|
|
Total Number of Subscribers: 464 | |
|
| ||
|
| ||
|
Date:17th September 2008 |
Compiled by Mr. M. Sathya Kumar | |
|
|
interpretation of tax laws 1.General
Rules Q.1 What is ‘Interpretation of law’.
Ans. According to
Salmond ‘Interpretation or Construction’ means “the process by which the
Courts seek to ascertain the meaning of the legislature through the medium
of authoritative forms in which it is expressed.”. The main body
of the law is to be found in statutes, together with the relevant
statutory instruments and in case law as enunciated by Judges in the
Courts. But the Judges not only have the duty of declaring the law, they
are also frequently called upon to settle disputes as to the meaning of
words or clauses in a statute. Statutes are
normally drafted by legal experts who are experts in the particular branch
of law of which the statute was to be a part. Although such persons are
skilled in the law, due to the volume of legislation the statutes are
often obscure and cryptic and we find courts and lawyers are busy in
unfolding the meaning of ambiguous words and expressions in a statute. The
age old process of application of the enacted law has led to formulation
of certain rules of interpretation or construction. Q.2 What are
the basic rules of Interpretation governing the taxing statutes in
general?
Ans. Rules of
interpretation or canon of interpretation The first and
the most elementary rule of construction is that it is to be assumed that
the words and phrases of legislation are used in their technical meaning
if they have acquired one, or otherwise in their ordinary meaning, and the
second is that the phrases and sentences are to be construed according to
the rules of grammar. The rule of
construction is “to intend the legislature to have meant what they have
actually expressed”. The object of all interpretation is to discover the
intention of Parliament but the intention of Parliament must be deduced
from the language used, for it is well accepted that the beliefs and
assumptions of those who frame Acts of Parliament cannot make the law.
When
Parliament enacts law, the law must be understood with reference to the
language used in the provision construed in the light of the scheme of the
Act and object of the statute and the provisions therein.
Where the
plain literal expression of the statutory provision produces a manifestly
unjust result, which could never have been intended by the legislature,
the Court can modify the language to achieve the intention of the
legislature and produce a rational construction. A) Literal rule If the
language of the statute is clear and unambiguous, words must be understood
in their plain meaning. The wordings of the Act must be construed
according to its literal and grammatical meaning, whatever the result may
be. There is no
room for any intendment. Nothing is to be read in, nothing is to be
implied. One can only look fairly at the language used.
ICAI vs. Price
Waterhouse, (1997) 90 Comp. Case 113, 140, 141 (SC) State of West
Bengal vs. Scene Seven P. Ltd. AIR 2000 SC 3089, 3094
Harbajan Singh
vs. Press Council of B) Intention of Legislature
The intention
of the legislature assimilates two aspects: a) In one
aspect it carries the concept of “meaning’, i.e. what the words mean.
b) In another
aspect, it conveys, the concept of purpose and object or the reason and
spirit pervading through the statute. The dominant
purpose of construction of any statutory provision is to ascertain the
intention of the legislature and the primary role is to ascertain the same
by reference to the language used. The Supreme Court in Doypack Systems
Pvt. Ltd. vs. UOI [1998 (2) SCC 299] laid down :
“It has to be
reiterated that the object of interpretation of a statute is to discover
the intention of Parliament as expressed in the Act. The dominant purpose
in construing a statute is to ascertain the intention of the legislature
as expressed in the statute, considering it as a whole and in its context
that intention, and therefore, the meaning of the statute, is primarily to
be sought in the words used in the statute itself, which must, if they are
plain and unambiguous be applied as they stand”. The object of all
interpretation is to discover the intention of Parliament, but the
intention of Parliament must be deduced from the language used.”
“It is settled
law that the expression used in a taxing statue would ordinarily be
understood in the sense in which it is harmonious with the object of the
statute to effectuate the legislative intention. It is equally settled law
that, if the language is plain and unambiguous, one can only look fairly
at the language used and interpret it to give effect to the legislative
intention.” CIT vs.
Gwalior Rayon Silk Mfg. Co. Ltd. (1992) 196 ITR 149 (SC)
Keshavji Ravji
& Co. vs. CIT (1990) 183 ITR 1 (SC) K.P. Varghese
vs. ITO (1981) 131 ITR 597 (SC) C) The mischief rule of interpretation (Heydon’s
rule) A statute is
to be construed so as to suppress the mischief in the law and advance the
remedy. This was set out in Heydon’s case (1584) 3 Broadly
speaking, the rule means that where a statute has been passed to remedy a
weakness in the law, the interpretation which will correct that weakness
is the one to be adopted. CIT vs.
Shahzada Nand & Sons. (1966 ) 60 ITR 392 (SC)
Classic
Builders & Developers vs. UOI (2001) 251 ITR 492, 497
(MP)
Reckitt Colman
of India Ltd. vs. ACIT (2001) 252 ITR 550 (
D) Strict construction of penal law
Remedial
statutes are known as welfare, beneficial or social justice oriented
legislations. Penal statutes, on the other hand, are those which provide
for penalties for contravention of the law and are directed against the
offender in relation to the state by making him liable to imprisonment,
fine, forfeiture or other penalty. A remedial
statute receives a liberal construction, whereas a penal statute is
strictly construed. In case of remedial statutes the doubt is resolved in
favour of the class of persons for whose benefit the statute is enacted;
whereas in case of penal statutes the doubt is resolved in favour of the
alleged offender. The principle
applied in constructing a penal act is that if, in construing the relevant
provisions, “there appears any reasonable doubt or ambiguity”, it will be
resolved in favour of the person who would be liable to the penalty. If
there are two reasonable constructions we must give the more lenient one.
The court must always see that the person to be penalised comes fairly and
squarely within the plain words of the enactment. It is not enough that
what he has done comes substantially within the mischief aimed at by the
statute. “The subject
is not to be taxed without clear words for that purpose …..”
CIT vs.
Provident Inv. Co. Ltd. (1954) 32 ITR 190 (SC) J.K. Steel
Ltd. vs. UOI AIR 1970 SC 1173
CIT vs. Indo
Oceanic Shipping Co. Ltd. (2001) 247 ITR 247 (Bom)
Hansraj &
Sons vs. State of J & K (2002) 6 SCC 227, 237-39
E) The Golden Rule : Purposive interpretation
This rule is
to some extent an extension of the literal rule and under it the words of
a statute will as far as possible be construed according to their
ordinary, plain, and natural meaning, unless this leads to an absurd
result. It is used by the courts where a statutory provision is capable of
more than one literal meaning and leads the judge to select the one which
avoids absurdity, or where a study of the statute as a whole reveals that
the conclusion reached by applying the literal rule is contrary to the
intention of Parliament. A construction
which would defeat the very object of the legislature should be avoided.
Keshavji Ravji
& Co. vs. CIT (1990) 183 ITR 1 (SC)
CIT vs.
Gwalior Rayon Silk Mfg. Co. Ltd. (1992) 196 ITR 149 (SC)
Vikrant Tyres
Ltd vs. ITO (2001) 247 ITR 821, 826 (SC)
F) Ejusdem generis rule Under this
rule where general words follow particular words the general words are
construed as being limited to persons or things within the class outlined
by particular words. The words used
together should be understood as deriving colour and sense from each
other. They should be read together as one. The rule of
ejusdem generis is to be applied “with caution” and “not pushed too far”.
It may not be interpreted too narrowly or unnecessarily if broad based
genus could be found so as to avoid cutting down words to dwarf size.
—
U.P. State Electricity Board vs. Hari Shanker Jain
AIR 1979 SC 65 — Rohit
Pulp & Paper Mills Ltd. vs. Collector of Central Excise AIR 1991 SC
754 G) Expressio unius est exclusio alterius
The expression
of the thing implies the exclusion of another. Q.3. What are the principles of natural justice?
Ans. Principles of
natural justice are soul of an administration of justice and needs to be
adhered to in order to make the order just and fair.
Natural
justice is an important concept in administrative law. The doctrine of
natural justice is a facet of fair play in action and if a statutory
provision can be read consistent with the principles of natural justice,
the court must and can do so as the legislature is presumed to intend to
act in consonance with those principles. a) Nemo debet essejudex in propria causa
No man shall
be a judge in his own cause or the deciding authority must be impartial
and without bias; and b) Audi alteram partem
Hear the other
side, or both the sides must be heard or no man should be condemned
unheard or that there must be fairness on the part of the deciding
authority. The above
principle got acceptance in India by The Supreme Court in the case of
A.K. Kraipak vs. UOI AIR 1970 SC 150 and Maneka Gandhi vs. UOI
AIR 1978 SC 597. Q.4. whether order passed in violation of principles of
natural justice is void ab-initio? Ans. Any order
made in violation of principles of natural justice is void and a nullity.
Shreeram Durga
Prasad [RB vs. Settlement Commission (1989) 176 ITR Nawaabkhan vs.
State of Gujarat AIR 1974
SC 1471 “….. Any
decision which is unfair and arbitrary fall foul of the principles of
Article 14 of the Constitution of India which envelops within itself the
requirement of fairness which, in turn, in these days is a requirement of
the principles of natural justice. …” CWT vs.
Jagdish Prasad Choudhary (1995) 211 ITR 472 ( Patna
) [F.B.] The principles
of natural justice are so fundamental that it is not to be construed as a
mere formality. Where the materials relied upon are not enclosed in a show
cause notice, there is no sufficient opportunity. Appropriate
Authority vs. Vijay Kumar Sharma (2001) 249 ITR 554 (SC)
The right is
so fundamental that the failure to observe the principles of natural
justice cannot be made good in appeal. Lack of
opportunity before the Assessing Officer cannot be rectified by the
appellate authority by giving such opportunity. Tin Box Co.
vs. CIT (2001) 249 ITR 216 (SC) Q.5 Whether irregularity in exercise of jurisdiction will
render the order void. Ans. Jurisdiction
is a matter, which is at the root of any valid proceedings. Valid service
of a valid notice within time is the foundation of a valid assessment
(a)
Jurisdiction is not a matter of consent as held in the case of Sarita
Jain vs. CIT (2003) 261 IR 499 (Del.) (b) Service of
Notice is not a mere procedural requirement Upadhyaya (RK)
vs. Shanabhai P. Patel (1987) 166 ITR 163 (SC)
(c) Need for
proper sanction prior to filing a prosecution case is a matter of
jurisdiction Bohra (SA) ITO
vs. Krishna Construction Co. (1998) 230 ITR 708 (Guj)
(d) In
CIT vs. Bharat Kumar Modi (2000) 246 ITR 693
(Bom). The court held that an irregularity in the exercise
of jurisdiction cannot result in annulment of the entire assessment
proceedings. The appellate authorities were justified in setting aside the
assessment. Q.6. What is the theory of form and
substance?
Ans: In revenue
matters, what is material is the substance of the transaction and not the
form. The doctrine of substance over the form was cited with approval by
House of Lords in the following cases: (a)
Secretary of State in Council of (b) Duke of
Westminster vs. IRC (1936) 19 TC 490 (HL)
(c) IRC vs.
Wesleyan General Assurance (1940) 30 TC 11 (HL) (d) Sir
Kikabhai Premchand vs. CIT (1953) 24 ITR 506 (SC)
(e) CIT vs.
Kharwar (DM) (1969) 72 ITR 603 (SC) (f) Panipat
Woollen & General Milks Co. Ltd. (1976) 103 ITR 66 (SC)
Q.7 When two interpretations are possible, how should the
court interpret the provision?
Ans. Where a
provision in a taxing statute can be reasonably interpreted in two ways,
that interpretation which is favourable to the assessee has got to be
accepted. CIT vs.
Vegetable Products Ltd. (1973) 88 ITR 192(SC).
