The content of this book is written subject to the principles of statutory interpretation and will therefore assist in providing such submissions. Feb, 2010 vanderwolk, jefferson peck, purposive interpretation of tax statutes. Tax and fee in case of a fee, there is a specific service rendered to the fee payer. Effort should be made to harmonize seemingly inconsistent provisions two sections of statute, if found repugnant, last must prevail. Sundaram iyyengar 1975 101 itr 764 sc if the language of the statute is clear and unambiguous, the court cannot discard. Cardinal rules for interpretation of taxing statutes. Pdf interpreting tax statutes a shift away from the strict rules of. This is also a very practical rule in the interpretation of taxing statutes and the charging section should be liberally construed while the procedure should have the widest possible ambit so as to ensure that no one has a. Generally, the words of a statute have a plain and straightforward meaning. There are some special provisions which are attracted while interpreting tax laws.
This then makes the interpretation of statutes not as simple as one would think. Download interpretation of taxing statutes file in pdf. Literal construction intention of the legislation must be found in the words used by the legislature itself. The need of interpretation arises only when the words used in the statute are. Therefore, entry 60 which refers to professions cannot be extended to include services. Fn16 avoid interpreting a provision in a way that would render other provisions of the act superfluous or unnecessary. Schreiner ja in savage v cir 1951 18 satc 1 stated. Prospective operation the cardinal principle of tax laws is that the law to be applied to assessee is the law in force in the assessment year unless otherwise provided expressly or by necessary implication.
Deductions and exemptions us law, case law, codes, statutes. Bulletin for international fiscal documentation, vol. This maxim has been confirmed by the apex court in desh bandhu gupta v. The tax laws tax laws are highly complex, complicated and beyond understanding of a tax payer. Interpretation 5 a01 8ofl%8, 3of m, ist april, 2968. On the other hand penal and taxing statutes and statutes excluding courts jurisdiction should be strictly. No tax can be levied and collected except according to the authority of law. Guide for developing and posting interpretation policies. Tax statutes must be construed strictly against the government and liberally in favor of the taxpayer power to tax involves power to destroy taxing act are not to be extended by implication tax statutes should be clearly, expressly, and unambiguously imposed reason for strict construction.
It is said that the best exposition of a statute or any other document is that which it has received from contemporary authority. Statutory interpretation refers to the process by which a court looks at a statute and determines what it means. However, in many an acts, definition clause is inserted to. The case of adler v george 1964 is a classic example of the courts applying the golden rule.
Rules of interpretation of tax statutes p a g e 6 49 introduction 1. It is the duty of the court to interpret the act and give meaning to each word of the statute. Tax code, regulations and official guidance internal. In 1982, the ramsay case seemed to herald the introduction in the united kingdom of a judiciallydeveloped new approach to counteract tax avoidance schemes. Strict interpretation words to be construed strictly. Comparing supreme court approaches in tax law and workplace law, 58 duke l. The principle of strict interpretation of taxing statutes was best enunciated by rowlatt j. Srivastava, judge, delhi high court at new delhi words spoken or written are the means of communication. One of the reasons for the dismal state of statutory. Pdf interpreting tax statutes a shift away from the.
Fn15 statutory interpretation is a holistic endeavor. Section 90 of the income tax act treaty interpretation should be holistic. Strict construction of taxing statutes in interpreting a taxing statute the court. General and commercial laws is inherently complicated and is subjected to constant refinement through new primary legislations, rules and regulations made thereunder and court decisions on specific legal issues. Contemporanea exposito is a guide to the interpretation of documents or statutes. India, one of the fastest growing economies of the world with an exemplary rate of gdp is a nation which in spite of abundant social, cultural, economical, political etc. Thus since taxing statutes are always special laws and most often self contained enactments which even oust the jurisdiction of courts in many cases, they would most definitely prevail over the general clauses act, 1897, when they define the scope of terms or procedures. Words are to be understood in their ordinary, everyday meaningsunless the context indicates that they bear a technical sense. Tax statutes must be construed strictly against the.
Where they are possible of giving one and only one meaning there is no problem. A purposive approach to the interpretation of tax statutes. Steve has authored scores of tax and statutory interpretation articles and book chapters, has coauthored two books on tax law, and has been a featured speaker at numerous tax conferences throughout the united states. Under the golden rule for statutory interpretation, where the literal rule gives an absurd result, which parliament could not have intended, the judge can substitute a reasonable meaning in the light of the statute as a whole. John avery jones cbe 1 this is the text of the ifs annual lecture 1996 delivered at thechartered accountants hall, london on 17 june 1996. A statute, which is a bill or law passed by the legislature, imposes obligations and rules on the people. Corporationstaxationlaw and legislationunited states. Mcguckian suggest that the judges should always have in mind the intention of parliament and that, indeed, the literal approach to the interpretation of statutes has been liberated by the purposive approach. Taxing enactment should be strictly construed and the right to tax should be clearly established.
