Love

Love cannot accept what it is. Everywhere on earth it cries out against kindness, compassion, intelligence, everything that leads to compromise. Love demands the impossible, the absolute, the sky on fire, inexhaustible springtime, life after death, and death itself transfigured into eternal life.- Albert Camus

Budget 2011 Summary

parents’ medical expenses
tax relief of up to RM5,000 for parents’ medical expenses be extended to cover expenses to care for parents - physical or mental disabilities and who need regular treatment certified by a qualified medical practitioner. This include home, day care centres or home care centres (exclude cosmetic dental treatment).

1st time owners
1st time Malaysian house (terrace house, condominium, apartment or flat) buyers will be given stamp duty exemption of 50% on (1) instruments of transfer (i.e sale and buy agreement)
(2) loan agreement on a residential house price not exceeding RM350,000 during 1 Jan 2011 to 31 Dec 2012.

Service tax
Service tax rate increased from 5% to 6% wef 1/1/2011.
This will impact all considerably on the long run in consideration for Govt.'s increase in revenue.

EPF and Directors

The Employees Provident Fund reiterates its stand that all company directors, whether or not directly involved in the daily operations of the company are to ensure that the company pays towards its employees EPF contributions.

The High Court in Penang in Lembaga KWSP vs. Adorna-Rmit Sdn. Bhd. made nine directors liable jointly and severally responsible whether they were active and/or inactive directors.

Under Section 46 of the EPF Act. 1991 all directors of a company are jointly and severally liable with the company to pay all outstanding arrears in contributions.

15th Malaysian Law Conference - CJ Dato Zaki vs Dato Sri Ram

Chief Justice of the Federal Court Tun Zaki Azmi want his judges to practise judicial restraint.

"While it may be good and necessary in some instances, in my opinion, it can be a dangerous weapon in the hands of a too activist judge," he said in his paper titled "Judicial Activism: Is it activism or plain interpretation?"

Zaki said such judges could overly expand or narrow down a set of legal principles based on personal ideals.

"Who are we (the courts) to give a different interpretation if the words and intentions are obviously clear.

He wants them to play the role of being interpreter of laws passed by the legislation (Parliament and state assemblies) and not be an extreme judicial activist.

Read more: Practise judicial restraint, judges told http://www.nst.com.my/nst/articles/14role/Article/#ixzz0vDeJ5DSN


Sri Ram said it was the courts that were the ultimate bastions against executive incursions on the freedom and fundamental rights of individuals.

Read more: ‘Don’t be too literal in interpreting law’ http://www.nst.com.my/nst/articles/2010073100502320100731005023/Article/#ixzz0vDcKqEMN

‘Don’t be too literal in interpreting law’

“Where the courts fail in this duty, even the most carefully crafted constitution cannot provide security to ordinary citizens,” he said in his paper titled: “How Do I read the Constitution: Recent Developments in Interpretation and Implementation”.

No more "correct, correct, correct"

This was extracted from : http://www.malaysiakini.com/news/138505
 
Chief Justice Zaki Azmi today said the VK Lingam video scandal that saw a
senior lawyer being caught on tape brokering the appointment of senior
judges is a thing of the past that need not be dwelled upon by the current
judiciary.
 
Speaking at a press conference after addressing law delegates on the issue
of 'Malaysian judiciary: Performance, Achievement and Future Planning', Zaki
said it was more important to look towards the future of the judiciary.

KNOW YOU RIGHTS

http://www.malaysianbar.org.my/index.php


1. POLICE STOPS YOU

1.1 Not in uniform, ask for identification
Say: “Please, show me your Police authority card”.
1.2 Police authority card
Red : Suspended Police Officer. He has no authority to do anything
to you. Walk away.
Other colours:
• Blue : Rank of Inspector and above
• Yellow: Below the rank of Inspector
• White : Reserve police
Note his name and ID number
1.3 In uniform
Note his name and ID number on his uniform.
1.4 Police vehicle
Note the number plate of the patrol car or motorcycle.

2. POLICE QUESTION YOU WHEN STOPPED
2.1 Your identification
Only give your name, ID card number and address.
2.2 The police ask other questions
Politely ask “Am I under arrest?”
2.3 When you are under arrest
You are arrested if the police:
• tells you “yes”;
• does not allow you to leave/want to take you to the Police Station;
or
• handcuffs you
if you are not under arrest, you may walk away/refuse to follow him back
to the Police station or anywhere else, if asked.
2.4 When you cannot be arrested
The police cannot arrest you just because you are a potential witness
and want to take a statement from you (112/Witness Statement).

