Taxation Law (s) – ‘INTENT ‘ vs Explicitness

V Swaminathan B.Sc. B.L., FCA

Recently Member (Income Tax), CBDT Ms. Anita Kapur has commented that government should Draft Tax Laws That Promote Intent Rather Than Litigation.

Some of the suggestions, unlike/except the ones such as found a mention in the concluding para of the write-up seemingly well-balanced, are prima facie lop- (one-) sided; leaning towards/favoring the behavioral pattern commonly observed and widely criticized for ages in the circles having proximity and remaining updated on the field realities.

There could be no contra views on the point underlined to the effect namely, that the law must be clothed in a plain and straight forward language (English), but at the same time with no attempt whatsoever , unwittingly or otherwise, to deviate in any manner from the ‘objective’ , rather the spirit behind, any enactment; likewise , on the well settled judicial principle that unless intent is made unambiguously clear, invariably the interpretation should be in favour of, leaving taxpayer with the least or no burden.

In this context, if scouted around, without the need to embark on any detailed study, it is bound to be truthfully realized that, besides the vagaries, most of the disputes and continued litigation are abused to be, not without substance or justification, in the words of an outstanding legal legend himself,- ‘lawyer stimulated’. Even so, what ought not to be over sighted is that, just as said of ‘charity’, any ‘controversy’ stemming on interpretation of an enactment begins at home; and is set in motion and kicked rolling, by the grass root authority, being the AO, who has to have a reasonably good grasp of any enactment, for making an ‘assessment’ in accordance with what the applicable provision says ;and in case of any genuine doubt or reservation, look up and follow the view taken by courts on any point of issue, especially a question of law. On the contrary, there are any number of instances in which the AO fails to do so; so much so, as per available updated statistics, it is the Revenue who is often responsible for prolonging disputes, eventually bringing exorbitant pressure on the judiciary and long pendency; thereby, impacting the otherwise expected quality and speedy adjudication.

Instantly comes to mind the recently reported ITAT Order in, – Maruti Securities Ltd vs. ACIT (ITAT Hyderabad)

In one’s honest and impartial perspective, an extremely disturbing question that instantly arises is THIS: Is it not nothing short of a tragedy , historically pervading the tax regime , that such a prima facie elementary proposition, or the like ones, were to be any longer rightly considered a matter for ‘controversy’ , further to be kept alive to eternity? More so, should regard be had to the fact that the selfsame proposition has been repeatedly taken to courts and the cited apex court’s judgments have left no room for the tax gatherer to obstinately pursue its own line of utterly misguided thinking. Is it not the duty and responsibility of the AO himself to “follow” (instead of leaving it to taxpayer to agitate, and the higher authorities, to do so) the settled judicial view, and abide by the unequivocally established principles even in the normal course of “performance of his duties”, also, while as expected of him, acting in “good Faith” or as “intended to be done under this Act”,- as envisaged in section 293 of the IT Act . The root cause for such unwarranted disputes is, one thinks, the cavernous gap in the tax gatherer ‘s understanding of the attendant simplistic concepts ; and the clearly differentiating factors between ‘income’ (not having to underline the prefix , -‘real’), “accrual” , etc. And in his obstinately indulging in blatant reluctance / refusal to recognize taxpayer‘s right to be taxed strictly in accordance with (not more / in excess) of what the law, and, wherever so, as elucidated by judicial opinion, says.

It is no longer early, by any yardstick, that the foregoing aspects impacting the quality of tax regime and its good governance receive the utmost attention and serious consideration by one and all concerned, in the larger interests of the taxpayers’ community, in its inclusive sense.

To conclude with apt quotes:

“On delay, we, as a nation, have some fine qualities but a sense of the value of time is not one of them. Perhaps, there are historical reasons. Ancient India had evolved the concepts of eternity and infinity. So what do years wasted in a litigation matter against the backdrop of eternity. Believing in incarnation, what does it matter if you waste this life. You will have many more lives in which to make good.

• Our cases drag on over a length of time which makes eternity intelligible
• The law may or may not be an ass but is certainly a snail; cases proceed at a pace as unduly slow in a community of snails.
• Justice has to be blind but I see no reason why it should also be lame; here it just hobbles along, barely able to walk.
• The hydra-headed bureaucracy of India contains some exceptionally able individuals, but they too get swallowed up by the system. Lord Curzon referred t the Indian administrative service as the strongest bureaucratic machine in the free world-so strong that even powerful viceroys found it difficult to correct or control it. The bureaucracy is impervious to all suggestions which come from outside sources. Their utter self-complacency resembles that of Mussolini who said, ‘Often I would like to be wrong, but so far it has not happened’. “

(A narration from Palkhivala’s published speech (1987) – The Judiciary and the Legal Profession,  the Book – We, the Nation THE LOST DECADES)