Such has been the influence of these dicta, that the tax law rewrite project considered. But where there is a possibility of two meanings, a problem arises and the real intention is to be sorted out. The section that charges the tax must have clear words. Fn17 interpreting a provision in a way inconsistent with the policy. See understanding irs guidance a brief primer for more information about official irs guidance versus nonprecedential rulings or advice. Pdf interpretation of tax statutes in nigeria ayomide. If the words of a taxing statute fail, so must the tax. It, therefore becomes necessary for every student to constantly update himself with the. Interpretation of taxing statute as strict construction and. Aug 03, 2015 construction and interpretation of tax legislation.
This is the most widely used rule of interpretation in taxing statutes. Jul 07, 2015 construction and interpretation of tax legislation. First, the literal rule that where the words of statute are. Welfare, social and beneficial statutes are not to be construed strictly. Act used with reference to legislation means any statute. This would hardly square with a general statement to the effect that each taxpayer shall pay tax on. Recent uk decisions on tax avoidance transactions february 1, 2002. Tax lawyers work in small and large law firms, legal departments of corporations, accounting firms, nonprofit legal services organizations, and taxation authorities such as the internal revenue service. The effect of this provision is merely to liberate the state laws from the fetter placed on then by article 2862 and to enable such laws to operate on their own terms. As stated by salmond, by interpretation or construction is meant, the process by which the courts seek to ascertain the meaning of the legislature through the medium of authoritative forms in which. Interpretation is the method by which the true sense or the meaning of the word is understood. The contents of this publication reflect the irs interpretation of tax laws enacted by congress, treasury regulations and court decisions. Words must be given the meaning they had when the text was adopted. Construction and interpretation of tax legislation.
Interpretation of taxing statutes bombay chartered accountants. The authorization contained in the sixteenth amendment to tax income from whatever source derived does not preclude congress from granting exemptions. Nov 14, 2019 the internal revenue service gives itself plenty of time to make sure your tax situation is on the upandup. Need to know although we are not lawyers, we essentially practice law in the practice of law, knowledge to apply the correct interpretation is an essential prerequisite even in taxing statutes, the. Apr 14, 2009 there is a statute of limitations, but it does not apply in cases involving acts of omission, fraud, or nonfiled returns. Quid pro quo, whereas for the tax payer no direct services are rendered but the service assumes the form of public expenditure rendered to the public at large. In a taxing statute one has to look merely at what is clearly said.
A guide to reading, interpreting and applying statutes. May 18, 2015 every taxing statute must contain three aspects. It also sets a deadline for youwhen you must file your return if you want to collect any refund thats owed to you. There is fiscal legislation every year much of it prepared in great secrecy and under server pressured of time, and it. Access to the full text of federal acts and regulations is provided by the department of justice canada, which is responsible for maintaining the consolidated statutes of canada. In addition to participating in the promulgation of treasury tax regulations, the irs publishes a regular series of other forms of official tax guidance, including revenue rulings, revenue procedures, notices, and announcements. Discuss the rules of statutary interpretation with the.
Nov 01, 2015 need to know although we are not lawyers, we essentially practice law in the practice of law, knowledge to apply the correct interpretation is an essential prerequisite even in taxing statutes, the courts and tribunals follow certain bedrock principles on which interpretation or construction is based 4. Here i am sharing two pdf ebooks containing detailed notes on the law llb subject interpretation of statutes. There is nothing new in complaining about the complexity of tax. Statutory interpretation is the process of interpreting and applying legislation to decide cases. It provides that not only levy but also the collection of a tax must be under the authority of some law. Although legislature makes the statute, it may be open to interpretation and have ambiguities. The basic rule with regard to the construction of taxing statutes is that they should be strictly construed. Mcguckian suggest that the judges should always have in mind the. In the case of taxing statutes, as in different type of statutes, there are certain bedrock principles on which the interpretation or construction of the particular statute is done by the courts and tribunals. Interpretation of taxing statutes linkedin slideshare. Purposive approach to the interpretation of sales tax. This article first explores the evolution of statutory presumptions in the tax context and suggests that tax statutes should be interpreted without resort to presumptions, barring the existence of evidence suggesting congress intended a broad or narrow construction. Doubts are resolved in favour of the class of persons for whose benefit the statute is enacted.
Interpretation is necessary when case involves suble or ambiguous aspects of a statute. Understanding corporate taxation leandra lederman, p. It has already been stated that a statute must be read as a whole as words are to be understood in their context. Basic principles rules of interpretation of taxing statute. Extension of this rule of context, permits reference to other statutes in pari materia, i. Interpretation of taxing statute as strict construction. This is the year of simplification of tax legislation and i should like to add my thoughts to the debate.
Chapter 1 introdution to interpretation of statutes. Validity of retrospective amendments to taxation statutes. Jan 06, 2015 this principle applies with greater force in case of taxing statutes like incometax, gift tax, wealth tax which bear intimate connection with one another verghese vs. Interpretation of taxing statute as strict construction and exemption. The interpretation of statutes is one of the most important subject usually taught in law. Ditslear, the warp and woof of statutory interpretation. Article 265 of the constitution mandates that no tax shall be levied orcollected except by the authority of law. Interpretation of taxing statute as strict construction and exemptions. There are three primary approaches to the interpretation of statutory provisions as originally developed by the english judges at common law and absorbed into the general laws of nigeria.