3. QUESTIONING BY POLICE WITHOUT ARREST
3.1 112/Witness Statement
When the police are investigating a case and think you have
information/knowledge about the case, the police may examine you
and take down your answers (112/Witness Statement).
3.2 Informal/Formal Request
Most times, the police make an informal request that you give a 112/
Witness Statement. If the place and time is convenient to you,
cooperate. If not, tell the police you will do so at a convenient place
If you completely refuse to cooperate, the police can issue a formal
order in writing, signed by an investigating officer (Police Officer) to
ask you to cooperate.
If you disobey a Police Order, you cannot be arrested. However, it is an
offence and the police may request the Magistrate to issue a warrant
against you to compel you to cooperate.
3.3 Giving a 112/Witness Statement
You have the right to ask a lawyer to accompany you. This is advisable.
In giving a 112/Witness Statement, you may refuse to answer any
question / remain silent if the answer is likely to expose you to a
criminal offence.
• Bring along a notebook or writing paper with you (Personal
Notes).
• Write down every question asked in your Personal Notes.
• Make sure you understand every question asked.
• Take your time and think carefully before writing your answers in
your Personal Notes.
• Read your answers to the Police Officer questioning you.
• Keep your Personal Notes for future refernce.
3.4 Signing your 112/Witness Statement
Before signing your statement, read the questions and your answers
written by the Police Officer carefully.
• Compare the statement you are asked to sign with your Personal
Notes.
• You have the right to make any corrections/changes to the
statement before signing.
• Sign your signature immediately below the last sentence of your
statement.

4. POLICE ARREST YOU
4.1 Ask: “Why am I under arrest?”
An arrest is unlawful if you are not informed of the reason.
4.2 Do not resist an arrest
The Police have the right to use reasonable force to arrest you if you
resist.
4.3 Ask: “Which Police station are you taking me to?”
The arresting Police Officer must immediately take you to the nearest
Police station and no other place.
4.4 What to do when arrested
You have the right to telephone call top :-
1. Relatives;
2. Lawyer
You may also call a nearby Legal Aid Centre. Inform them:
• you have been arrested;
• the time, place and reason of the arrest;
• the Police station you will be taken to
4.5 What happens after arrest
You may be detained up to 24 hours:
• at the Police station, or
• in a lock-up to “assist” police investigation.

5. YOUR RIGHTS AFTER ARREST & DURING DETENTION
5.1 Right to consult a lawyer
Once you request for the presence of a lawyer, you have a right to
consult the lawyer at the Police Station. The Police must accord
you a reasonable period of time for the lawyer to meet you and for
consultation to take place. The Police can, however, deny you this
right, if the delay in questioning you may cause the occurrence of
another crime or cause danger to others.
5.2 Clothing
You are allowed to have one set of clothing on you in the lock-up.
5.3 Personal belongings
The police must record and put all your personal belongings in safe
custody.
Your personal belongings must be returned to you upon your
release.
5.4 Welfare
You are allowed to take bath two times a day.
If you are sick, you have the right to receive immediate medical
attention.
You are to be given proper and adequate food and water during
detention.
5.5 How long can the Police detain you
The police can only detain you up to 24 hours for investigation.
The duty of the police is to complete investigation within 24 hours
and to release you as soon as possible.
If the police cannot complete investigation within 24 hours, the
police must bring you before a Magistrate far a remand order to
extend your detention beyond 24 hours (“Remand Order”).