Chartered
Housing Bhomka Finance Corpn vs. Appropriate Authority (2001) 250 ITR 1,
18 (Kar)
CIT vs. A.J.
Abraham Anthraper (2004) 268 ITR 417, 432 (Ker)
Kapti Comm.
Agency vs. State of U.P. (2004) 134
STC 436 448 452 (All) Q.8 What is the meaning of Doctrine of Territorial
Nexus.
Ans. Article 245(1)
of the Constitution States “Subject to the provisions of this
Constitution, Parliament may make laws for the whole or any part of the
territory of India and the legislature of a State may make laws for the
whole or any part of the State. Article 245(2) states. No Law made by the
Parliament shall be deemed to be invalid on the ground that it would have
extra – territorial operation.”. Thus it makes
clear that extra-territorial operation will not make a Parliamentary law
invalid. State vs.
Narayandas AIR 1958 Bom 68(FB). AIR 1955 SC 661 at 750.
II. EXEMPTION – DEDUCTION
Q.9 What is the general rule for interpretation of
provisions relating to exemptions ? Ans.
Provisions for
deduction, exemption and relief should be interpreted liberally,
reasonably and in favour of the assessee. CIT vs. South
Arcot District Co-operative Marketing Society Ltd. (1989) 176 ITR 117
(SC), CIT vs. U.P.
Co-operative Federation Ltd. (1989) 176 ITR 435 (SC),
Bajaj Tempo
Ltd. vs. CIT (1992) 196 ITR 188 (SC)
IV. PENALTIES
Q.10 How to interpret the penalty provisions
Ans. The rule of
strict construction applies to penal provisions. Bhagwati
Trading Co. vs. CIT
(1977) 109 ITR 353 Ganesh
Properties P. Ltd. vs. CIT (1993) 202 ITR 434 ( Cal
) In penal
statutes if two possible and reasonable interpretation are possible the
court must lean towards the construction which exempts the subject from
penalty rather than one which imposes the penalty. B.K. Agarwal
vs. State of Orissa AIR 1966 (SC) 2531 CIT vs.
Vegetable Products Ltd. (1973) 88 ITR 192 (SC)
V. OTHER ACTS, RULES, OPINIONS
Q.11 Whether
interpretation given in different statutes of direct taxes is applicable
to other Acts?
Ans. Where there
are different statutes in pari materia though made at different times,
they will be taken and construed together as one system and explanatory to
one another. This principle applies with greater force in case of taxing
statutes like Income-Tax, Gift Tax, Wealth Tax which bear intimate
connection with one another (Verghese vs. CIT (1981) 131 ITR 597;
C.I.T. vs. Ranga Pai (1975) 100 ITR 413) (Ker). Accordingly it has
been held that rules of valuation prescribed under one Act have to be
applied to valuation issues under other Acts (1983) 141 ITR 802
(Bom) and (1974) 96 ITR 87 (Mys) and (1985) 155 ITR 637.
CWT vs.
Imperial Tobacco Co. of India Ltd. (1966) 61 ITR 461 (SC)
State of
All Kerala
Nasiruddin vs.
Sita Ram Agarwal (2003) 2 SCC 577, 585
Commissioners
of Customs vs. Indian Oil Corpn. Ltd. (2004) 267 ITR 272, But this
principle need not apply to read special provisions of one Act into the
provisions of another and vice versa ITO vs. Varghese K.P. (1973) 91
ITR 49 (Ker)(FB) Q.12. Whether opinion of Law minister is binding on
Court?
Ans. In
Builders Association vs. Union of Q.13 Whether the reports of Select Committees, will be
binding while interpreting the taxing statutes ?
Ans. Reports of
Commissions or Inquiry Committees preceding the introduction of a Bill
have also been referred to for similar purpose, i.e. either as evidence of
historical facts or of surrounding circumstances or of mischief or evil
intended to be remedied. For example, reference was made to the Indian
States Finance Enquiry Committee Reports in A. Thangal Kunju Musaliar
vs. Venkatachalam Potti, AIR 1956 SC 246; 29 ITR 349 (S.C.); to the
Income-tax Enquiry Report, in CIT vs. Sodra Devi (1957) 32 ITR 615
(S.C.) (AIR 1957 SC 832); to the Press Commission’s Reports, in
Express Newspaper (Pvt) Ltd. vs. Union of India (AIR 1958 SC 578)
and to the report of a committee appointed to bring about changes in
Company Law resulting in the passing of amending Act No. 65 of 1960 in
Madanlal Fakirchand Dudhediya vs. S. Changdeo Sugar Mills Ltd. (AIR
1962 SC 1543). And, reference to the report of the Expert Committee on
Financial Provisions was made in Union of
In
Report of
Commissions & Committees — taken into Consideration
Haldiram
Bhujiwala and another vs. Anandkumar Deepak Kumar & Rosy and
Another vs. State of Kerala and
others. (2000) 2 SCC 230 Reports of a
joint parliamentary committee, report of a commission set up for
collecting information leading to the enactment are permissible external
aids to construction. Nayak (RS) vs.
Antulay (AR) AIR 1984 SC 684
Against –
Asst. CIT vs. Velliappa Textiles Ltd (2003) 263 ITR 550, 560
(SC)
Dissenting
M.V. Javali vs. Mahajan Borwell (1998) 230 ITR 1 (SC)
Q.14 Whether
parliamentary debate can be considered for interpretation of taxing
statute.?.
Ans.
In cases of
ambiguity, the legislative debate ,which resulted in coming in to
existence of the provision can be looked in to . S.P.Gupta vs.
Union of
Q.15. Whether the Finance Ministers Speech is relevant for
interpretation a provision.
Ans.
In J.B.
Boda &CO vs. CBDT (1997) 223 ITR 271 (SC), the court held that the
Finance Ministers speech is relevant for interpretation a provision. In
Allied Motors (P)Ltd vs. CIT (1977) 224 ITR 677 (SC). ,the court
held that the budget speech of the Finance minister and memorandum
explaining the Finance Bill as also the Dept. circular showing the
departmental understanding are relevant in construing the provision.
Q.16. Whether budget speech of finance minister and
memorandum explaining the provision, are relevant for
interpretation?
Ans.
In Allied
Motors (P) Ltd vs. CIT (1997) 224 ITR 677(SC), the court held that,
finance ministers, speech, memorandum explaining the provisions are
relevant in construing the provision. In Kumar
J.C. Sinh Eileen AIR 1955 SC 515, the court held that the statement of
object and reasons of an enactment cannot be used to ascertain true
meaning and effect of statutory provision, but it can certainly be seen
for limited purpose of understanding the background, antecedent state of
affairs object of legislation. CIT vs.
D’costa Brother (1963) 49 ITR 1 (Bom). CIT vs. Mahindra & Mahindra
Ltd. (1983) 144 ITR 225(SC)
Finance
Minister’s Speech before Parliament can be relied on to throw light on
object & purpose of provisions. Kerala State
ID Corpn Lt d. vs. CIT 259 ITR 51 (SC) (2003)
Sound-N-Music
(BR) vs. Bhardwaj (OP) 1988 173 ITR 433 (Bom) Narisamha Rao
(PV) vs. State CBI AIR, 1998 (SC) 2120
Q.17 What is the relevance of a meaning given in
dictionaries and text books for interpretation?
Ans.
When a word is
not defined in the statute a dictionary is often useful in ascertaining
its meaning. Courts usually rely on standard dictionaries, such as
Webster’s or the Oxford Dictionary. CIT vs. Raja
Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC)
Q.18 When are the provisions of the General Clauses Act
applicable to interpretation of taxing statutes.
Ans.
The General
Clauses Act has been enacted to avoid superfluity and repetition of
language in various enactments. The object of this Act is to shorten the
language of Central Acts, to provide as far as possible, for uniformity of
expression in the Central Acts, by giving definition of series of terms in
common use, to state explicitly certain convenient rules for the
construction and interpretation of the Central Acts, and to guard against
slips and oversights by importing into every Act certain common form
clauses, which otherwise ought to be inserted expressly in every Central
Act. In other words, the General Clauses Act is a part of every Central
Act and has to be read into each Act unless specifically excluded. Even in
cases where the provisions of the Act do not apply, courts in the country
have applied its principles keeping in mind the inconvenience that is
likely to arise otherwise, particularly when the provisions made in the
Act are based upon the principles of equity, justice and good conscience.
State of
Punj vs. Harnek
Singh (2002) 3 SCC 481, 490 Q.19 When
there are two special statutes, both containing non obstante clauses,
which will prevail.
Ans.
Statute latter
in time shall prevail. Maruti Udyog
Ltd vs. Ram Lal (2005) 2 Supreme Court Cases 638.
VI.
PRECEDENTS
Q.20. Whether
circulars issued by CBDT are binding on the tax authority?
Section 119
(1) of the Income-tax Act, 1961 specifically empower the CBDT to issue
general instructions for the general administration of the Act and such
instructions issued are binding on the officers of the Department. The
only exception is that such instructions shall not be issued in a
particular case nor shall it interfere with the exercise of judicial
powers by the appellate authorities. As circulars
of CBDT are binding on the authorities and if in spite of his attention
being drawn to it, if an authority refuses to follow it, such orders could
be set aside by the Appellate Authorities on the sole ground that the ITO
was bound to follow the circular. In
Navneetlal Zaveri vs. AAC (1965) (56 ITR 198) (SC) the Supreme
Court laid down that the circulars are binding on the authorities, and
they are bound to follow them. In both Navneetlal Zaveri and Ellerman
Lines Ltd.’s case (1971) (82 ITR 913), even though the circulars
were not strictly according to law, still the Supreme Court held that such
circulars were binding. Contrary observations were made in State Bank of
Travancore’s case (1986) (158 ITR 102). The contrary observations
of Madras High Court have not been approved by the Supreme Court in UCO
Bank vs. CIT (1999) 237 ITR 889 (SC). It has also been held that
circulars bind the Department but not the assessee. It is open to an
assessee to challenge its correctness before the Appellate Authorities.
Commissioner
of Custom vs. IOC Ltd. (2004) 267 ITR 272, 277 (SC)
K. P.
Verghesse vs. CIT (1981) 131 ITR 597 (SC)
A Circular
which does not specifically state that it is issued under sec. 119 has
still to be treated as one so issued as held in UOI vs. Azadi Bachao
Andolan (2003) 263 ITR 706 (SC) Q.21 What is
the binding effect of withdrawal of circular in the middle of the
accounting year?
If a circular
was operative at the beginning of the relevant assessment year, its
subsequent withdrawal has to be ignored, and for that relevant year the
circulars should be given effect to [CIT vs. Edwards (1979) 119 ITR 335
(Ker) FB]. Unit Trust of
Q.22 Whether notification can Act
retrospective.?.
Ans.
A notification
cannot operate with retrospective effect, unless the statute expressly
permits it. Cannaore Spg
& Wvg Mills vs. Collector 1978 ELT 375 SC..
Q.23 Whether the decision of other High Courts are
binding?
Ans.
In
interpreting an all Flexoplast
Abrasive Ltd vs. Union of
UOI vs.
Kamlakshi Finance Corpn Ltd. AIR 1992 SC 711, 712
CIT vs. G.M.
Mittal Stainless Steel P. Ltd. (2003) 263 ITR 255, 258 (SC)
Q.24 Whether English and American decisions are binding on
Indian Courts ?
Ans. In
The decisions
relating to specific provisions are of little use, since the Indian tax
laws are not in pari materia with those in foreign countries. (CIT
vs. A. Gajapathy Naidu (1964) 53 ITR 114 (SC) (117).
Decision of
the Privy Council rendered before 1950 would be binding upon the High
Courts of India, unless, of course, there is a decisions to the contrary
by the Supreme Court. Salzgitter Industries
Bav GMBH vs. CIT (1990) 184 ITR 7 (Bom) Any decision
of the House of lords (in CIT vs. Bai
Shirinbai K. Kooka (1962) 46 ITR 86 (SC) Q.25 What is the relevance of Opinions expressed by courts
of other countries.
