estimate of his income and pay tax, as required
by the terms of sub-Section (3) of that
Section" .
The High Court answered that question against
the assessee. Hence the present appeals by him.
There are three appeals because there are three
Sarkar Ji
1961
Gu1aahai Saigal
v. ,
Crmm;ssioner of
lncom1-Tax, Punjab
Sarkar J.
896
SUPREME COURT REPORTS [1963]
orders
chargin~ interest nnder s.18A(8), one in
respect of each of three assessment years.
It would help now to refer briefly to some of
the provisions of s. ISA. That Section deals with
advance payment of income-tax and Super-tax,
that is, payment of such taxes on income of the
year in which taxes are paid and therefore before
assessment. Sub-section ( 1) of this section gives
power in certain caBes to an Income.tax Officer to
make an order directing a person to make an
advance payment of tax of an amount equal to
the amount of the tax payable for the latest previous year in respect of which he has been assessed.
Sub-section (2) gives an assessee on whom an orders
under sub-seo. ( 1) has been make, power to make his
own estimate
of the advance tax payable by him
and to pay according to such estimate instead of
according to that order. Sub·seotion (3) deals
with the case of a person who has not been assessed before and requires him to make his own estimate
of the tax payable by him in advance and pay
accordingly.
This sub-section applies to the assessee in the present case for he had not been assessed
earlier. The assessee however neither submitted
any estimate nor paid any tax. It remains now to
states that the payment of tax in advance has to
be made on June 15, September 15, December 15,
and March I5 in each financial year or on such of
these dates as may not have expired in the OMes
contemplated by sub-secs. (2) and (3), and that the
income
on
which
tax
is payable in advance under the section does not include income
in respect of which provision is made by s. 18 for·
deduction of the tax at the source of the income.
Now we shall take up sub-secs. (6) and (8)
of s. lSA both of which have to be considered in
some detail as the decision in this case depends on
the words used in them. Sub-section (6) is the
3 S.C.R.
SUPREME COURT REPORTS
897
sub-section which has created the difficulty felt in
this case and the relevant portion of it is in these
terms ;
"Where in any year an assessee has paid
tax under sub-section (2) or sub-section (3)
on the basis of his own estimate, and the tax
so paid is less than eighty per cent of the tax
determind on the basis of regular assessment
simple interest at the rate of six per cent per
annum from the 1st day of January in the
financial year in which the tax was paid up
to the date of the said regular assessment
shall be payable by the assessee upon the
amount by which the tax so paid fails short
of the said eighty per cent".
It is de11igned to apply to oases ;where tax bas been
paid by the assessee according to hie own estimate
but that estimate is on regular assessment found to
be deficient. Under this sub-section interest has to
be calculated from January 1, in the financial year
in which the tax mentioned was paid and such
calculation has to be made on the shortfall between
the amount paid and eighty per cent of the tax
which was found payable on the regular assessment
sub-section (8) provides:
"where, on making the, regular assessment
the income-tax Officer finds that no payment
of tax has been made in accordance with the
foregoing provisions of this section, interest
calculated in the manner laid down in subsection (6) shall be added to the tax as determined on the basis of the regular assessement.
The assessee does not dispute that sub-secs ( 3)of s.
l8A applies to him and that he should have made an
estimate and paid tax according to it but he has
not done either. He admits that he is a person to
whom sub-sec. (8)applies· His contention is that in
1968
Guraahai Yaigal
,,.
Cammi,,ioner of
lncam1·Tax, Punja"ll
Sarkar J.
19(2
Gurs•h•i Sai:al
v.
Comrni11ion1r of
Incow11-i ax, Ptit1j1b
898
SUPREME COURT REPOR1'S [1963]
hie case since he has not paid tax at all, it is not
possible to calculate interest in the manner laid
down in sub-sec.( 6).
Now sub sec. (8) by its terms applies to a case
where no payment of tax has been made ~nd,
therefore, there is
no first day of January of
a financial ye&r in which tax was paid, from which
day the calculation of interest h11.s to commence.
Neither, the asaessee contend~, can any question of
a shortfall between eighty per cent of the tax payable on regular assessment and the amount paid
arise where nothing had been paid. The assessee
really says that as the language of sub·seo. (6)
stands, it can have no operation in his case and
therefore he has been wrongly charged with interest. To clear the ground we may state before
proceeding further that the assessee has no other
objection to the orders under sub·sec. (8) m&king
him laible for interest.
The question thus raised is one of construction
of sub· secs.
(6)and (8). The assessee relies on a
rule of construction applicable to taxing statutes
which has been variously stated. Rowlatt J.put it
in these words in Cape· Brandy Syndicate v.lnland
Revenue Commissiones, (').
"In a taxing Act one has to look merely
at what is clearly said.
There is no room for
any intendment. There is no equity about
a tax. There is no presumption as to a tax.
Nothing is to be read in, nothing is to be
implied. One can only look fairly at the
language used."
The object of this rule is to prevant a taxing
statute being construed "according to its intent,
~ ~
though not according to its words": In re Bethlem
Hospital ('). This Court has accepted this rule.
(I) (I92I) I K.B. 64, 7I.