6. REMAND ORDER BY MAGISTRATE AFTER ARREST
6.1 Who is a Magistrate
A Magistrate is a judicial officer. He/She has power to make a
Remand Order to detain you for more than 24 hours.
6.2 Purpose of Remand Order
It is to give more time to the Police to complete their investigation
and decide whether there is evidence to charge you for an offence.
The Police cannot ask for a Remand Order only for the purpose of
taking a statement from you.
6.3 How long is a Remand Order
When the Police bring you before a Magistrate for a Remand Order, the
Police must give reasons to the Magistrate why it is necessary to detain
you beyond 24 hours.
The Magistrate’s duty is to consider carefully the reasons given by the
Police.
The Magistrate may order a Remand detention of between 4 to 7 days.
The Police may return at the expiration of this time period and apply for
a 2nd Remand Order. For this 2nd Order, the Magistrate may extend the
detention for another 3 to 7 days.
The Magistrate, after careful consideration of the reasons given by the
Police, has discretion:
• not to make a Remand Order; or
• make a Remand Order for a period shorter than that asked by the
Police.
The Police can make more than one application for a Remand Order.
Altogether, you cannot be detained longer than 15 days.
6.4 What to say when you are brought before a Magistrate for remand
Tell the Magistrate:
• you want legal representation and to contact the LAC and your
family;
• you want medical treatment because you are sick or have been
beaten;
• if the Police had threatened or beaten you during detention;
• if you had been denied proper food/water/clothing, toilet or
necessary medical attention during your detention;
• whether the Police had carried out any investigation during your
detention.
6.5 Ask for a shorter Remand Order from the Magistrate
Before the Magistrate makes the Remand Order, ask for a shorter
remand period asked by the Police. Give reasons (Example: “I will cooperate
with the Police in their investigation”, “I will be available” etc).

7. BODY SEARCH WITHOUT ARREST
7.1 When can this be done
If you are at a place (example: karaoke/clubs/entertainment outlets)
where the Police are conducting a raid or looking for something
(example: drugs), the Police may search your body/bags without
arresting you.
This must be done in the presence of a Police Officer who is an
inspector or of a higher rank.
7.2 What to do
• Do not allow the Police officer to put his hands into your pockets
or bags.
• Take out your belongings one by one. Each time, say “Purse”, “keys”,
“ID card”, etc.
• When your pockets/bags are empty, turn your pockets/bags inside out.
7.3 Your rights
• A female can only be body searched by a female Police Officer.
• All body searches must be carried out with decency (Example: cannot
touch your private parts).
• There is no law requiring you to strip naked.

8. BODY SEARCH UPON ARREST
8.1 When Police can do so
• The Police have power to search your body for any object relating to
the suspected offence.
• The body search must be conducted in a confined place. It is your right
to be bodily searched in private.
8.2 Type of Body search
The law allows the Police to conduct 4 types of body search :-
1. “pat down” search - act of searching outer clothing
2. Strip search - to search for concealed evidence, object, contraband or
weapon. Can only conducted with the authorization of an officer
ranked Inspector and above
3. Intimate search - to search beyond the mouth, nose and ears. Can only
be conducted with the authorization of an officer ranked Assistant
Superintendent (ASP) and above
4. Intrusive search - to determine the existence of objects etc in the body.
Must be conducted by Government Medical Officer or Medical
Officer. Can only be conducted with the authority of the Officer in
charge of the Police District (OCPD)
If you are forced to strip naked/threatened if you do not strip naked:
• Protest
• Remember the Police Officer’s name.
• Lodge a report after the incident.

9. QUESTIONING BY POLICE AFTER ARREST
9.1 Identity of the Police Officer questioning you
Note the name/rank of the Police Officer questioning you.
9.2 Right to remain silent
The Police Officer will first make friendly conversation/talk (example: ask
you about your family and friends etc). Be polite. Do not be afraid to remain
silent. This is your right.
Other than giving your Personal Particulars, you have the right to remain
silent.
If you choose the right to remain silent, say: “I will answer in Court”.
9.3 Written Statement by you during investigation
The Police Officer will ask you questions and then write down your
answers. You are only obliged to give your full name, age, address and
occupation (Personal Particulars).
The Police cannot threaten or force you into making statements.
If you have been threatened, beaten or forced, lodge a police report against
the Police Officer at first opportunity. This is your right.
9.5 Written statement is not to be used as evidence
Any statement you make to the Police during investigation cannot be used
as evidence. But you may use the statement to support your defence during
Trial.