Ans.
Generally,
opinions expressed by the courts of the countries of United States, Canada
or Australia are not helpful in construing the collocation of legislative
heads in the constitution of India, although they may be some relevance in
determining the true character of particular legislation. (2005) 139
STC 537 (SC). Q.26 What are the general principles of
precedent?
Ans. In CIT vs.
B. R. Constructions (1993) 202 ITR 222 (AP) (FB), the AP High Court
has discussed in detail the general principles regarding the binding
nature of precedent which reads: The effect of a binding precedent in
A single Judge
or Benches of High Courts can not differ from the earlier judgements of
co-ordinate jurisdiction merely because they hold a different view on the
question of law for the reason that certainty and uniformity in the
administration of justice is of paramount importance. But if the earlier
judgement is erroneous or adherence to the rule of precedents results in
manifest injustice, differing from an earlier judgement will be
permissible. When a
Division Bench differs from the judgement of another Division Bench, it
has to refer the case to a Full Bench. A Single Judge cannot differ from a
decision of a Division Bench except when that decision or a judgement
relied upon in that decision is overruled by a Full Bench or the Supreme
Court, or when the law laid down by a Full Bench or the Supreme Court is
inconsistent with the decision. It may be noticed that a precedent will
not be binding (i) if it is reversed or overruled by a higher Court; (ii)
when it is affirmed or reversed on a different ground; (iii) when it is
inconsistent with the earlier decisions of the same rank (iv) when it is
subsilentio; and (v) when it is rendered per incuriam.
A judgement
can be said to be per incuriam if it is rendered in ignorance of the
provisions of a statute or a rule having statutory force or a binding
authority. But if the provision of the Act was noticed and considered
before the conclusion was arrived at, merely on the ground that it has
erroneously reached the conclusion, the judgement cannot be ignored as
being per incuriam. The rule of per incuriam is of limited application.”
A judgement
can be said to be per incuriam if it is rendered in ignorance of the
provisions of a statute or a rule having statutory force or a binding
authority. But if the provision of the Act was noticed and considered
before the conclusion was arrived at, merely on the ground that it has
erroneously reached the conclusion, the judgement cannot be ignored as
being per incuriam. The rule of per incuriam is of limited application.
In Union of
India vs. Raghubir Singh (1989) 178 ITR 548 (551-57) (SC), the Apex
Court held that, the doctrine of binding precedent has merit of promoting
certainty and consistency in judicial decisions and enables an organic
development of law, besides providing assurance to an individual as to the
consequence of transactions, forming part of his daily affairs.
In
Union of Director of
Income Tax vs. Paper Product Ltd. ( Del
) 257 ITR 1 (2002) Y.S.C. Babu
vs. Charmanand Managing Director, Syndicate Bank (AP) 253 ITR 1
(2002)
Agarwal
Warehousing & Leasing Lt d. vs. CIT (MP) 257 ITR 235
(2002)
Sayaji Iron
& Engg. Co. vs. CIT
(Guj) 253 ITR 749 (2002) Goodyear India
Ltd. vs. State at Haryana (SC) 188 ITR 402 (1991)
Baba Parasu
Kaikadi vs. Babu (2004) 1 SCC 681
Q.27 What is
Ratio decidendi?
A decision is
only an authority for what it actually decides and not for what may
logically follow from it. It is the rule deductible from the application
of law to the facts and circumstances of the case which constitutes its
ratio decidendi [UOI vs. Dhanwanti Devi (1996) 6 SCC 44, 51-52] A
case is a precedent and binding for what it explicitly decides and no
more. The ratio
decidendi is the underlying principle, namely, the general reason or the
general ground upon which the decision is based on the test of abstract
from the specific peculiarities of the particular case which gives rise to
the decision. In the course of delivering a judgement the judge may make
observations which are not relevant to the issue before the court. These
observations may not strictly be relevant to the issue involved or may not
be relevant for deciding the issue in question. These observations are
known as ‘obiter dicta’. It is easy to
describe what is ratio decidendi. But it is very difficult to trace the
ratio in a judgement. Several tests are suggested for the purpose of
deducing a ratio in a judgement. One of the tests which is supposed to be
fairly workable is the test of reversal. As per this test one has to
identify the proposition of law put forward in a judgement, reverse it and
then see if the reversal would have altered the actual decision.
If it alters
the decision, then the proposition is the ratio of the decision; on other
hand if the reversal does not affect the decision, then the proposition is
not the ratio of the decision. In other words, the ratio is the general
rule without which the case would have been decided otherwise. This test
however is not helpful when no proposition of law is given in support of
the decision, nor it is very helpful where a court gives several reasons
for its decision logically in such cases it may follow that the first
reason is ratio and other reasons are obiter. Where a case has been argued
on several points, the judge may decide on one of the propositions of law
and merely indicate his views on the remaining points.
The
proposition of law which was material to decide the case shall constitute
ratio. However, where the judge declares that he is deciding the case on
more than one ground, then each proposition on which he bases his decision
will qualify as a ratio. Thus, to be
the ratio decidendi amongst others the minimum requirements are: (1) that
the matter was directly in issue; (2) that the issue needs to have been
decided; and (3) the matter has been decided by giving reasons
[Industrial Credit & Investment Corporation of India Ltd. vs.
Dahanesh D. Ruparelia (2000) 99 Comp. Case 181, 185 (Bom).
UOI vs. Chajju
Ram (2003) 5 SCC 568, 576
Q.28 To what extent would a judgment of the Supreme Court
constitute a binding precedent? Ans. Article 141
of the Constitution of India provides that the law declared by the Supreme
Court shall be binding on all courts within the territory of India . Thus
the law as interpreted by the Supreme Court is binding on all Courts and
Tribunals in India CGT vs. Aluminium Corporation of India Ltd. (1972)
85 ITR 167, 172 (SC). The decision
of the Supreme Court in taxation matters amounts to a declaration of law
as contemplated by Article 141 of the Constitution of India. Karamchand
Premchand Pvt. Ltd. vs. CIT (1975) 101 ITR 46, 52 (Guj.). The High
Court cannot ignore a decision of Supreme Court on the ground that the
relevant provision was not brought to the notice of the Supreme Court,
Badlachandas Mathurdas Lukhani Municipal Committee AIR 1970 SC 1002.
Tata Iron & Steel Co. Ltd. vs. D.V. Bapat ITO (1975) 101 ITR 292, 327
(Bom). The Tribunal
is bound to follow the principle of law laid down by the Supreme Court. It
is not open to the Tribunal to say that the Supreme Court decision was not
relevant simply because, it was not under the statute under which the
Tribunal is working. Bhavnagar University vs. Palitana
Sugar Mill Pvt. Ltd. AIR 2003 SC 511. Ratio is Binding AIR 2002 SC
1598, AIR 2002 SC 834. CIT vs. Vallabhdas Vithaldas & Others (2002)
253 ITR 543 (Guj.) The view
expressed by the Supreme Court is an authority on the subject provided the
facts and situation is identical. The Supreme Court in State of West
Bengal vs. Kesoram Industries Ltd. (2004) 266 I.T.R. 721 (SC)
corrected inadvertent error in India cement Ltd. vs. State of Tamil
Nadu (1990) 1 SCC 12 on the aspect of ‘Royalty is not tax after 14
years.’ Deys Medical
Stores Ltd. vs. Commissioner of Trade Tax (2004) 134 SC 1, U.P. Pollution
Board and others vs. Kaneria Industrial Limited & others 259 ITR 321
(SC)
Delhi
Administration vs. Manoharlal (2002) 7 SCC 222, 227
Q.29 Whether rejection of SLP can be considered as an order
of Supreme Court? What is the binding effect?
Ans. A mere
dismissal of SLP does not mean that the judgement of the High Court stands
affirmed by the Supreme Court. The effect of a dismissal is that no appeal
was permitted and not that an appeal against the said judgement was
dismissed by the Supreme Court affirming the view of the High Court. J.
K. Charitable Trust vs. WTO (1996) 222 ITR 523 (All.)
Rejection of
SLP does not mean that the judgement of High Court has been approved by
the Supreme Court on merit. CIT vs.
Quality (1997) 224 ITR 77 (Pat.)
Smt. Tej
Kumari vs. CIT (2001) 247 ITR 210 ( Patna
) (FB) V.M.
Salgaonkar vs. CIT (2004) 243 ITR 383 (SC)
Kunhayammed
vs. State of Kerala (2000) 245
ITR 360 (SC) Q.30 Whether appeal dismissed by the Supreme Court is
binding on the Tribunal though the order may not be speaking?
Ans.
Where a
decision of the Supreme Court is virtually a non speaking order which does
not set out the facts or the reason for the conclusion or direction given,
it cannot be treated as a binding precedent. Government of
Kanhayamal vs.
State of Kerala (2000) 245
ITR 360 (SC) Q.31 Whether a judgement of the Supreme Court is
retrospective or prospective? Ans. Law is
settled by the Supreme Court. Law laid down by Supreme Court is the law in
existence since its enactment. It is retrospective in operation. Such law
is from inception unless and until spelt as prospective by the Supreme
Court. All Courts, Tribunals, authorities and citizens are bound to follow
the diction laid by the Supreme Court or else shall be liable to contempt.
M. A. Murthy
vs. State of Karnataka and Others
(2003) 264 ITR 1 (SC), Kil Kotagiri Tea and Coffee Estate Co. Ltd. vs.
ITAT (1988) 174 ITR 579 (Ker.) CESC Ltd. vs.
Dy. CIT (2004) 270 ITR 383, 387 ( Cal
.) Q.32 When there are two judgements of the Supreme Court,
which are contrary to each other, which judgement should the Tribunal
follow? Is obiter dicta of the Supreme Court binding on the
Tribunal? Ans.
Article 141 of
the Constitution prescribes that judgements of the Supreme Court are
binding on all Courts and based on the rule of precedent the latest
judgement is to be followed as that is the last word spoken by the
The Supreme
Court sits in Division Bench of two or three Judges. In Jawed Ahmad‘s case
the Supreme Court observed that it may be inappropriate for a Division
Bench of three Judges to purport to overrule the decision of Division
Bench of two judges, although it may be otherwise where a Full Bench or a
Constitution Bench does so. Obiter dicta of the Supreme Court is binding on the Tribunal. The Full Bench of the Andhra Pradesh High Court in Ushodaya Enterprises Ltd. vs. Commissioner of Commercial Taxes (1993) 111 STC 711 observed “ In a case of conflict arising from the decisions of co-equal Benches of the Supreme Court, the High Court is free to disregard the decision which is based on an obvious mistake of fact or the one which purports to follow the ratio of an earlier decision though such ratio is found to be non-existent. The High Court
can legitimately decline to follow such decision and follow the earlier
decision which is backed by reasoning – whether it is accepted to the High
Court or not, and which is free from an such apparent flaw. The later
decision need not be automatically followed despite the fact that it rests
on a conclusion based on an erroneous impression that an earlier decision
took a particular view which in fact it has not taken.” In our view the
same principle may be followed by the Tribunal. Delhi
Development Authority vs. Ashok Kumar Behal, (2002) 7 SCC 135, 141
Divisional
Controller vs. Mohadeva Shetty, AIR 2003 SC 4172, 4178
Q.33 What is the binding nature of the decision of High
Courts? Ans.
As per the
doctrine of precedent, all lower courts, Tribunals and authorities
exercising judicial or quasi-judicial functions are bound by the decisions
of the High Court within whose territorial jurisdiction these courts,
Tribunals and authorities function. In CIT vs.
