BASIC TENETS OF

INTERPRETATION OF STATUTES

Dr.M.K.Ramesh
Professor
NLSIU
 I WHY INTERPRET STATUTES?

• LEGISLATIVE LANGUAGE

• “LEGISLATIVE INTENT”
 II FUNDAMENTAL NORMS

• STATUTE MUST BE READ AS A

WHOLE IN ITS CONTEXT
• STATUTE TO BE CONSTRUED TO
MAKE IT EFFECTIVE AND
WORKABLE
• LITERAL CONSTRUCTION : IF MEANING
PLAIN, EFFECT MUST BE GIVEN TO IT
IRRESPECTIVE OF CONSEQUENCES
• MISCHIEF RULE
• “PURPOSIVE INTERPRETATION”:
‘ JUDGES CANNOT INTERPRET STATUTES
IN THE LIGHT OF THEIR VIEWS AS TO
POLICY; BUT THEY CAN ADOPT A
PURPOSIVE INTERPRETATION’ –USE AND
REFERENCE TO MATERIAL AS AN AID TO
INTERPRETATION TO ILLUMINATE
PARLIAMENT’S PURPOSE OR POLICY
• JUDICIAL ACTIVISM v. JUDICIAL
RESTRAINT- LETTER AND SPIRIT OF THE
LAW
• CONSTITUTIONAL COMMANDS:-
A.129: SC AS COURT OF RECORD; A.131 SC TO
HAVE ORIGINAL JDN.; Arts. 132-134: APPELLATE
JDN.; A.136: SPL. LEAVE TO APPEAL TO SC; A.137:
POWER TO REVIEW OWN JMT. & ORDERS
A.141: THE LAW DECLARED BY SC BINDING ON
ALL COURTS
 CONSTUCTION OF TAXING
STATUTES
• STRICT CONSTRUCTION :
A.265: NO TAX SHALL BE LEVIED OR COLLECTED EXCEPT BY
THE AUTHORITY OF LAW
# STRICT LETTER OF THE LAW-SUBJECT NOT TO BE TAXED
UNLESS THE STATUTE UNAMBIGUOUSLY IMPOSES IT-
LITTLE ROOM FOR SUPPOSITIONS AS TO “SPIRIT” OF THE
LAW OR BY WAY OF “INFERENCE”
# “TAX” (-IMPOSED FOR FOR PUBLIC PURPOSE) AND “FEE” (-
IMPOSED FOR RENDERING SERVICE)
# PENALTY PROVISION IN A TAXING STATUTE HAS TO BE
SPECIFICALLY PROVIDED AND CANNOT BE ONFERRED
• RULE OF AVOIDANCE OF DOUBLE TAXATION- A
RULE OF CONSTRUCTION –INAPPLICABLE WHEN
STATUTE EXPRESSLY PROVIDES FOR IT
• CHARGING SECTION AND THE COMPUTATION
PROVISIONS TOGETHER CONSTITUTE AN
INTEGRAL CODE
• WHEN THE PROVISION IS REASONABLY OPEN TO
ONLY ONE MEANING-NOT OPEN TO
RESTRICTIVE CONSTRUCTION AS THE LEVY OF
TAX, BEING OPPRESSIVE , DISPROPORTIONATE,
UNRESONABLE OR WOULD CAUSE HARDSHIP-
NO ROOM FOR SUCH SPECULATION
• PURPOSIVE CONSTRUCTION:- SHIFT FROM
LITERAL CONSTRUCTION POSSIBLE WHEN IT
LEADS TO ABSURDITY
• EQUITY AND TAXATION- NOT STRANGERS,
ALWAYS!- CIT v.J.H.KOTLA YADGIRI (1985) SCC 343
at p.360- s.16(3) OF IT ACT, 1922, INCOME FROM
BUSINESS OF WIFE OR MINOR CHILD INCLUDIBLE
AS INCOME OF THE ASSESSEE- HELD,THE PROFIT
OR LOSS FROM SUCH BUSINESS SHOULD BE
TREATED AS THE PROFIT OR LOSS FROM A
BUSINESSS CARRIED ON BY HIM FOR THE PURPOSE
OF CARRYING FORWARD AND SET-OFF OF THE
LOSS u/s.24(2)OF THE ACT
• STRICT CONSTRUCTION WOULD NOT
COME IN THE WAY OF REQUIRING A
PERSON CLAIMING AN EXEMPTION , TO
TO ESTABLISH IT-CONCESSION GRANTED
UNDER A FISCAL STATUTE
• THE RULE DOES NOT PERMIT ANY ONE
TO TAKE THE BENEFIT OF AN
ILLEGALITY-CIT v.KURJI JINABHAI
KOTECHA,AIR 1977 SC 1142 at p. 1146 :
s.24(2) OF IT ACT CONSTRUED NOT TO PERMIT
ASSESSEE TO CARRY FORWARD THE LOSS OF AN
ILLEGAL SPECULATIVE BUSINESS FOR SETTING
IT OFF AGAINST PROFITS IN SUBSEQUENT
YEARS- EVEN A TAXING STATUTE SHOULD BE
SO CONSTRUED AS TO BE CONSISTENT WITH
MORALITY AVIDING A A RESULT THAT GIVES
RECOGNITION TO CONTINUED ILLEGAL
ACTIVITIES OR BENEFITS ATTACHED TO IT
• THE RULE APPLIES PRIMARILY TO CHARGING
PROVISIONS IN A TAXING STATUTE AND HAS NO
APPLICATION TO A PROVISION NOT CREATING A
CHARGE BUT LAYING DOWN MACHINERY FOR
ITS CALCULATION OR PROCEDURE FOR ITS
COLLECTION
• “EVASIONS “AND “AVOIDANCE”- SCOPE FOR ONE TO
ARRANGE ONES BUSINESS AS TO AVOID A LAW AND ITS
CONSEQUENCES SO LONG AS HE DOES NOT BREAK THAT
LAW-IF THE ACT OF THE PARLIAMENT DOES NOT FORBID,
IT ALLOWS- EVASION , UNACCEPTABLE TAX AVOIDANCE
BY CREATION OF COMPLEX ARTIFICIAL STRUCTURES-
RAIDS ON PUBLIC FUNDS AT THE EXPENSE OF THE
GENERAL BODY OF TAX-PAYER, AND AS SUCH
UNACCEPTABLE