POLICE AND YOUR BASIC RIGHTS
Published in conjunction with TANGKAP
(Tindakan Anti PenyalahGunaan KuAsa Polis)
www.malaysianbar.org.my
PUSAT BANTUAN GUAMAN / LEGAL AID CENTRES (LAC)
• Kuala Lumpur : 03-2691 3005 / 03-2693 2072
• Selangor : 03-3372 2792
• Negeri Sembilan : 06-7633 035
• Melaka : 06-2845 519 / 06-2864 514
• Johor : 07-2235 698
• Perak : 05-2550 523
• Kedah & Perlis : 04-7333 467
• Kelantan : 04-7448 660
• Pahang : 09-5159 244 / 09-2969 410
• Pulau Pinang : 04-2617 451 / 04-3316 830

Senior lawyer falls to death from hotel

Senior lawyer falls to death from hotel Gan was a senior lawyer, an executive member of JUST and participated in the publication of Aliran

Nisha Chandramohan

2 years old
Missing since June 4, 2010, Mentakab, Pahang.
Contact Police or Nisha's father Govindasamy +6016-9353400

INTERPRETATION OF LAWS An article for general interpretation as well. Please note the credits

INTERPRETATION OF TAX LAWS
72 FREQUENTLY ASKED QUESTIONS

http://www.itatonline.org/interpretation/interpretation23.php

Research Team : K. Shivaram, S. S. Shetty, Arati Vissanji, Premchandra Tripati and Ajay Singh Advocates


I. GENERAL RULES

Q.1 What is ‘Interpretation of law’.

Ans. According to Salmond ‘Interpretation or Construction’ means “the process by which the Courts seek to ascertain the meaning of the legislature through the medium of authoritative forms in which it is expressed.”.

The main body of the law is to be found in statutes, together with the relevant statutory instruments and in case law as enunciated by Judges in the Courts. But the Judges not only have the duty of declaring the law, they are also frequently called upon to settle disputes as to the meaning of words or clauses in a statute.

Statutes are normally drafted by legal experts who are experts in the particular branch of law of which the statute was to be a part. Although such persons are skilled in the law, due to the volume of legislation the statutes are often obscure and cryptic and we find courts and lawyers are busy in unfolding the meaning of ambiguous words and expressions in a statute. The age old process of application of the enacted law has led to formulation of certain rules of interpretation or construction.

Q.2 What are the basic rules of Interpretation governing the taxing statutes in general?

Ans. Rules of interpretation or canon of interpretation

The first and the most elementary rule of construction is that it is to be assumed that the words and phrases of legislation are used in their technical meaning if they have acquired one, or otherwise in their ordinary meaning, and the second is that the phrases and sentences are to be construed according to the rules of grammar.

The rule of construction is “to intend the legislature to have meant what they have actually expressed”. The object of all interpretation is to discover the intention of Parliament but the intention of Parliament must be deduced from the language used, for it is well accepted that the beliefs and assumptions of those who frame Acts of Parliament cannot make the law.

When Parliament enacts law, the law must be understood with reference to the language used in the provision construed in the light of the scheme of the Act and object of the statute and the provisions therein.

Where the plain literal expression of the statutory provision produces a manifestly unjust result, which could never have been intended by the legislature, the Court can modify the language to achieve the intention of the legislature and produce a rational construction.

A) Literal rule

If the language of the statute is clear and unambiguous, words must be understood in their plain meaning. The wordings of the Act must be construed according to its literal and grammatical meaning, whatever the result may be.

There is no room for any intendment. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.

ICAI vs. Price Waterhouse, (1997) 90 Comp. Case 113, 140, 141 (SC)

State of West Bengal vs. Scene Seven P. Ltd. AIR 2000 SC 3089, 3094

Harbajan Singh vs. Press Council of India (2002) 3 SCC 722, 727

B) Intention of Legislature

The intention of the legislature assimilates two aspects:

a) In one aspect it carries the concept of “meaning’, i.e. what the words mean.

b) In another aspect, it conveys, the concept of purpose and object or the reason and spirit pervading through the statute.

The dominant purpose of construction of any statutory provision is to ascertain the intention of the legislature and the primary role is to ascertain the same by reference to the language used. The Supreme Court in Doypack Systems Pvt. Ltd. vs. UOI [1998 (2) SCC 299] laid down :

“It has to be reiterated that the object of interpretation of a statute is to discover the intention of Parliament as expressed in the Act. The dominant purpose in construing a statute is to ascertain the intention of the legislature as expressed in the statute, considering it as a whole and in its context that intention, and therefore, the meaning of the statute, is primarily to be sought in the words used in the statute itself, which must, if they are plain and unambiguous be applied as they stand”. The object of all interpretation is to discover the intention of Parliament, but the intention of Parliament must be deduced from the language used.”

“It is settled law that the expression used in a taxing statue would ordinarily be understood in the sense in which it is harmonious with the object of the statute to effectuate the legislative intention. It is equally settled law that, if the language is plain and unambiguous, one can only look fairly at the language used and interpret it to give effect to the legislative intention.”