The local arrival of the purposive approach to statutory interpretation to some extent coincided with the advent of the constitutional era in the midnineties. Interpretation is only limited to explore the written text or to discern the meanings of the words through dictionaries and other sources. For understanding the provisions of a statute, knowledge to apply the correct interpretation, is an essential prerequisite in the case of taxing statutes, as in different type of statutes, there are certain bedrock principles on which the interpretation or construction of the particular statute is done by the courts and tribunals. Governmental power has been divided into three wings namely the legislature, the executive and the judiciary.
Buy online income tax, gst, company law, insolvency. State imposing tax on sales shall be deemed to be invalid merely because such sales are in the course of interstate trade or commerce. The object of interpretation of statutes is to determine the intention of the legislature conveyed expressly or impliedly in the language used. The meaning of an ordinary word of the english language is not a question of law. For the ejusdem rule to apply, the specific words must constitute a category, class or genus. Hence in taxing statutes the language cannot be strained, vide state of punjab v. Most settled principle of interpretation is that the court must deduce the intention of the parliament from the words used in the act. One of them is that words do not usually have static meanings. Income tax laws interpretation of statutes taxmann. A dissertation submitted in partial fulfilment of the requirements for the degree. The general rule of the interpretation is that statutes must prima facie be given this ordinary meaning. In this act unless the contzxt otherwise requires short title.
A tax of fifty cents for each one hundred dollars and each remaining major fraction thereof of principal debt or obligation which is, or under any contingency may be secured at the date of the execution thereof or at any time thereafter by a mortgage on real property situated within the state recorded on or after the first day of july, nineteen hundred and six, is hereby. Preliminary steps there are three important preliminary steps you should take before attempting to interpret a given statute. Interpretation of statues to render justice is the primary function of the judiciary. Important maxims related to interpretation of statutes. Beginning with a discussion of this rule, the paper moves on. Taxable income taxable income is the gross income including all revenues, profits and gains of any type and of any form of payment resulting from carrying out an activity, including.
This article considers the practice and efficacy of the purposive approach to the interpretation of sales tax statutes. Get interpretation of statutes pdf notes, ebook for law llb students in llb law 3rd year pdf notes, projects, papers section at. Please read the important note from the department of justice canada. There is a severe lack of rational method in interpretation in this area, since the courts often either do not employ the purposive approach at all, or they do. Interpretation of statutes is a very important issue which is not made easy due to varying factors. The logic behind this principle is that imposition of taxes is also a kind of imposition of penalty which can only be imposed if the language of the statute clearly says so. Interpretation of statute means that the court has to ascertain the facts and then interpret the law to apply to such facts. Presumption affecting the jurisdiction of the court. Various dicta in high profile tax cases such as pepper v. A basic understanding of theory is essential for a perspective on and understanding of legal interpretation. The genesis of the interpretation was a question that was put to the ifric asking when the recognition of a current tax asset is appropriate if tax laws require an entity to make an immediate payment in respect of a disputed amount.
Principles adopted in interpretation of treaties are not the same as those in interpretation of statutory legislation. Equitable construction should not be taken into account. However, in many an acts, definition clause is inserted to mean a word or expression. Rules of interpretation of tax statutes p a g e 5 49 index sr. The proper construction of a statute is a question of law. There is a severe lack of rational method in interpretation.
The maxim that there is no equity in tax is embodied in the bill of rights 1689 which provided for no taxation. The courts cannot, except rarely and in clear cases, help the draftsman by a favourable construction, vide ito v. The paper is a critique of the golden rule of interpretation along with relevant case laws. To construe andor interpret a statute the whole of the statute. Each statutory provision should be read by reference to the whole act. Reviving the modern rule in the interpretation of tax statutes. Interpretation of tax legislation canadian tax foundation. Interpretation is the process of discovering the true meaning of the language used in a statute.
This is what is called as an aspect theory all india federation of. The interpretations committee noted that paragraph 12 of ias 12 income taxes provides guidance on. Interpretation of statutes pdf notes, ebook for law llb. Treaties are negotiated and entered into at a political level and have several considerations as their bases.
A positive theory of judges and everyone else, 83 n. Introduction there are very few tax cases known to the wider legal community but ramsay1 is one of them. The tax code gives the irs three years to audit your tax return and 10 years to collect any tax you might owe. Shapiro, continuity and change in statutory interpretation, 67. No enactment has been enacted by the legislature for interpretation of statues including on tax laws.272 331 754 1153 1238 1022 751 398 1121 206 1180 616 660 28 126 361 467 693 1203 562 1295 1201 265 601 614 425 358 626 842 955 1485 478 1232 1257 542 648 1252