Kantilal Nathuchand (1964) 53 ITR 420 (Guj.), the Court doubted, but
followed for the sake of uniformity among the High Courts the judgement of
another High Court in the matter of interpretation of the Income-tax Act.
Also refer CIT vs. Chimanlal J. Dalal & Co. (1965) 57 ITR 285
(Bom). Tribunals
functioning within the jurisdiction of a particular High Court are bound
to follow the decision of the jurisdiction High Court — State of AP vs.
Commercial Tax Officer (1988) 169 ITR 564 (AP); Air Conditioning
Specialists Pvt. Ltd. vs. Union of India (1996) 221 ITR 739
(Guj). The Assessing
Officer is bound to follow the decision of Supreme Court as also the
decision of High Court of the State within whose jurisdiction he is
functioning — K. Subramanian, ITO vs. Siemens India Ltd. (1985) 156 ITR
11 (Bom). The order of the Tribunal not applying the decision of
jurisdictional High Court was held to be erroneous — Shri Mahabir
Industries vs. CIT (1996) 220 ITR 459 (Guwahati). Not following the
decision of the High Court within whose jurisdiction the ITO acts, would
tantamount to committing contempt of that court — Siemens India Ltd.
vs. K. Subramaniam (ITO) (1983) 143 ITR 120 (Bom.).
The decision
of a High Court does not have binding force outside the State. Dr. T.
P. Kapadia vs. CIT (1973) 87 ITR 511 (Mys.). CIT vs. Thana Electricity
Supply Ltd. (1994) 206 ITR 727 (Bom.), Geoffrey Manners & Co. Ltd. vs.
CIT (1996) 221 ITR 695 (Bom.), CIT vs. Vardhman Spinning (1997) 226 ITR
296 (P&H), N. R. Paper and Board Ltd. & Others vs. DCIT (1998) 234
ITR 733 (Guj.). No reference can be made on a question of law which is
settled by a decision of the jurisdictional High Court. CIT vs. Him Containers Ltd. (1995) 216
ITR 674 (Guwahati) Kiersentec vs. CIT 11 Taxman 70 (Bom.) (1982), CIT vs.
G.M. Mittal Stainless Steel P. Ltd. (2003) 263 ITR 255, 258 (SC) , R.D.
Joshi & Co. vs. CIT (2001) 251 ITR 332 (MP), Nicco Corpn. Ltd. vs CIT
(2001) 251 ITR 791 (Cal.) The decision
of one High Court is neither binding precedent for another High Court nor
for Courts or Tribunals outside the territorial jurisdiction. The fact
that there is only one decision of any one High Court on a particular
point or that of different High Courts have taken identical views in that
regard is not at all relevant for that purpose. Whatever may be the
conclusion, the decisions cannot have the force of binding precedent on
other High Courts or any other subordinate courts or Tribunals outside
their jurisdiction. That status is reserved only for the decisions of the
Supreme Court, which are binding on all courts in the country by virtue of
Article 141 of the Constitution. Consolidated Pneumatic Tool Co.
(India) Ltd. vs. CIT (1994) 209 ITR 277, 282 (Bom), Universal Ferro &
Allied Chemicals Ltd. vs. P.G.K. Warrier (1983) 143 ITR 959 (Bom.).
In CIT vs.
G. Dalabhai & Co. (1997) 226 ITR 922 (Guj), it was observed
“Before
parting with the case, we notice with anguish the language used by the
Income Tax Officer in his assessment order saying that ‘With due respect
to the decision of the Gujarat High Court, I do not follow the same’. The
Income Tax Officer in not following the decision of the Gujarat High Court
within whose supervisory territory he was functioning, is far from
satisfactory, that is the least we can say. The minimum decorum of the
system of hierarchy that Tribunals in the administration of justice and
their Judicial subordination to the High Court of the territory in which
they function requires that they restrain in the use of proper expression
while following or not following the decision of the High Court”.
Agrawal
Werehousing and Leasing Ltd. vs. CIT (2002) 257 ITR 235
(MP)
Q.34 When
there are two judgements of the jurisdictional High Court, which are
contrary to each other and the latter judgement is delivered without
referring to the earlier judgement, which judgement should the Tribunal
follow?
Ans. It is clear
that when there are conflicting judgements of the jurisdictional High
Court, normally the latter judgement would prevail provided it has
referred to the earlier decision and distinguished the same. However, if
the earlier judgement is not referred to at all, and there are two
conflicting judgements, it is open to the Tribunal to follow that
judgement, the reasoning of which appeals to the Tribunal. Since both the
jurisdictional High Court judgement are binding the Tribunal has to prefer
one or the other judgment and in such a case it can prefer either of the
two judgments. Amarsingh Yadav vs. Santi Devi AIR (1987) Patna 191
and CIT vs. Madhukant M. Mehta (1981) 132 ITR 159 (Guj).
Yogiraj
Charity Trust vs. CIT (1984) 149 ITR 7, 17, ( Del
). Q.35 When there are two judgements of the jurisdictional
High Court which are contrary to each other which will be binding on
Income Tax Appellate Tribunal?
Ans.
The later
judgement shall be of binding on the Tribunal. When there are
conflictory decisions of Courts of Co-ordinate Jurisdiction, the later
decision is to be preferred if reached after full consideration of the
earlier decision. CIT vs. Thomas
Electricity Suppliers Ltd. (1994) 206 ITR 737 (Bom.)
(738).
Q.36 What is
the precedent value of orders passed by different Benches of
Tribunal?
Ans. A decision of
a Division Bench and Third Member Bench is binding on the Single Member
Bench. A decision of a Special Bench is binding on all the Benches of the
Tribunal. A decision of the Special Bench can be distinguished or
disregarded if there is any contrary view of the jurisdictional High Court
or of the Supreme Court. A co-ordinate Bench should follow the view of
another co-ordinate Bench or else refer the matter to a larger Bench
through the President. S. I. Roopal and Others vs. Government through
Chief Secretary, Delhi & Others AIR 2000 SC 594, Union of India vs.
Paras Laminates Pvt. Ltd. (1990) 186 ITR 722 (SC), Pradip Chandra Parija
vs. Pramod Chandra Patniak (2002) 254 ITR 99 (SC), Agrawal Warehousing and
Leasing Ltd. vs. CIT (2002) 257 ITR 235 (MP), CIT vs. L. G. Ramamurthi
& Others (1977) 110 ITR 453 (Mad.), Export House vs. ITO (1985) 23 TTJ
285 (Amritsar), Chandulal Venichand vs. ITO (1991) 38 ITD 138 (Ahd.)
Q.37 Whether one Bench of the Tribunal is bound to follow
the order of another Bench? Ans. For the sake of uniformity, one Bench of the Tribunal is bound to follow the view expressed by another Bench of the Tribunal unless the earlier view is per-incurium — CIT vs. L. G. Ramamurthi (1977) 110 ITR 453 (Mad), CIT vs. S. Devaraj (1969) 73 ITR 1 (Mad). Modu Timblo (Individual) vs. CIT (1994) 206 ITR 647(Bom.) – Union of India vs. Paras Laminates Pvt. Ltd. (1990) 186 ITR 722 (SC), Pradip Chandra Parija vs. Pramod Chandra Patnaik (2002) 254 ITR 99 (SC), Agrawal Warehousing & Leasing Ltd. vs. CIT (2002) 257 ITR 235 (M.P.), The Bench should not come to a conclusion totally contradictory to the conclusion reached by the earlier Bench of the Tribunal. Where a Bench
wants to differ from an earlier Bench decision, the matter should be
referred to a larger Bench on a request made to the President — CIT vs.
Goodlass Nerolac Paints Ltd.. (1991) 188 ITR 1 (5) (Bom). Sayaji Iron and
Engineering Co. vs. CIT (2002) 253 ITR 749 (Guj.), Sis Ram Sharma &
Co. vs. ITO (1988) 25 ITD 410 (Delhi) (TM), Subarna Plantation &
Trading Co. Ltd. vs. ITO (1989) 28 ITD 177 (Cal.), Longwalia Poultry Farm
vs. Dy. CIT (1998) 67 ITD 45 (Chan.) (TM), Birumal Gaurishankar Jain vs.
Income Tax Settlement Commission (1992) 195 ITR 792 (ITSC) (SB), Union of
India vs. Paras Laminates Pvt. Ltd. (1990) 186 ITR 722, 726, 727 (SC),
Sub. Inspector Rooplal & Another vs. Lt. Governor, New Delhi &
Others (2000) 1 SCC 644, 654 (SC), Dy. CIT vs. Reliance Industries Ltd.
(2004) 88 ITD 273 (Mum) (SB). Q.38 Whether the decision of Tribunal is binding on lower
authorities? Ans.
Judicial
discipline demands that authorities subordinate to the Tribunal accept as
binding the decisions of the Tribunal. In Khalid Automobiles vs. Union
of India (1995) 4 SCC (Suppl.) 653, the Court held that an order of
the Tribunal was binding on the assessing officer and the first appellate
authority and that failure to follow the same may constitute contempt of
Tribunal’s order. See Rajendra Mills Ltd. vs. Jt. CIT (1971) 28 STC 483
(Mad.), Serethil Raja Metal vs. CTO (1990) 79 STC 38 (Mad.) and
Union of India vs. Kamlakshi Finance Corporation Ltd. AIR 1992 SCC 711,
712 (SC). In Voest
Alpine Ind. GmbH vs. ITO (2000) 246 ITR 745, (749) (Cal.), the Court
condemned the action of assessing officer in making an assessment contrary
to the decision of the Tribunal which had become final. Also see Bank
of Baroda vs. H. C. Shrivatsava & Another (2002) 256 ITR 385
(390) (Bom.), Asstt. CCE vs. Dunlop India Ltd. (1985) 154 ITR 172 (SC),
Govindram Seksaria Charity Trust vs. ITO (1987) 168 ITR 387 (MP), Agarwal
Warehousing & Leasing Ltd. vs. CIT (2002) 257 ITR 235 (MP), C. D.
Thandani ITO vs. Universal Ferro & Allied Chemicals Ltd. (1988) 172
ITR 30 (Bom.) Q.39 Is CIT(A) bound to follow the decision of the
Tribunal? Ans.
Yes. CIT(A)
being subordinate to the Tribunal is bound to follow the view of the
Tribunal. Agrawal Warehousing and Leasing Ltd. vs. CIT (2002) 257 ITR
235 (MP) Q.40 When there is a special bench decision and after the
decision of Special Bench a High Court other than jurisdictional High
Court has taken a contrary view whether Tribunal has to follow Special
Bench or High Court. Ans.
High Court
decision does not extend beyond its territorial jurisdiction.
CIT vs. Thana
Electricity Supply Ltd 206 ITR 727 (Bom)
Q.41 Whether Third member decision is binding on division
bench. Ans.
Third member
decision is a decision of full bench because Three Judges have applied
their mind. P.C. Puri vs.
CIT (1985) 151 ITR 584 ( Del
) Q.42 When there are two orders of Tribunal, which one has to
be followed. Ans.
Where there
are conflicting decisions of courts of co-ordinate jurisdiction, the later
decision is to be preferred if reached after full consideration of the
earlier decisions. CIT vs. Thana
Electricity Supply Ltd (1994) 206 ITR 727 (Bom)
Q.43 When there are two orders of tribunal one of Mumbai
Bench against the assessee and the other of Ahmedabad Bench in favour of
assessee, which order is binding on the Mumbai Bench.
Ans. If the
Ahmedabad Tribunal decided the matter in favour of assessee, after
considering the Mumbai Tribunal. The order of Ahmedabad Tribunal required
to be followed or otherwise? The matter may
be referred to special Bench. CIT vs. L.G.