(2) (1875) L.R. 19 Eq. 475, +sg.
3 S.C.R ..
SUPREME COURT REPORTS
899
Bhagwati J. in A. V. Fernandez v. The State of
Kerala (1) said,
"If ......... the case is not covered within
the four corners of the provisions of the taxing statute, no tax can be imposed
by
inference or by analogy or by trying to
probe into the intentions of the legislature
and by considering what was the substance of
the matter."
It has been said that "If the provision is so wanting in clllrity that no meaning is responsibly clear,
the courts will be unable to regard it as of any
effect.'' : see lnland Revenue Commissioners v. Balilnoch Distillery Oo. Ltd. (2)
The assessee therefore
contends that on the plain words of sub-ss. (8) and (6)
he cannot be charged any interest and in fact in a
case like his, sub-section (8) has to be regarded as of
no effect.
Now it is well recognised that the rule of
construction on which the assessee relies applies
only to a taxing provision and has no application
to all provisions in a. taxing statue. It does not,
for example, apply to a provision not creating a
charge for the tax but laying down the machinery
for its calculation or proceedure for its collection.
The provisions in a taxing statute dealing with
machinery for assessment have to be construed by
the ordinary rules of construction, that is to say,
in accordance with the clear intention of the legis~
lature which is to make a charge levied effective.
Reference may be made to a few cases laying down
this distinction. In Commissioner of Income-tax v.
Mahaliram Ramjidas (1) it was said,
"The Section, although it is part of a
taxing Act, imposes no charge on the subject,
and deals merely with the machinery of
(I) (1957) S.C.R. 83 7, 847.
(21 (1948) I All. E. R, 6'6, 625.
(3) A.l .R. (1940) P.C. 124. 126-127.
196t
Gunahai Saigal
v.
Oommissi mer of
lneome-Ta:r, Puni••
SqrkarJ.
195B
Guraaliai Saigal
v.
C1mmissioner •f
/ttcome-Tax, Punjab
900
SUPREME COURT REPORTS [1963]
assessment. In interpreting provisions of this
kind the rule is that that construction should be
preferred which make the machinery workable
utres valeat potius quam pereat."
In India United Mills Ltd. v. Commissioner of
Excess Profits Tax (1) This Court observed,
"That section is, it should be emphasised,
\
not a charging section, but a machinery section. And a machinery section should be so
construed as to effectuate the charging sections."
We may now profitably read what Lord Dunedin
said in Whitney v. Commissioners(') of Inland Revenue:
r-
"My Lords, I shall now permit myself a
genral observation.
Once that it is fixed
that there is liablity, it is antecedently highly
improbable that the statute should not go on
to make that liability effective. A statute is
designed to be work!j.ble and the interpretation thereof by a Court should be to secure
that object, 'tmless crucial omission or clear
direction makes that end unattainable. Now
there are three stages in the imposition of a
tax: there is the declaration of liability, that
is the part of the statute which determines
what persons in respect of what property are
liable. Next, there is the assessment, Lia.bi·
lity does not depend on assessment. That,
ex hypothesi, has already been fixed.
But
assessment particularises the exact sum which
a person liable has to pay. Lastly, come the
methods of recovery, if the person taxed does
not voluntarily pay."
(I) (1955) I s.c.R. BIO, 816.
(2) (!925) IO T.C. 88, no.
·~ ~
j
3S.C.R.
SUPREME COURT REPORTS
901
There is one other case to which we think it useful
to refer and that is Allen v. Trehearne wheres. 45(5)
of the English Finance Act, 1927 which laid down
that "Where in any year of assessment a person
ceases to hold an office or employment ...... charge·
able under Schedule ·E'tax shall be charged for that
year on the amount of his emoluments for the
period beginning on the sixth day of April in that
year and ending on the date of the cessation" came
up for constmction. It was contended that a sum
of£10,000 which became payable to the assessee as
the executor of the deceased holder of an office
under the terms on which the office was held was
not liable to tax under the secti0n as it could not te
said to be " his emoluments" since it was payable
after his death. It was observed by Scott L.J.,
"the rules ..... .in Section 45, Sub-section ( 5)
and (6), are rules affecting assessment and
collection, and that if there is any difficulty
in the precise applicability of the language of
those bub-sections, it should be interpreted
largely and generously in order not to defeat
the main object of liability laid down by Rule
1 of Schedule E."
Dealing with the words "his emoluments" occurring
in the sub-section the learned Lord Justice said,
"It is quite true that strictly speaking the
emolunent in question never became his in
the sense that the quantitative amount of
£10,000 became his property. It never became
payable to him, because he died. But that it
was his emolument under the agreement with
the Company in a broad sense seems to me to
be obvious, and in order to prevent the
~. J
Revenue's failure to get the tax which was
intended by Rule 1 of .Schedule E, it appears
to me to be legitimate to treat the words in
{I) (1938) 22 T.C. 25, 26 27.
1962
Gursahai Saigal
v.
Commissioner of
Income· Tax, Punjab
Sar/car J.
1962
GrwJahai l!aigal
v.
Commi•sioa~r of
lncome-Tax1 Pun.JU
Sarkar J.
