It is a well-established rule that taxing statutes have to be strictly construed. When interpreting taxation statutes such as the Income-tax Act, 1961, the following aspects must be strictly observed: (i) equitable considerations, presumptions, or assumptions should not be taken into account, and (ii) the statute should be interpreted according to what is clearly expressed. Thus, if the court is satisfied that a case falls strictly within the provisions of the law, the subject can be taxed, regardless of the consequences such a levy of tax might have.

When the language of the statute is plain and unambiguous, allowing only one meaning, then no issue of statutory construction arises as the statute speaks for itself. The reasoning behind this principle is that when the words are clear and plain, the courts are obliged to accept the expressed intention of the Legislature.

Two principles apply here: (i) first, deciding whether statutory language is “plain” inherently involves a process of construction. One cannot simply declare words to be clear without first studying them. Second, true unambiguity depends on context, not just grammar. Words cannot be judged in isolation, as most words are capable of multiple meanings. A provision is seenas unambiguous only when, after being examined in its specific context, almost anyone competent would assign to it a single, appropriate meaning to the exclusion of others, i.e., the words are unambiguous in the context of the provision in question.

If the language of the enactment is clear and unambiguous, it would be unjustifiable for the courts to add words on the ground that such additions would better enable carrying out the Legislature’s presumed intentions. It is not the court’s duty to reframe the legislation, as the power to “legislate” has not been granted to it. In most circumstances, the legislative intention is to be discerned from the words used in the statute itself, and the mischief rule of interpretation should not be invoked in an unfettered manner. Considering the object and purpose is relevant only when the words in question are ambiguous and reasonably capable of more than one meaning.

While the object and purpose may help illuminate the context, they cannot override the text. Once the words are examined in their context, including considerations of object and purpose, and are found to be clear, unambiguous, and capable of only one meaning, the plain meaning rule prevails, and considerations of object and purpose cannot be invoked to alter, control, or distort the clear mandate of the statutory language.(AY. 1997-98, 2003-04)