Ramamurthi & Others (1977) 110 ITR 453 (Mad),
Pradeep
Chandra Parija and others vs. Pramod Chandra Patnaik & Others. (2002)
254 ITR 99 (SC) VII. DOUBLE TAXATION AGREEMENTS
CONVENTION
Q.44. What is the binding effect of
treaties?
Ans. liberal
interpretation of the agreement and the treaty will override t he
provisions of domestic law has been accepted by the
Circular No.
333, dated Provisions of
treaty will prevail over provisions of I. T.
Act. UOI vs. Azadi
Bachao Andolan (2003) 263 ITR 706 (SC)
Q.45. What is the binding effect of types of international
instruments, such as, Convention, Protocol, Agreement, Arrangement,
Declaration?
Ans.
International
conventions cannot override express provisions of statute.
Peoples union
for civil Liberties v Union of
VIII.
GENERAL
Q.46 When
orders passed by the taxing authorities are neither speaking nor reasoned,
can it be challenged?
Ans.
An order
should be speaking, should contain detailed recording of evidence for and
against, explanation of both sides, arguments raised by both sides and the
reasons for arriving at a particular view. A reasoned and speaking order
is bedrock of justice whether or not an appeal or revision lies against
it. The Supreme Court in Siemens Engineering & Manufacturing Co.
vs. UOI, AIR 1976 SC 1785 stated:— “It is now well settled law that
where an authority makes an order in exercise of a quasi judicial
function, it must record its reasons in support of the order it makes and
the order must be supported by reasons. The Supreme Court in S. N.
Mukherjee vs. UOI, AIR 1990 (SC). The Supreme
Court in State of West Bengal vs. Atul Krishna Shaw, 1990
SC 2205 stated “giving of reasons is an essential element of
administration of justice. A right to reason is, therefore, an
indispensable part of sound system of judicial review. Reasoned decision
is not only for the purpose of showing that the citizen is receiving
justice but also a valid discipline for the Tribunal itself. Therefore,
statement of reasons is one of the essentials of justice.”
It stated that
the order should be a speaking order. The Supreme Court in Kishan Lal
vs. UOI observed that even though in section 220(2A) of the IT Act, it
is not stated that any reasons are to be recorded in the order deciding
such an application, it is implicit in the said provision that whenever
such an application is filed the same should be decided by a speaking
order. The principles of natural justice in this regard would be clearly
applicable. A decision which is taken by the authority under section 220
(2A) can be subjected to judicial review, by filing a petition under
Article 226 of the Constitution. This being so and where the decision of
the application may have repercussion with regard to the amount on
interest which an assessee is required to pay, it would be imperative that
some reasons are given by the authority while disposing of the
application. The matter was restored to the file of the Chief Commissioner
to decide in accordance with law. Anusayaben A.
Doshi vs. JCIT (2002) 256 ITR 685, 686 (Bom)
UOI vs. GTC
Inds. Ltd. (2003) 5 SCC 106, 112
Q.47 High Court deciding the case without considering the
Judgement of Supreme Court, which judgement, the tribunal has to follow
Ans.
Article 41 of
the Constitution of ‘The Law
declared by the SC shall be binding on all courts – within the territory
of India ’. Once there is pronouncement of the highest court of land, same
is binding on all courts tribunals and all authorities in view of this
article. Tribunal must follow the decision of Supreme Court.
Q.48 Can revenue take conflicting
stands?
Ans.
The revenue
cannot take conflicting stands. It has got the assistance of technical
persons and should be consistent. It cannot discriminate between the
assessees. Seshasayee Paper and Boards Ltd. vs. CIT (2003) 260 ITR 419
(Mad.), Union of India vs. Kaumudini Narayan Dalal (2001) 249 ITR 219
(SC), Berger Painters vs. CIT (2004) 266 ITR 99 (SC), Union of India vs.
Satish Panalal Shah (2001) 249 ITR 221 (SC). Q.49 What is the rule of interpretation of documents/
agreements?
Ans. It is the
duty of Court to interpret a document of contract as was understood
between the parties. The terms of the contract have to be construed
strictly without attending the nature of the contract as it may affect the
interest of parties adversely (2005) 123 Companies Cases 663 (SC)
Polymat India Ltd. and others vs. National Insurance Co. Ltd.
Q.50 How to interpret the delay in filing of
appeal?
Ans. The
Supreme Court in Collector of Land Acquisition vs. Mrs. Katiji &
Others (1987) 167 ITR 471, has held that the Court should have a
pragmatic and liberal approach. The Hon’ble Supreme Court in N.
Balakrishnan vs. M. Krishnamurthy (1998) 7 SCC 123 condoned delay of
883 days and has observed that condonation of delay is a matter of
discretion of the court. Section 5 of the Limitation Act does not provide
discretion only in the cases of delay within a certain limit. The only
criterion is the acceptability of explanation irrespective of the length
of delay. The primary function of the court, being the adjudication of the
disputes between the parties and to advance substantial justice, it is not
enough to turn down the plea of the litigant and to shut the door against
him for some lapse on his part which has caused the delay. If theaost
consideration to the suitor. The Supreme Court in Vedabai vs. Shantaram
Baburao Patil & another (2002) 125 S.T.C. 375 observed that the
Court has to exercise its discretion, keeping in mind that the principle
of advancing justice is of prime importance and the expression “sufficient
cause” should receive a liberal construction. The approach of Courts
should be pragmatic so as to impart substantial justice and substantial
Justice. Collector land
acquisition vs. MST, Katiji and Others (1987) 167 ITR 471
(SC)
Q.51 Whether mistake of Lawyer or Accountant
Ans. Wrong legal
advice given or other mistake made by the assessee’s lawyer or chartered
accountant may constitute good reason or sufficient cause for condoning
delay in filing an appeal or an application or a writ or for not imposing
penalty, or for setting aside an ex parte order passed on non appearance
of a party. Ordinarily, a case should not be dismissed for failure of the
lawyer to appear at the hearing. Concord of India Ins. Co. Ltd Vs. Nirmaladevi & Ors (1979) 118 ITR 507 (SC); Manoj Ahuja and Anr. vs. IAC (1984) 150 ITR 696 (P & H); IAC vs. Kedarnath Jhunjhunwala (1981) 133 ITR 746, 755 (Pat); Arun S. Meher vs. M.A. Twigg (1984) 153 ITR 131 (Bom); Avtar Krishandas vs. CIT (1979) 133 ITR 338 (Del);CIT vs. Khemraj Ramshmichand (1976) 114 ITR 75 (MP); Subhkaran & Sons vs. N.A. Kazi (1984) 152 ITR 231 (Bom); Kwality Restaurant & Ice Cream Co. vs. CIT (1984) 158 ITR 188 (Del); CIT vs. India Capacitors Ltd (1987) 180 ITR 641 (Cal); Ganesh, Dass Ram Gopal vs. IAC (1982) 142 ITR 101 (Allah) Q.52 How to interpret sections dealing with
procedure? Ans.
There is no
vested right in procedure or as to cost. Enactments dealing with this
subject apply to pending action, unless a contrary intention is expressed
or clearly implied. The Hon’ble
Supreme Court the case of Shreenath vs. Rajesh (AIR 1998 SC 1827) noted as
under:
“In
interpreting any procedural law, where more than one interpretation is
possible, the one which curtails the procedure without eluding justice is
to be adopted. The procedural law is always subservient to and is in aid
to justice. Any interpretation which eludes or frustrates the recipient of
justice is not to be followed. “ K.M. Sharma
vs. ITO (2002) 254 ITR 772, 779 - 80 (SC)
Haresh Dayaram
Thakur vs. State of Maharashtra (2000) 6
SCC 179, 187 Q.53 How to interpret sections dealing with
limitation?
Ans.
Limitation law
has to be liberally construed (Collector Land Acquisition vs. Mst.
Katiji (1987) 167 ITR 471 (SC); Premchand Bansal & Sons vs. ITO (1999)
237 ITR 65 (Del), Seshammal (R) vs. ITO (1999) 237 ITR 185 (Mad.), Concord
of India Insurance Co. Ltd. vs. Nirmala Devi (1979) 118 ITR 507 (SC)
followed in Avtar Krishnan Das vs. CIT (1982) 133 ITR 338 (Del.)
In CST vs.
Auraiya Chamber of Commerce, (1987) 167 ITR 458 (SC); the Supreme
Court directed admission of delayed claim for refund on the ground that
“in interpreting relevant procedural provisions, fairness and justice
should be the approach, and even in fiscal statute, equity should prevail
wherever language permits”. Q.54 When AO followed the order of Tribunal can CIT, review
the order of AO, on the ground that, there is contrary judgement of Courts
? Ans.
An order
passed by ITO following the decision of the tribunal can not be held to be
erroneous & prejudicial of the interest of the revenue.
Kiran Agencies
vs. ITO (1983) 15 TTJ 460 (Nag)
Indures (P)
Ltd. vs. IAC (1991) 38 ITD 635 Del.
Q. 55 Whether finding of settlement Commission is binding on
tribunal. Ans.
Settlement
Commission is a Tribunal and not court The Finding
given by the Tribunal is not binding on the Income Tax Appellate Tribunal
Similarly the order of the Income tax Appellate Tribunal will not have
binding effect on the Settlement Commission. Order of Settlement
Commission and Tribunal will have persuasive value. CIT vs. B.N.
Bhattacharya (1979) 118 ITR 461 (SC). VII. LEGAL MAXIMS - PRINCIPLES
Q.56 . Whether
interpretation of penal provisions should be construed
strictly?
Ans.
The penal
provisions must be construed strictly. CIT vs.
Sundaram Iyengar & Sons (P) Ltd (1975) 101 ITR 764 (SC)
ITO vs.
Kaysons However the
penal provision giving benefit to a assessee such as section 273A has to
be construed liberally. Handa (RP) vs. ITO (1992) 198 ITR 54 (P &
H) Q.57 What is the binding effect of orders of authority for
advance rulings?
Ans.
The Act has
made the ruling binding in the case of one transaction only and the
parties involved in that case in respect of that transaction. For other
transactions and for other parties the ruling will be of persuasive
nature. Advance ruling are judgments in personam and not in rem. Cyril
Engg. Pereira , In re (1999) 239 ITR 650 ( AAR ) Union of
In Dy. CIT
vs. Biston Consulting Group Pvt. Ltd. (2005) 93 TTJ 293 (Bom.), the
Tribunal held that the Ruling of given by the Authority for Advance
Rulings are not certainly not binding precedents on the Tribunal.
Q.58. How to interpret statutes relating to
appeals?
Ans.
A right of
appeal is the creation of the statute and an assessee has a right of
appeal only if there is a statutory provision for it CIT vs. Ashok
Engg. (1992) 194 IRR 645 (SC). But a provision for appeal should be
liberally construed and should be read in a reasonable and practical
manner CIT vs. T.V. Sundaram (1999) 236 ITR 524 (Mad.). It is
always desirable not to place, a restricted meaning to such a provision
and take away the right of appeal provided to a party.
DCIT vs.
Shanthabaram (2003) 260 ITR 156 (Kar.) Q.59. What is the rule for lifting the corporate
veil?
Ans.
A company is a
legal personality entirely distinct from it’s members and a company is
capable of enjoying rights and being subjected to duties which are not the
same as those enjoyed or borne by its members. But, in certain exceptional
cases, the court is entitled to lift the corporate veil and to pay regard
to the economic realities behind the legal facade. (Jindal (MD) vs. CIT
(1987) 164 ITR 28 ( Cal ). The doctrine
of lifting of corporate veil has been invoked in the following cases ;
(a) where a
corporate entity is attempted to use for fraudulent purpose PNB Finance
Ltd. vs. Shital Prasad Jain (1983) 54 Comp Case 66 (Del.)
