Tax is levied by a charging section i.e., it imposes a charge or liability to pay tax. If a person has been brought to tax within the ambit of the charging section by clear words, he has to be taxed, subject to specific exemption/ deduction, if any, available under the provisions of the Act. Charging sections should be strictly construed.
Machinery provisions provide machinery for assessment and collection of charge created by the charging section. Machinery and charging provisions constitute an integrated code. The machinery provisions should be construed in a way that makes the machinery workable.
Penal provisions are required to be construed in a strict manner. In case of ambiguity, the taxpayer should be entitled to the benefit of doubt.
Deeming provision is intended to enlarge the scope of chargeability of income under a particular head or scope of coverage of a certain provision. It includes matters which otherwise may or may not fall within the provision. Deeming provision should be strictly construed. It should be given its full effect and carried to its logical conclusion.
Appeal and refund provisions
The taxpayer has a right to appeal only if there is a statutory provision for the same. It cannot be implied. Appeal provision should be liberally construed in a reasonable and practical manner. Similarly, provisions granting refund must also be read liberally, in favor of the taxpayer.
Provisions giving exemptions and reliefs
Provisions giving deduction, exemption or relief should be interpreted liberally and in favor of taxpayers. They should be construed to effectuate the object of legislature and not to defeat it.
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