| COURT: | Supreme Court |
| CORAM: | A. M. Khanwilkar J, Dinesh Maheshwari J |
| SECTION(S): | 80-O |
| GENRE: | Domestic Tax |
| CATCH WORDS: | deduction, exemption, incentive, interpretation of statutes |
| COUNSEL: | - |
| DATE: | June 5, 2020 (Date of pronouncement) |
| DATE: | June 6, 2020 (Date of publication) |
| AY: | 1993-94 to 1997-98 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| (i) The sweeping proposition in some Supreme Court decisions that when two views are possible, the one favourable to assessee has to be preferred & that a tax incentive provision must receive liberal interpretation, is disapproved by the Constitution Bench in Dilip Kumar (2018) 9 SCC 1 (FB). The burden is on the assessee to prove eligibility to an incentive or exemption provision and it is subject to strict interpretation. If there is ambiguity, the benefit of the ambiguity has to go to the Revenue. However, if the assessee proves eligibility, a wide and liberal construction of the provision has to be done (ii) Merely having a contract with a foreign enterprise and mere earning foreign exchange does not ipso facto lead to the application of s. 80-O of the Act (All judgements considered in detail) | |
The principles laid down by the Constitution Bench in Dilip Kumar (2018) 9 SCC 1, when applied to incentive provisions like those for deduction, would also be that the burden lies on the assessee to prove its applicability to his case; and if there be any ambiguity in the deduction clause, the same is subject to strict interpretation with the result that the benefit of such ambiguity cannot be claimed by the assessee, rather it would be interpreted in favour of the revenue. In view of the Constitution Bench decision in Dilip Kumar & Co. (supra), the generalised observations in Baby Marine Exports 290 ITR 323 (SC) with reference to a few other decisions, that a tax incentive provision must receive liberal interpretation, cannot be considered to be a sound statement of law; rather the applicable principles would be those enunciated in Wood Papers Ltd. (1990) 4 SCC 256, which have been precisely approved by the Constitution Bench
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