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By K. C. Patel & Manish J.
Shah
Advocates
1
Recently we have been tumbling with the idea of sharing with you
certain important pronouncements of the Supreme Court on interpretation.
The approach that the Supreme Court expects the subordinate Courts to
have whenever they would be faced with an issue of interpreting the
statutes is that the statute should be interpreted in such a way that
the object of bringing a particular section in the Act is
preserved.
2.
The Supreme Court of India in the above-mentioned situation has
taken recourse to different modes of approaching the issue before it.
Some of the modes adopted in interpreting in such a way that the object
is preserved are discussed herein below for your ready reference
whenever the need arise.
3.
Gist of useful judgments :
(1) Luke v. IRC (1963) AC
557; (1964) 54 ITR 692 (HL) followed
Speeches made by the
members of the legislature on the floor of the House when the Bill is
being debated are inadmissible for the purpose of interpreting the
statutory provision but the speech made by the mover of the bill
explaining the reason for its introduction can certainly be referred to
for the purpose of ascertaining the mischief sought to be remedied by
the legislation and the object and purpose for which the legislation is
enacted. This is in accord with the recent trend in juristic though not
only in western countries but also in India, that the interpretation of
a statute being an exercise in the ascertainment of meaning, everything
which is logically relevant should be admissible.
(2) Chandulal Harjivandas V/s.
C.I.T. (1967) 63 ITR-627 at page-631 per justice J. C. Shah.
"It should be remembered in this connection that the
object of enacting section 15(1) of the Act is the encouragement of
thrift and the section hence be interpreted in such a manner as not
to nullify that object."
(3) K. P. Verghese V/s. I.T.O. (1982) 131 I.T.R.-597
at page-598 per Justice P. N. Bhagwati.
"A statutory provision must be so construed, if possible,
that absurdity and mischief may be avoided. Where the plain literal
interpretation of a statutory provision produces a manifestly absurd and
unjust result, which could never have been intended by the legislature,
the court may modify the language used by the legislature or even do
some violence to it, so as to achieve the obvious intention of the
legislature and produce a rational construction.
(4) C.I.T. V/s. J. H. Gotla
(1985) 156 I.T.R.-323 at page-324 (SC)
"If a strict and literal construction of the statute leads
to an absurd result, i.e. a result not intended to be sub-served by the
object of the legislation ascertained from the scheme of the
legislation, then, if another construction is possible apart from the
strict literal construction, then, that construction should be preferred
to the strict literal construction.
Where the plain literal interpretation of a statutory provision
produces a manifestly unjust result which could never have been intended
by the legislature, the court might modify the language used by the
legislature so as to achieve the intention of the legislature and
produce a retional result.
BY THE COURT : "Though equity and taxation are often
strangers, attempts should be made that these do not remain always so
and if a construction results in equity rather than in injustice, then
such construction should be preferred to the literal construction.
The word "income" in s.16(3) would include loss."
(5) Rajratna Naranbhai Mills
Co. Ltd., V/s. S.T.O. (1991) 189 ITR-90 at page-97 (SC).
"Both Benches of the High Court, with due respect gave to
the provision a very wide and varied interpretation and that
too on literality and grammaticals seemingly over looking the
legal philosophy which permeates the provision...."
(6) Administrator Municipal
Corporation, Bilaspur V/s. Dattatray Dahankar (1992) AIR (SC) 1846
at page 1847 (Tax Case).
"It seems to us that the High Court had a mechanical
approach to construction. The mechanical approach to construction is
altogether out of step with the modern positive approach. The modern
approach is to have a purposeful construction that is to effectuate the
object and purpose of the Act." Section 127A, must therefore,
receive a purposeful construction."
And at page 1848 "Any other construction would render the
proviso nugatory and defeat the object of the Act."
(7) C.W.S. (India) Ltd. V/s.
C.I.T. (1994) 208 ITR-649 at page-650 :
"Literal
construction may be the general rule in construing taxing enactments,
but that does not mean that it should be adopted even if it leads to a
discriminatory or incongruous result. When a literal interpretation
leads to an absurd or unintended result the language of the statute can
be modified to accord with the intention of Parliament and to avoid
absurdity."
(8) Director of Enforcement
V/s. Deepak Maharaj A.I.R. 1994 SC 1775 :
"Normally
Courts should be slow to pronounce the legislature to have been mistaken
in its constantly manifested opinion upon a matter resting wholly within
its will and take its plain ordinary grammatical meaning of the words of
the enactment as affording the best guide, but to winch up the
legislative intent, it is permissible for Courts to take into account of
the ostensible purpose and object and the real legislative intent.
Otherwise, a bare mechanical interpretation of the words and
application of the legislative intent devoid of concept of purpose and
object will render the legislature inane."
"In given circumstances, it is permissible for Courts to
have functional approaches and look into the legislative
intention and sometimes may be even necessary to go behind the words and
enactment and take other factors into consideration to give effect to
the legislative intention and to the purpose and spirit of the enactment
so that no absurdity or practical inconvenience may result and the
legislative exercise and its scope and object may not become
futile."
(9) Mysore Minaral Ltd. V/s.
I.T.O. 239 I.T.R. 775 (SC) :
"Section
32 of the Income-tax Act, 1961 confers a benefit on the assessee. The
provision should be so interpreted and the words used therein should be
assigned such meaning as would enable the assessee to secure the benefit
intended to be given by the Legislature to the assessee. It is also
well-settled that where there are two possible interpretations of a
taxing provision the one which is favourable to the assessee should be
preferred."
4.
Though in this article we have taken the liberty of being
different content-wise we felt a sincere need to address ourselves to
the above-mentioned issue, so that our professional brothers can
usefully refer to the pronouncements on interpretation whenever the need
to do so arises.
September 2002
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