(b) To
willfully disobey the courts order Jyoti Ltd vs. Kanwalji Kaur Bhasin
(1987) 62 Comp Cases 626 (Del.) (c) To
frustrate sales tax or capital gains tax liability – Trackways (P) Ltd.
vs. CST (1981) 47 STC 407 (MP), Wood Polymer Ltd. In re (1977) 109 ITR 177
Guj. To deprive
workman of the legitimate bonus – Workmen of Associated Rubber Inds.
Ltd. vs. Associated Rubber Inds. Ltd. (1986) 157 ITR 77 (SC)
Q.60 How to interprete the law relating to Refunds.
Ans.
Provisions
giving refund must be interpreted liberally in favour of the assessee
Calcutta Electric Supply Corporation (Indian) Ltd. vs. ITO (1992) 197
ITR 563 (Cal.) Q.61 In case of two contradictory decisions, which decision
to be followed ?
Ans.
If there are
two apparently contradictory decisions, decision of larger bench to be
followed. CIT vs.
Sundaram Industries Ltd (2002) 253 ITR 396 (Mad),
Siemens India
Ltd. vs. State of Maharashtra (1986) 62
STC 40, 50 (Bom) N.C. Dhoundial
vs. Union of
Q.62 What is the principle of
Resjudicata
The principle
is that the cause of action cannot survive, if it is covered by an earlier
judgment. It literally means a matter already decided.
The strict
doctrine of resjudicata is not applicable to tax matters. The reason being
each assessment year being independent of others all issues relevant to a
particular assessment year could be considered and decided, irrespective
of the fact that the same issues arose in the earlier years. However
questions of fundamental nature or questions relating to assessment which
do not vary every year but depends on the nature of the property or
questions on which the rights of parties to be taxed are based, principle
of res-judicata to that extent would apply to tax matter. Further,
principle of finality to a decision and rule of consistency does apply to
income tax proceedings. Kotak Mahindra
Fin. Ltd. vs. Dy. CIT (2004) 265 ITR 114, 149 (Bom)
Ashok Leyland
Ltd. vs. State of T.N. (2004) 3
SCC 1, 144. Q. 63 What is the Rule of Estoppel Estoppel is a
rule of equity which forbids truth being pleaded or a representation, on
the faith of which another has acted to his detriment, being retracted
Nirmala L.
Mehta vs. CIT (2004) 269 ITR 1, 11 (Bom)
B.L. Sreedhan
vs. K.M. Munireddy (2003) 2 SCC 355, 366
CIT vs.
Bhattachargee (BN) (1979) 118 ITR 461 (SC )
UOI vs. Anglo
Afghan Agencies Ltd. AIR 1968 (SC) 718
The principle
of estoppel strictly does not apply to income tax proceedings (CIT vs.
VMRP Firm (1965) 56 ITR 67 (S.C.). But rules similar to the rule of
estoppel may be applicable under certain circumstances. In any case there
cannot be estoppel against a statute. The principle of promissory estoppel
was considered in detail by the Supreme Court in Motilal Padampat Sugar
Mills case (1979) 118 ITR 326 (SC). Q.64 What is the rule of Ejusdem Generis. (of the same kind
of nature.) ?
Ans.
The rule of
Ejusdem Generis must be applied with great caution, because it
implies a departure from the natural meaning of words, in order to give
them a meaning on a supposed intention of the legislature. CRAISE on
STATUTE LAW (7th Edition p. 178) mentions that the Ejusdem Generis
rule of limiting general words is one to be applied with caution and not
pushed too far. To invoke the application of the rule, there must be a
distinct genus or category. The specific words, the rule requires, are all
of one genus, in which case, the general words may be presumed to be
restricted to that genus. For example, the words “or otherwise” are
generally used as ancillary to the specific proposition which precedes
them. SUTHERLAND in
his STATUTORY CONSTRUCTION (3rd Edition, Vol. II p. 395) explained the
following requisites for the application of the principle of Ejusdem
Generis. i) The statute
contains an enumeration of specific words. ii) The
members of the enumeration constitute a class. iii) The class
is not exhausted by the enumeration. iv) A general
term follows the enumeration. v) There is no
clearly manifested intention that the general term is to be given a
broader meaning than the doctrine require. In the
background of the above theoretical exposition of the principle by the
most noted legal exponents, it can be seen that this rule have been
applied in various cases by the Indian Courts viz., Siddeshwari
Cotton Mills vs. Union of
Mangalore
Electric Supply Co. vs. C.I.T. West Bengal AIR 1978
SC 1272. Lokmat News
papers P. Ltd. vs. Shankar Prasad AIR 1999 SC 2423, 2444
Grasim Inds.
Ltd. vs. Collector of Customs (2002) 4 SCC 297, 304.
Q.65 What is the rule of audi alteram
partem?
Ans.
Both parties
should be heard before any decision. The right to a fair hearing has been
used by the court as the base on which to build a kind of code for
administrative procedure comparable with due process of law. A proper
hearing must always include a fair and adequate opportunity to those who
are parties in the controversy for correcting and contradicting anything
prejudicial to their view. The disclosure of a charge or opposing case
must be made and it must be made within reasonable time to allow the
person affected to prepare his defence or his comments. He must have fair
notice of any accusation against him. The principle of audi alteram partem
has two aspects (i) notice and (ii) hearing (i)
Notice
Before any
action is taken, the affected party should be given a notice to show cause
against the proposed action and seek his explanation. Any order passed
without giving notice is against the principles of natural justice.
Accordingly, even if there is no provision in the statute about giving of
notice, if the order in question adversely affects the rights on an
individual, the notice must be given. The notice must be clear, specific
and unambiguous and the charges should not be vague and uncertain. The
object of notice is to give an opportunity to the individual concerned, to
present his case. Moreover, the notice must give a reasonable opportunity
to comply with the requirements mentioned thereon. Natural justice,
therefore, requires that the person directly affected by the proposed
acts, decisions or proceedings be given adequate notice of what is
proposed so that he may be in a position, a) to make
representation on his own behalf, or b) to appear
at the hearing or inquiry (if any), and effectively prepare his own case
and to answer the case he has to meet. Accordingly,
the notice should be served in sufficient time to enable these
representation to be made effectively. If an oral hearing is to be held,
the time and the place must be properly noticed. If the charges are to be
brought, they should be specified with particulars. (ii)
Hearing
The second
requirement of audi alteram partem is that the person concerned must be
given an opportunity of being heard before any adverse action is taken
against him. Shamnsaheb M.
Mul Hani vs. State of Karnataka (2001) 2
SCC 577 585 - 86 Q.66 What is meaning of Doctrine of Stare
Decisis?
Ans.
The policy of
courts is to stand by precedent and not to disturb a settled point. Stare
decisis at non quiet amovere. It means, to adhere to precedent and not to
unsettle things which are settled. When court has once laid down a
principle of law as applicable to certain state of facts, it will adhere
to that principle, and apply it to all future cases where facts are
substantially the same. A deliberate and solemn decision of court made
after argument on question of law fairly arising in the case, and
necessary to its determination, is an authority, or binding precedent on
the same court, or on other courts of equal or lower rank in subsequent
cases where the very point is again in controversy unless there are
occasions when departure is rendered necessary to indicate plain, obvious
principles of law and remedy continued injustice. Thus, doctrine of stare
decisis means to stand by a decision and not to disturb a legal position
which is settled. The importance of this doctrine can be understood from
the observations of the Apex Court in the case Krishena Kumar vs. UOI
(1990) 4 SCC 207 233, wherein it was observed that “It should be
invariably applied and should not ordinarily be departed from where
decision is of long standing and rights have been acquired under it,
unless considerations of public policy demand it. However, it is
very important to understand that the doctrine of stare decisis is a
policy as explained by the Madras High Court in the case of Pierce
Leslie & Co. vs. CIT (1995) 216 ITR 176, 192 (Mad.). The doctrine
of stare decisis is one of policy grounded on theory that security and
certainty require that accepted and established legal principle, under
which rights may accrue, be recognised and followed, though later found to
be not legally sound, but whether a previous holding of the court shall be
adhered to, modified or overruled is within the court’s discretion under
the circumstances of case before it. His Lordship Kuldip Singh, J., in
Supreme Court Advocates-on-Records Associations vs. UOI. (1993) 4 SCC 441,
644 observed that “It is no doubt correct that the rule of stare
decisis brings about consistency and uniformity but at the same time it is
not as inflexible in Administrative Law as in Public Law.”
Sakshi vs. UOI
(2004) 5 SCC 518, 538 - 39 2001 (1) SCC 748
National
Insurance Co. Ltd. vs. Swaran Singh AIR 2004 SC
1531, 1556-57
Milkfoods Ltd.
vs. GMC Icecream P. Ltd. (2004) 121
Comp. Case 581, 606 (SC)
Q.67 What is the meaning of
sub-silentio?
Ans.
A decision is
passed sub silentio in the technical sense that has come to be attached to
that phrase, when the particular point of law involved in the decision is
not perceived by the court or present to its mind. The Court may
consciously decide in favour of one party because of point A which it
considers and pronounces upon. It may be shown, however, that logically
the court should not have decided in favour of a particular party unless
it has also decided point B in his favour; but point B was not argued or
considered by the Court. In such circumstances although point B was
logically involved in the facts and although the case had a specific
outcome the decision is not an authority on point B. Point B is said to
pass sub silentio. An interesting question that arises is whether a
precedent is deprived of its authoritative force by the fact that it was
not argued or not fully argued by the losing party. One of the chief
reasons for the doctrine of precedents is that a matter that has been once
fully argued and decided should not be allowed to be reopened where a
judgement is given without the losing party having been represented there
is no assurance that all the relevant considerations have been brought to
the notice of the court and consequently the decision ought not to be
regarded as possessing, any binding effect. A decision which is not
express and is not founded on reasons nor proceeds on consideration of
issues cannot be deemed to be a law declared to have a binding effect as
is contemplated by Article 141. Uniformity and consistency are the core of
judicial discipline. But that which escapes in the judgement without any
occasion is not ratio decidendi [State of U.P. vs. Synthetics &
Chemicals Ltd. (1992) 87 STC 289, 309 (SC)]. However now it is well
established that a precedent is not destroyed merely because it was badly
argued, inadequately considered and reasoned. Thus an arbitrary line has
to be drawn between total absence of argument on a particular point, which
vitiates the precedent and inadequate arguments which is ground for
impugning the precedent only if it is absolutely binding and
indistinguishable. Arnit Das vs.
State of Bihar AIR 2000
SC 2264, 2270 Sun N Sand
Hotel Ltd. vs. V.V. Kamat AIR 2003 Bom 168, 177
Q.68 What is meaning of Per incuriam
?
Ans.
The latin
expression per incuriam means through inadvertence. In practice per
incuriam appears to mean per ignoratium. The English Courts have developed
this principle to bring certain degree of flexibility to the doctrine of
stare decisis. The rigid or strict implementation of the doctrine of stare
decisis may lead to certain anomalous and absurd conclusions. The
quotable-in-law is avoided and ignored if it is rendered in ignoratium of
a statute or other binding authority. This principle had been adopted by
the Conflicting
decisions given by coordinate Benches of the Supreme court-Earlier
decision rendered by three-judge Bench unanimously - later decision only
by a majority of 2:1. held the latter decision having not noticed the
earlier binding precedent of a coordinate Bench was per incurium.
(2004) 1
Supreme Court Cases 681
Govt. of W.B.
vs. Tarun R. Roy (2004) 1 SCC 347, 358
State of
Bihar vs. Kalina
Kaur AIR 2003 SC 2443, 2447 Q.69 What is the meaning of Obiter
dicta?
Ans.
