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Tuesday, May 4, 2010

Chapter-9 Part -8

The Delhi High Court had the oppurtunity to observe the implications of the strictness which is employed in the rule of interpretation. It observed as follows while construing the section 52(2) of the Income Tax..

” This Court noticed the basic principle of interpretation of statutory provisions. Noticing the words of Judge Learned Hand, it was said that the task of interpretation of a statutory enactment is not a mechanical task. It is more than a mere reading of mathematical formulae because few words possess the precision of mathematical symbols. We must not adopt a strictly literal interpretation of Section 52(2) but construe its language having regard to the object and the purpose which the legislature had in view in enacting the provision and in the context of the setting in which it occurs. The literal construction would lead to manifestly unreasonable and absurd consequence. It is well-recognised rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. It was held that construction suggested on behalf of the Revenue would lead to a wholly unreasonable result which could never have been intended by the legislature. It was said that the literalness in the interpretation of Section 52(2) must be eschewed and the court should try to arrive at an interpretation which avoids the absurdity and the mischief and makes the provision rational, sensible, unless of course, the hands of the court are tied and it cannot find any escape from the tyranny of literal interpretation. It is said that it is now well-settled rule of construction that 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. In such a case the court may read into the statutory provision a condition which, though not expressed, is implicit in construing the basic assumption underlying the statutory provision. Bearing in view these principles the court held that on a fair and reasonable construction of Section 52(2) the court would red into it a condition that it would apply only where the consideration for the transfer is understated or in other words, the assessee has actually received a larger consideration for the transfer than what is declared in the instrument of transfer and it would have no application in case of a bona fide transaction where the full value of the consideration of transaction is correctly declared by the assessee. Thus, a condition though not expressed, was read into Section 52(2) constituting the basic assumption underlying the said sub-section[1]”.

This Court as a general proposition of interpretation of Statutes observed as follows:

“Now a code of procedure must be regarded as such. It is `procedure’ something designed to facilitate justice and further its ends: not a penal enactment for punishment and penalties; not a thing designed to trip people up. Too technical a construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against (provided always that justice is done to `both sides’ ) lest the very means designed for the furtherance of justice be used to frustrate it.[2]

[1]See; Oxford University Press vs. Commissioner of Income Tax, (2001) 3 SCC 359;As quoted in. WP (C) No.18268/2005 & CM No.11927/2005IN THE HIGH COURT OF DELHI, Hearing : October 20, 2005

[2] (Arising out of SLP ( C ) 11514 of 2001)Topline Shoes Ltd.VS… Corporation Bank

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