CIT vs. Gwalior Rayon Silk Mfg. Co. Ltd. (1992) 196 ITR 149 (SC)

Keshavji Ravji & Co. vs. CIT (1990) 183 ITR 1 (SC)

K.P. Varghese vs. ITO (1981) 131 ITR 597 (SC)

C) The mischief rule of interpretation (Heydon’s rule)
A statute is to be construed so as to suppress the mischief in the law and advance the remedy. This was set out in Heydon’s case (1584) 3 Co. Rep. 7a. Under this rule the judge will look at the Act to see what was its purpose and what mischief in the common law it was designed to prevent.

Broadly speaking, the rule means that where a statute has been passed to remedy a weakness in the law, the interpretation which will correct that weakness is the one to be adopted.

CIT vs. Shahzada Nand & Sons. (1966 ) 60 ITR 392 (SC)

Classic Builders & Developers vs. UOI (2001) 251 ITR 492, 497 (MP)

Reckitt Colman of India Ltd. vs. ACIT (2001) 252 ITR 550 ( Cal .)

D) Strict construction of penal law
Remedial statutes are known as welfare, beneficial or social justice oriented legislations. Penal statutes, on the other hand, are those which provide for penalties for contravention of the law and are directed against the offender in relation to the state by making him liable to imprisonment, fine, forfeiture or other penalty.

A remedial statute receives a liberal construction, whereas a penal statute is strictly construed. In case of remedial statutes the doubt is resolved in favour of the class of persons for whose benefit the statute is enacted; whereas in case of penal statutes the doubt is resolved in favour of the alleged offender.

The principle applied in constructing a penal act is that if, in construing the relevant provisions, “there appears any reasonable doubt or ambiguity”, it will be resolved in favour of the person who would be liable to the penalty. If there are two reasonable constructions we must give the more lenient one. The court must always see that the person to be penalised comes fairly and squarely within the plain words of the enactment. It is not enough that what he has done comes substantially within the mischief aimed at by the statute.

“The subject is not to be taxed without clear words for that purpose …..”

CIT vs. Provident Inv. Co. Ltd. (1954) 32 ITR 190 (SC)

J.K. Steel Ltd. vs. UOI AIR 1970 SC 1173

CIT vs. Indo Oceanic Shipping Co. Ltd. (2001) 247 ITR 247 (Bom)

Hansraj & Sons vs. State of J & K (2002) 6 SCC 227, 237-39

E) The Golden Rule : Purposive interpretation
This rule is to some extent an extension of the literal rule and under it the words of a statute will as far as possible be construed according to their ordinary, plain, and natural meaning, unless this leads to an absurd result. It is used by the courts where a statutory provision is capable of more than one literal meaning and leads the judge to select the one which avoids absurdity, or where a study of the statute as a whole reveals that the conclusion reached by applying the literal rule is contrary to the intention of Parliament.

A construction which would defeat the very object of the legislature should be avoided.

Keshavji Ravji & Co. vs. CIT (1990) 183 ITR 1 (SC)

CIT vs. Gwalior Rayon Silk Mfg. Co. Ltd. (1992) 196 ITR 149 (SC)

Vikrant Tyres Ltd vs. ITO (2001) 247 ITR 821, 826 (SC)

F) Ejusdem generis rule
Under this rule where general words follow particular words the general words are construed as being limited to persons or things within the class outlined by particular words.

The words used together should be understood as deriving colour and sense from each other. They should be read together as one.

The rule of ejusdem generis is to be applied “with caution” and “not pushed too far”. It may not be interpreted too narrowly or unnecessarily if broad based genus could be found so as to avoid cutting down words to dwarf size.

— U.P. State Electricity Board vs. Hari Shanker Jain AIR 1979 SC 65

— Rohit Pulp & Paper Mills Ltd. vs. Collector of Central Excise AIR 1991 SC 754

G) Expressio unius est exclusio alterius
The expression of the thing implies the exclusion of another.

Q.3. What are the principles of natural justice?
Ans. Principles of natural justice are soul of an administration of justice and needs to be adhered to in order to make the order just and fair.