It is an
expression of opinion by a judge on a question immaterial to the ratio
decidendi, and unnecessary for the decision of the particular case. It is
in no way binding on any court but may receive attention as being an
opinion of higher authority. Thus, the observations made in a judgement
which are not relevant to the ratio decidendi do not have any binding
force. However, obiter dicta of the Supreme Court are binding or are
entitled to the highest respect. [Shree Swami Advocate vs. State of
Rajasthan AIR 1995 Raj 69, 72, Panjumal Hassomao Advani vs. Harpal Singh
Abnashi Singh Swahaney, AIR 1975 Bom 120, 125). The Calcutta High
Court held that the obiter dicta of a Supreme Court decision has
persuasive value and further observed that the opinion coming from
renowned judge, may command respect. Ratanlal Nahta vs. Nandita Bose
AIR 1999 Cal. 29 (FB). Golden Color
Lab & Studio vs. Commissioner of Commercial Taxes (2004) 134 STC 570
(Karn)
Director of
Settlements vs. M.R. Apparao (2002) 4 SCC 638
Q.70 What is the meaning of judgment in Rem and judgment in
personam? Ans.
A Judgment
that determines the status or condition of property & that operates
directly on the property itself. Judgment in Personam
1. A judgment
that imposes personal liability on a defendant & that may therefore be
satisfied out of any of the defendant’s property within judicial reach.
2. A judgment
resulting from an action in which a court has personal jurisdiction
overtime parties. 3. A judgment
against a person as distinguished from a judgment against a thing, right,
or status. Source:
Black’s Law Dictionary (Seventh Edition) Q.71 Nosciture a Sociis – Ans.
Meaning of
doubtful word may be ascertained by reference to meaning of words
associated with it. But this rule can not be applied in case provisions of
Law being construed is clear and unambiguous. Pennar
Patenson Ltd. In re (2002) 36 SCL 525, 531 (AP)
CIT vs.
Sivanandha Steel Ltd. (2000) 243 ITR 770, 773 (Mad)
Kalpana
Polytec India Ltd. vs. UOI (2001) 106 Comp. Cas. 558, 562
( Cal
) Q.72 What is the status of legal opinion for tax
assessment Ans.
It is not
proper for an assessee to produce legal opinions before an assessing
officer nor is it proper for the officer to ask for the same. Where such
opinions an appended to petitions, they must be expended.
Maharajadhiraj
of Dharbharaj vs. CIT (1933) 1 ITR 206 (210) 11 (Pt.) affirmed in (1934)
12 ITR 345 (PC)
Legal Maxims 1. Actio –
Personalis Moriture cum persona
This maxim
signifies that a personal right of action dies with the death of person. A
personal right is different from composite and/or corporate right.
2. Actus
non-facit reum, nisi mens sit rea
The act does
not make a man guilty unless there is guilty intention.
The maxim is a
cardinal doctrine of criminal law that an act in order to constitute a
crime, it must be committed with a guilty mind. In other words, the intent
and the act must both concur to constitute the crime.
There are two
components for every crime namely a physical element and a mental element
usually called actus reus and mens rea. The mental element is always
marked by the word “Maliciously, fraudulently, negligently or knowingly.
But this rule is flexible, for a statute may make an act criminal whether
or not there has been an intention to break the law or otherwise to do
wrong e.g. food adulteration act. In Criminal
Law, an act means a conscious movement. It is a conduct which result from
operation of will. Involuntary action will not become criminal.
So long as an
act rests on bare intention, it is not punishable, but when the act is
done, the law judges not only the act itself, but also the intent with
which it was done. As a general
rule, based upon this maxim, a master is not criminally responsible for
acts done by his servant without his knowledge and the condition of the
servant’s mind is not to be imputed to the master. But this rule is not
absolute. A man may be indicted for a public nuisance upon his premises
caused by the act of his servants without his knowledge.
The
legislature can create offences which consist solely in doing an act
whatever the state of mind of the person may be. Such cases however,
should be regarded as exception to the general rule that a person cannot
be convicted of a crime unless done with wrongful intention.
An honest and
reasonable belief in the existence of circumstances which, if true, would
make the act, is a good defence, for it either result in his conduct not
being really voluntary, or disprove his foresight of its consequences.
3. Ab
inconvenienti A statute has
to be interpreted according to the language used therein. Rival
interpretation many times create hardship, injustice or absurdity as it
avoids a particular construction. Therefore, this rule has to be applied
with great care. It should be remembered that individual cases of hardship
or injustice have no bearing for rejecting a natural construction. It is
true that very often laws which are enacted for general advantage do
result in individual hardship, for example laws of limitation,
Registration. Though attestation was enacted for public benefit, it may
work injustice in particular cases. But there is no need to depart from
the normal rule. Hence, it is the duty of all courts of justice to take
care of the general good of the community that hard cases do not make bad
law. Therefore, the doctrine ab inconvenienti must not be used to rewrite
the language in a way different from that in which it was originally
framed. However, in case of ambiguity, that construction which better
serves the ends of fairness and justice will be accepted. If no
alternative construction is open, the court cannot ignore the statutory
provision. Therefore, the rule of avoiding a particular construction with
its elements of absurdity and hardship has to be applied with great care.
4. Cessante
Ratione Legis Cessat Ipsa Lex
Reason is the
soul of the law, and when the reason of any particular law ceases, so does
the law itself. A Member of
Parliament is privileged from arrest or civil process during the session,
in order that he may discharge his public duties and trust reposed in him,
but the reason of this privilege ceases at a certain time — probably forty
days after termination of the parliamentary session, because the public
has then no longer an immediate interest in the personal freedom of the
individuals composing the representative body. The same
principle applies where a right exits of common; a right depending upon a
general custom and usage, which appear to have originated, not in any
actual contract, but in a tacit acquiescence of all parties for their
mutual benefit. This right does not, indeed, enable its processor to put
his cattle at once on the neighbouring waste, but only on the waste which
is in the manor where his own land is situated; and it seems that the
right of common of vicinage should be considered merely as an excuse for
the trespass caused by the straying of the cattle, which excuse the law
allowed by reason of the ancient usage, and in order to avoid the
multiplicity there is no separation or enclosure of adjacent common.
As regards the
consent of parents to the marriage of their minor children, it has been
observed that “any analogy which existed between marriage by banns and
marriage — by notice to the registrar has been effaced — the attempt at
securing that consent in marriages of the latter clan by publicity
relinquished and the procurement of actual consent substituted in the same
manner as had always been used in marriage by licence. There is no reason,
therefore, why those decision which have hitherto only been applied to
marriage by banns, and which have their foundation in the necessity for
securing that publicity through which it is the subject of banns to reach
the parent’s consent, should be applied to marriage in which that consent
is otherwise attained and secured.” 5. De Fide Et
Officio Judicis Non Recipitur Quaestio, Sed De Scientia Sive
Facti
The honesty
and integrity of a Judge cannot be questioned, but his decision may be
impugned for error either of law or of fact. The credit and
authority of judges command a great deal of respect. However, no action
will lie against a judge of record for any act done by him in the exercise
of his judicial function provided such act was within the scope of his
jurisdiction. The law has much respect for the certainty of judgments. The
rule is that a judicial officer cannot be sued for an adjudication
according to the best of his judgment upon a matter within his
jurisdiction and also the rule that a matter of fact so adjudicated by him
cannot be put in issue in an action against him have been uniformly
maintained. 6. Ex-debito
Justitiae
The maxims
herein speaks of a remedy which the applicant gets as a matter of right.
On the principle of equity and justice, every Court of plenary
jurisdiction has the power to correct ex debito Justitiae its judgment and
order to prevent the abuse of its process and grave and palpable errors.
Many times the court is called upon to act ex debito justitiae to rectify
its own mistake or orders inadvertently passed or to prevent gross
miscarriage of justice. Thus, we see
that this maxim conveys an important rule of law wherein a review is
resorted to only when a glaring omission or a patent mistake has crept in
due to judicial fallacy. Otherwise a judgment pronounced by the Court is
final. Therefore, in the circumstances, where there is some manifest
illegality or want of jurisdiction in the earlier order, the court is
called upon to ex debito Justitiae its own wrong to undo the injustice
caused. This power can be traced to Article 142 of the constitution, or in
case of Supreme Court the power inherent in the Court as
7. Expressio –
unius personae vel rei est exclusio alterius
This maxim is
very often used to ascertain the legislative intent of any piece of
legislation. It conveys an important rule of interpretation to signify the
circumstances where the express mention of one person or thing results in
totality the exclusion of another. In other words, in any particular
provision where the statutory language is plain or straight and its
meaning is apparently clear, there is no scope of applying the rule.
However, this maxim could be accepted as a valuable servant but it is
definitely a dangerous master in the construction of statutes and
documents. It is used when there is imperfect enactment of statutory
language. Coming
corollary to this maxim is expressum facit cessare facitum which states
that when there is express mention of certain things, then anything not
mentioned is excluded. 8. Generalia
Speciali bus non derogant and generalia bus specialia
derogant
General things
do not derogate from special things and special things derogate from
general things. This maxim
comes into help when two apparently conflicting provisions clash with each
other wherein it becomes necessary to find out which provision is more
general and which is more specific and to construe the more general one so
as to exclude the more specific. When a special provision is made on a
certain matter, that matter is excluded from the general provision. This
principle also helps in resolving the conflict arising between two
different Acts. The Hon’ble Supreme Court had applied this principle in
resolving a conflict between Articles 25(2)(b) and 26(b) of the
constitution. [Venkataramana Devara vs. State of Mysore , AIR
1958 SC 255]. Similarly, while resolving the conflict between Articles
19(1)(a) and 194(3) of the Constitution, the Hon’ble Supreme Court had
relied on this maxim as shown in M.S.M. Sharma vs. Shri Krishna Sinha,
AIR 1959 SC 395. 9. Incumbit
Probatio Qui Dicit non Qui Negat
In the matter
of casting onus or burden, this maxim has its share of importance to lay
stress on the principle that the burden lies upon one who alleges and not
upon one who denies the existence of a fact. In the case of Lakshmi
Jewellery vs. CIT 171 ITR 649 (AP), it was held that the burden is far
more greater on the Revenue where penalty is sought to be justified not
with reference to the Explanation to section 271(1)(c) of the Income Tax
Act but with reference to the provisions contained in the substantive
section itself. Even under
criminal law a convict is presumed innocent unless proved guilty.
Therefore, in the interpretation exercise of any criminal and/or
quasi-criminal proceedings, the general intent of this maxim is applied to
specify upon whom the onus lies. 10. Ignorantia
Facit Excusat – Ignorantia Juris Non Excusat
Ignorance of
fact excuses, Ignorance of law does not Ignorance may
be either of law or of fact. If the heir is ignorant of the death of his
ancestor, he is ignorant of a fact; but if, being aware of the death, but
ignorance of certain rights which have been vested in himself, he is
ignorant of the law, which every man is presumed to know and it does not
afford excuse. It is a rule
that every man must be cognizant of the law otherwise there will be no
limit to the extent where the excuse of ignorance might be carried. It
would be urged in almost every case . Ignorance of
fact is inevitable. But ignorance of law is never inevitable for the law
can be and ought to be definite and knowable. If ignorance of law were
admitted as a ground of exemption, the courts would be involved in
question hardly possible to solve and which would lead administration of
justice totally impracticable. In criminal
cases, the maxim ignorantia facit applies, except in cases where mens rea
in the ordinary sense is not requisite. When a man intending to do a
lawful act does that which is unlawful. If a man intending to kill a
burglar under circumstances which would justify him in so doing, by
mistake kills one of his family, this is no criminal act.
Therefore,
this maxim conveys an important rule of law that ignorance of laws could
not be pleaded as an excuse. 11. Nonest
factum: It is not his deed
The
applicability of this doctrine comes into play when a person says that his
signature in a deed or document is obtained by fraud, his plea in effect a
plea of nonest factum. Normally, this doctrine does not find much support
by law save certain exceptional circumstances. It is generally presumed
that one who is signing a document is aware of its meaning, content and
character. Later on after signing, he can’t plead that it is not his
document. But in exceptional cases, the plea of the non est factum could
be admissible. A document should be held void as opposed to voidable only
when the element of consent as regards its content is totally absent.