902
SUPREME COURT REPORTS [1963)
question as meaning' on the amount of the
emoluments attaching to the office which he
held'."
On this interpretation of Sub-section (5) tax was
assessed in this case.
Now it seems to us that we are dealing here
with a provision which lays down the machinery
for the assessment of interest. That sub-section
(8) intended to and did in the clearest term impose
a charge for interest seems to us to be beyond
dispute. It says that interest calculated in a certain
manner "shall be added to the tax." We do not
here have to resort to any equita hie rule of
constructin or
to
alter the
meaning of the
language usd or to add to or vary it in order to
arrive at the conclnsion that the provision intended
to impose a liability to pay interest. That is the
plain affect of the language used. But the Subsection also provides that the interest for which
liability was ereated, has to be calculated in a
.certain manner. It is this provision which has given
rise to the difficulty. But obviously this provision
only lays down the machinery for
as~essing the
amount of interest for which liability was clearly
created; it in substance says that in cslculating the
amount of interest the machinery of calculation
laid down in sub.sec. (6) shall be applied. The
proper way to deal wi.th such a provision is to give
it an interpretation which, to use the words of the
Privy Council in Mahairam Kamjidas's( 1)case "makes
the machinery workable, utres valeat potius quam
pereat". We, therefere, think that we should read
suh·sec.(6), according to the provision of which interest has to be calculated as provided in sub-sec.(8)
in a manner which makes it workable and thereby
prevent the elear intention of sub-sec.(8) being
defeated. Now, how is that best done? As we have
(1) A.J.R. (1940) P.C. 124, 126-127.
..__ I
3 S.C.R.
SUPREME COURT EPORTS
903
ealier said sub-sec.(6) deals with a case in which tax
has been pa.i 1 and therefore it says that interest
would be calculated "from the 1st day of January
in the financial year in which the tax was paid".
This obviously cannot literarily be applied to a case
where no tax has been paid. If however the por·
tion of sub-sec. ( 6) which we have quoted above is
read as, "from the 1st day of January in the finan·
cial yea~ in which the tax ought to have been paid",
the provision becomes workable. It would not be
doing too much viol~nce to the words .used to read
them in this way. The tax ought to have been paid
on one or other of the dates earlier mentioned. The
intention was that interest should be charged from
January 1 of the financial · year in which the tax
ought to have been paid. Those who paid the tax
but a smaller amount and those who did not pay
tax at all would than be put in the same position
substantially which is obuiously fair and was clear·
ly intended. Which is tb.e precise financial year in
any case would depend on its facts and this, would
make no difference in the construction of the provision.
With regard to the other question about there
being no shortfall between eighty per cent. of the
amount of tax found payable on the regular assessment and the amount of tax paid in a case where
no tax was paid, it setms to us the position is much
simpler. If no tax is paid, the amount of such
shortfall will naturally be the entire eighty per cent.
We also think that the case before us is very near
to Allen'B oaBe(l)
It remains now to refer to sub-s.(9) of s. l8A.
That sub·section provides for payment of penalty
in tenms of s.
28 upon submission of estimates
under sub·secs. (2) and (3) known or reasonably
believed to be untrue or upon failure without
(I) (1P8i 22 T.C. l.S. 16, 17.
'
'
1962
GurJahai Sa ·gal
••
Commi'1ioner of
Income· Tax, Punj••
SJrkor J,
1961
Gursahai Saital
•.
Cur salrai Saigal
lneome•Tax, Punjab
Sarkar J.
1982
August 31.
904
SUPREME COtJRT REPORTS [1963]
reasonable cause to comply with the provisions of
sub-sec.(3). We are unable to see that this provision in any way affects the construction of subsecs.(6) or (8) or assists in the solution of the
difficulty which has arisen in this oase, The penalty
under sub-sec.(9) is in addition to the liability
under
sub-seo. (6)
and
(8)
which his
not
penalty in the real sence, and is leviable for reasons
different from those on which the levy of interest
under sub-secs. (6) and (8) is besad.
The result, therefore, is that these appeals are
dismissed aud the
decision of the High Court
answering the question framed is upheld for the
reasons earlier mentioned. The respondent will get
the costs of these appeals.
Appeals dismissed.
SHAM KARTIK SINGH
v.
MATH ORA
(P. B. GA.JENDRAGADKAR, K.C.DAs GUPTA and
RAGHUBER DAYAL, JJ.)
Te,,ancy Law-Sir la.nds-Suit for ejeclment oflenantaDecree-Appeal-Pending appeal provision made for filing
particulars in suits for ejectment-Statute providing penal~y .of
di•missal of suit for failure to file particulars-Retrospeciivity
-If substantial compliance sufficient - U .P .Tenancy Act. 1939
(U.P. 27 of 1939), ss. 6.16,19-U, P. Tenancy(Amen~ment)Act
1941(U.P. [I) o/ 19"7),s.31.
The appellants filed suit under the U.P Tenancy Act,
1939 for the ejectment of the respondents who were tenants
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of si;. The appellants filed the necessary extracts of pap~rs
in support of their case. The trial court decreed the suits
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