Natural justice is an important concept in administrative law. The doctrine of natural justice is a facet of fair play in action and if a statutory provision can be read consistent with the principles of natural justice, the court must and can do so as the legislature is presumed to intend to act in consonance with those principles.

a) Nemo debet essejudex in propria causa

No man shall be a judge in his own cause or the deciding authority must be impartial and without bias; and

b) Audi alteram partem

Hear the other side, or both the sides must be heard or no man should be condemned unheard or that there must be fairness on the part of the deciding authority.

The above principle got acceptance in India by The Supreme Court in the case of A.K. Kraipak vs. UOI AIR 1970 SC 150 and Maneka Gandhi vs. UOI AIR 1978 SC 597.

Q.4. Whether order passed in violation of principles of natural justice is void ab-initio?

Ans. Any order made in violation of principles of natural justice is void and a nullity.

Shreeram Durga Prasad [RB vs. Settlement Commission (1989) 176 ITR
169 (SC)]

Nawaabkhan vs. State of Gujarat AIR 1974 SC 1471

“….. Any decision which is unfair and arbitrary fall foul of the principles of Article 14 of the Constitution of India which envelops within itself the requirement of fairness which, in turn, in these days is a requirement of the principles of natural justice. …”

CWT vs. Jagdish Prasad Choudhary (1995) 211 ITR 472 ( Patna ) [F.B.]

The principles of natural justice are so fundamental that it is not to be construed as a mere formality. Where the materials relied upon are not enclosed in a show cause notice, there is no sufficient opportunity.

Appropriate Authority vs. Vijay Kumar Sharma (2001) 249 ITR 554 (SC)

The right is so fundamental that the failure to observe the principles of natural justice cannot be made good in appeal.

Lack of opportunity before the Assessing Officer cannot be rectified by the appellate authority by giving such opportunity.

Tin Box Co. vs. CIT (2001) 249 ITR 216 (SC)

Q.5 Whether irregularity in exercise of jurisdiction will render the order void.
Ans. Jurisdiction is a matter, which is at the root of any valid proceedings. Valid service of a valid notice within time is the foundation of a valid assessment
(a) Jurisdiction is not a matter of consent as held in the case of Sarita Jain vs. CIT (2003) 261 IR 499 (Del.)

(b) Service of Notice is not a mere procedural requirement

Upadhyaya (RK) vs. Shanabhai P. Patel (1987) 166 ITR 163 (SC)

(c) Need for proper sanction prior to filing a prosecution case is a matter of jurisdiction

Bohra (SA) ITO vs. Krishna Construction Co. (1998) 230 ITR 708 (Guj)

(d) In CIT vs. Bharat Kumar Modi (2000) 246 ITR 693 (Bom). The court held that an irregularity in the exercise of jurisdiction cannot result in annulment of the entire assessment proceedings. The appellate authorities were justified in setting aside the assessment.

Q.6. What is the theory of form and substance?

Ans: In revenue matters, what is material is the substance of the transaction and not the form. The doctrine of substance over the form was cited with approval by House of Lords in the following cases:

(a) Secretary of State in Council of India vs. Scobel (1903) 4 TC 618 (HL)

(b) Duke of Westminster vs. IRC (1936) 19 TC 490 (HL)

(c) IRC vs. Wesleyan General Assurance (1940) 30 TC 11 (HL)

(d) Sir Kikabhai Premchand vs. CIT (1953) 24 ITR 506 (SC)

(e) CIT vs. Kharwar (DM) (1969) 72 ITR 603 (SC)

(f) Panipat Woollen & General Milks Co. Ltd. (1976) 103 ITR 66 (SC)

Q.7 When two interpretations are possible, how should the court interpret the provision?

Ans. Where a provision in a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee has got to be accepted.

CIT vs. Vegetable Products Ltd. (1973) 88 ITR 192(SC).

Chartered Housing Bhomka Finance Corpn vs. Appropriate Authority (2001) 250 ITR 1, 18 (Kar)

CIT vs. A.J. Abraham Anthraper (2004) 268 ITR 417, 432 (Ker)

Kapti Comm. Agency vs. State of U.P. (2004) 134 STC 436 448 452 (All)

Q.8 What is the meaning of Doctrine of Territorial Nexus.

Ans. Article 245(1) of the Constitution States “Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India and the legislature of a State may make laws for the whole or any part of the State. Article 245(2) states. No Law made by the Parliament shall be deemed to be invalid on the ground that it would have extra – territorial operation.”.