Therefore, if an innocent person raises the plea of non est factum, the
law would protect such person if they diligently prove that they are the
victims of tricky situations and swayed into signing the documents without
knowing the content and character it conveys to the world.
12. Nova
constitutio futuris forma-mimponere debet, non practeritis
This maxim
conveys a valuable meaning in the construction and interpretation of
statutes. It lays down that a new law ought to regulate what is to follow,
not the past. Every framed law ought to be prospective in nature. It is in
bad taste if past is dug into for retrospective effect.
Thus the
relevant maxim embodies a particular rule of construction which is
valuable only when the words of an Act of parliament are not plain. The
inertia speaks that as far as practicable effort should be made so as not
to give a statute a retrospective operation. Except in special cases, the
new law ought to be construed so as to interfere as little as possible
with the vested rights. 13. Nemo
Tenetur Seipsum Accusare
No man can be
compelled to criminate himself. The rule of
this maxim goes to say that the evidence of a confession by the accused is
not admissible unless it be proved that such confession was free and
voluntary. The maxim forms the general rule that a witness in any
proceeding is privileged from answering not merely where his answer will
criminate him directly, but also where it may have a tendency to criminate
him. However, the protection does not extend to excuse a person from
answering questions on the ground that the answers may establish or tend
to establish he owes a debt or otherwise subject to a Civil Suit at the
instance of any other person. 14. Nemo Est
Haeres Viventis
“No one can be
heir during the life of his ancestor” Non
inheritance could vest, nor could any person be the actual complete heir
of another, till the ancestor was dead. Before the happening of this event
the person who would be heir, if the ancestor immediately dies, was called
heir-apparent or heir-presumptive this claim would only be to an estate
remaining with the ancestor at the time of his death, and of which he had
made no testamentary disposition, might be defeated by the superior title
of an alienee in the ancestor’s lifetime or of a devisee under his will.
Therefore, at common law, if an estate were granted to A for life,
remainder to the heirs of B, if A died before B, the remainder failed, for
during B’s life, he had no heir. But if B died first, the remainder then
immediately vested in his heir, and he was entitled to the land on the
death of A. So, a “will”
takes effect only on the testator’s death. During his life, it is subject
to his control, and until it was consummated by his death, no one had, in
a legal view, any interest in it. The general
rule being that the law recognizes no one as heir until the death of his
ancestor. Though a party may be heir-apparent or heir-presumptive, yet he
is not very heir, living the ancestor but this rule has been relaxed in
many cases and an exception, engrafted on it, that, if there be sufficient
on the will to show that by the word ‘heir’ the testator meant heir
apparent, it shall be so construed and in such case, popular sense shall
prevail against, the technical. (Winter vs. Perratt).
Where a
testator gave property to his wife for life, and after the death, “to such
person as at the decease of my said wife shall be my heir”, and the
testator’s wife predeceased him, it was held that the property went to the
person who would have been the testator’s heir, if he had died at the time
of his wife’s death, for the law leans against an intestacy. In like
manner the familiar expressions, “heir to the throne,” “heir to a title or
estate” “heir apparent,” “heir-presumptive,” proves that the existence of
a parent is quite consistent with the popular idea of heirship in the
child. In all such cases the legal maxim has no place, nor can it have in
any in which the person speaking knows of the existence of the parent, and
intends that the devise to the child shall take effect during the life of
the parent. 15. Nemo Dat
Quod Non Habet
No one gives
what he does not possess No man can
transfer better title than he himself has; i.e., no person can give to
another that which he was not the true owner. Thus, if a thief transfer to
me for value a thing stolen by him, the true owner can claim it from me
even though I paid value for it, and had no notice of the theft.
So no one can
give a better title than he himself has. This general rule of nemo dat
quod non habet is applicable to both movable and immovable property.
However, there
are few exception to this rule. Sale by mercantile agent and sale in open
market or sale by a person in possession of movable goods under a voidable
contract does not attract this maxim. Also, when the true owner is
stopped, by his own conduct, from denying the seller’s authority to sell,
the buyer may get a valid title to the goods. 16. Nemo Debet
Esse Judex in Propria Sua Causa No man can be
a judge in his own cause Justice should
not only be done but must also be seem to be done. Interest or bias would
disqualify a person from being on a judicial or quasi judicial body. The
principle of natural justice and fair procedure require that the
complainant cannot be the judge. Interest and bias become a disqualifying
factor. A person who sits on a committee for selection of candidates for
jobs or admission to a course must not be a candidate himself. A person
whose near relation is appearing for the examination is not allowed to
undertake assessment of answer books - bias may arise due to pecuniary
interest. Personal bias may arise out of blood relations or marital
relations or friendship or hostility. Bias may also be official bias.
S. Maheswar
Rao vs. State of Orissa (1989)
Supp (2) SCC 248 at 251 (SC) 17. Quod Ab
Initio Non Valet in Tractu Temporis Non Convalescit
That which was
originally void, does not by lapse of time become valid.
The rule of
this maxim has general importance in our day-to-day practice, in pleading
and in the application of legal principles to various occurrences of facts
and events. This maxim finds its significance in the interpretation of Law
of Contract and other Commercial Law. 18. Qui facit
per alium facit per se He who acts
through another is deemed to act in person. This maxim proposes a
vicarious liability upon a person who delegates the exercise of his rights
and privileges upon another to act on his behalf. Thus we say, a master is
vicariously liable for the acts of his servants. So is owner servant
relationship, teacher student relationship, father son relationship etc.
The court does not generally restrict the common law rule of qui facit per
alium facit per se unless the statute expressly or by implication or by
necessary intendment excludes it. 19. Res ipsa
loquitur
“The event
speaks for itself or tells her own story.” The maxim herein conveys an
important rule of interpretation. The doctrine of “things speaks for
itself” traces its origin to the law of tort and specifically not
applicable to criminal prosecutions. The application of this principles
squarely depends upon the nature of event and the surrounding
circumstances. More particularly, when there is an evidence to show that
an event has occurred in such way, the question of applying res ipsa
loquitur does not arise. It applies in the cases of actions for negligence
when the negligent act of the defendant could be presumed.
20. Respondent
Superior
Let the
principal be held responsible The dictionary
meaning of the word “respondent” is let him answer; i.e., to say let the
person against whom a relief is claimed answer that he is not liable for
the claim. The maxim
means let the principal be responsible. According to this maxim, the
master is answerable for every such wrong of the servant or agent as is
committed in the course of the service and for the masters benefit, though
no express command or privity of the master be proved. (Barwick vs.
English Joint Stock Bank). A Municipal Board was held to be liable for
the acts of its secretary in executing an illegal distress warrant acting
under the order of the Chairman of the Board. (Municipal Board
Mussorrie vs. Goodall). The doctrine
of respondent superior is the doctrine of vicarious liability. Generally
master is liable for the tort of his servant, when it is done in the
course of his employment. To impose vicarious liability on the master,
there should be a master and servant relationship and the tort must have
been committed by the servant during the course of employment. In
Sitaram vs. Shantanu Prasad, AIR 1966 SC 1967 the owner of the car
entrusted the car to his driver for plying it as a taxi Driver was
training C to drive and even took him for driving test. Due to his
negligence during test ride, there was an accident. Neither driver nor
trainee were held not to be working during the course of employment and
hence the owner was not vicariously liable. However, when
fraud is committed by the agent when he was acting not in the interest of
his employers, but entirely in his own interest, the principal cannot be
held responsible for consequences of his fraudulent conduct.
The general
rule is that the master is liable for the tort of his servant when done in
the course of his employment. This involves two points.
1) The
relationship of master and servant exists 2) A tort is
committed by the servant in the course of his employment.
The maxim has
its origin in the legal presumption that acts done by the agent/servant in
the master’s business by master’s authority (expressly or impliedly) are
in truth the acts of the master. The two main
reasons for the recognition of this rule are 1) The
difficulty in the way of proving actual authority and
2) That the
employers usually are, while their servants are not financially, capable
of bearing the burden of civil liability. The general
principle which render a private individual liable for his servant’s acts
apply to render a corporation which can only act through agents liable for
its agents acts provided such agent act within the scope of their
employment. Public
functionaries like judges, magistrate are protected from the consequences
of an illegal and wrongful acts done by an officer or other person
employed in the inferior ministerial capacity, provided that the principal
himself acted in the discharge of his duty and within the scope of his
jurisdiction and of authority delegated to him. A person who
employs not his own servant but an individual contractor to do a lawful
act is not answerable for wrongful and negligent acts unnecessarily
committed by the contractor or his servant in the performance of the
contract. 21. Rex Non
Potest Peccare
This maxim
means that the King can do no wrong. It is an
ancient and fundamental principle of the English constitution that the
king can do no wrong. But this maxim must not be understood to mean that
the king is above the law, in the unconfined sense of those words, and
that every thing he does is necessarily just and lawful. Its true meaning
is, first that the sovereign, individually and personally, and in his
natural capacity, is independent of and is not amenable to any other
earthly power or jurisdiction, and that anything arises in the conduct of
public affairs is not to be imputed to the king, so as to render him
personally answerable for it to his people. Secondly, the maxim means that the prerogative of the Crown extends not to do any injury, because being created for the benefit of the people, it cannot be exerted to their prejudice; and it is therefore a fundamental and general rule that the king cannot sanction an act forbidden by law; so that from this point of view, he is under and not above the laws, and is bound by them equally with his subjects. 22.
Vigilantibus, Non Dormientibus Jura Subveniunt
The law assist
those who are vigilant, not to those who sleep over their rights.
The court of
justice require that parties to a litigation shall exercise due degree of
vigilance or caution. Limitation has
been prescribed in law for taking cognizance of cases. In the limitation
Act 1963, limitation has been prescribed for various steps to be taken by
the parties. If a party has not taken the appropriate steps within the
time, he cannot enforce his right at a later time unless he has a
sufficient reason for not taking those steps. Limitation has
been prescribed in criminal law also. If an offence is punishable with
fine only, then the offence must be taken cognizance of by the Court
within 6 months from the date of commission of the offence, otherwise it
will accelerate the activities of the investigating agency. If the matter
is not sent to the court within 6 months then the State will not get any
opportunity to prosecute the offender. The laws of
limitation are founded on public policy. That public policy is an
unlimited and perpetual threat as litigation leads to disorder and
confusion. It creates insecurity and uncertainty. The object of the
Limitation Act is to quiet long possession and to extinguish state
demands. REFERENCER Books
Butterwoths
,interpretation of taxing statutes. Second Edition
By Markandey Katju.1998. Interpretation
of Statutes 2nd edition, taxman by D.P. Mittal. Articles
Interpretation
of taxing statutes, Income tax Review July 2001
Interpretation
of taxing statutes, Income tax Review Sept. 2001
Interpretation
of taxing statutes by R.K. Patel (2003) 183 CTR (Art.) 80
Tax laws and
their Interpretation by N.M. Ranka (2004) 191 CTR (Art) 128
Law precedents by B.V. Venkatramaiah (2003) 183 CTR (Art.) 116. Source : K. Shivaram,
S. S. Shetty, Arati Vissanji, Premchandra Tripati and Ajay
Singh | |
|
| ||
|
|
| |
|
|
Rewards waiting for feedback
at | |
|
|
| |
|
|
||
|
|
| |
|
|
Disclaimer: We believe that the information contained in this e-zine is true. If you do not wish to receive Smart Trainee please click here. | |
|
|
||
|
|
| |
|
|
Click here to contact us, if you are unable to view the content properly | |
|
|
| |