Thus it makes clear that extra-territorial operation will not make a Parliamentary law invalid.

State vs. Narayandas AIR 1958 Bom 68(FB). AIR 1955 SC 661 at 750.

II. EXEMPTION – DEDUCTION

Q.9 What is the general rule for interpretation of provisions relating to exemptions ?

Ans. Provisions for deduction, exemption and relief should be interpreted liberally, reasonably and in favour of the assessee.

CIT vs. South Arcot District Co-operative Marketing Society Ltd. (1989) 176 ITR 117 (SC),

CIT vs. U.P. Co-operative Federation Ltd. (1989) 176 ITR 435 (SC),

Bajaj Tempo Ltd. vs. CIT (1992) 196 ITR 188 (SC)

IV. PENALTIES

Q.10 How to interpret the penalty provisions

Ans. The rule of strict construction applies to penal provisions.

Bhagwati Trading Co. vs. CIT (1977) 109 ITR 353

Ganesh Properties P. Ltd. vs. CIT (1993) 202 ITR 434 ( Cal )

In penal statutes if two possible and reasonable interpretation are possible the court must lean towards the construction which exempts the subject from penalty rather than one which imposes the penalty.

B.K. Agarwal vs. State of Orissa AIR 1966 (SC) 2531

CIT vs. Vegetable Products Ltd. (1973) 88 ITR 192 (SC)

V. OTHER ACTS, RULES, OPINIONS

Q.11 Whether interpretation given in different statutes of direct taxes is applicable to other Acts?

Ans. Where there are different statutes in pari materia though made at different times, they will be taken and construed together as one system and explanatory to one another. This principle applies with greater force in case of taxing statutes like Income-Tax, Gift Tax, Wealth Tax which bear intimate connection with one another (Verghese vs. CIT (1981) 131 ITR 597; C.I.T. vs. Ranga Pai (1975) 100 ITR 413) (Ker). Accordingly it has been held that rules of valuation prescribed under one Act have to be applied to valuation issues under other Acts (1983) 141 ITR 802 (Bom) and (1974) 96 ITR 87 (Mys) and (1985) 155 ITR 637.

CWT vs. Imperial Tobacco Co. of India Ltd. (1966) 61 ITR 461 (SC)

State of Assam vs. D. P. Barua (1970) 75 ITR 18 (SC).

All Kerala C.A. Associations vs. Union of India (2002) 258 ITR 679 (Ker.)

Nasiruddin vs. Sita Ram Agarwal (2003) 2 SCC 577, 585

Commissioners of Customs vs. Indian Oil Corpn. Ltd. (2004) 267 ITR 272,
277-78 (SC)

But this principle need not apply to read special provisions of one Act into the provisions of another and vice versa ITO vs. Varghese K.P. (1973) 91 ITR 49 (Ker)(FB)

Q.12. Whether opinion of Law minister is binding on Court?

Ans. In Builders Association vs. Union of India (1994) 209 ITR 877 (SC) the court held that the opinion of law minister and reply of minister in Parliament regarding a taxing provision cannot be treated as binding on the Court.

Q.13 Whether the reports of Select Committees, will be binding while interpreting the taxing statutes ?

Ans. Reports of Commissions or Inquiry Committees preceding the introduction of a Bill have also been referred to for similar purpose, i.e. either as evidence of historical facts or of surrounding circumstances or of mischief or evil intended to be remedied. For example, reference was made to the Indian States Finance Enquiry Committee Reports in A. Thangal Kunju Musaliar vs. Venkatachalam Potti, AIR 1956 SC 246; 29 ITR 349 (S.C.); to the Income-tax Enquiry Report, in CIT vs. Sodra Devi (1957) 32 ITR 615 (S.C.) (AIR 1957 SC 832); to the Press Commission’s Reports, in Express Newspaper (Pvt) Ltd. vs. Union of India (AIR 1958 SC 578) and to the report of a committee appointed to bring about changes in Company Law resulting in the passing of amending Act No. 65 of 1960 in Madanlal Fakirchand Dudhediya vs. S. Changdeo Sugar Mills Ltd. (AIR 1962 SC 1543). And, reference to the report of the Expert Committee on Financial Provisions was made in Union of India vs. Harbhajan Singh Dhillon (1972 83 ITR 582 (S.C.); AIR 1972 SC 1061. In Gopalan’s case, reference was made to the report of the Drafting Committee of the Constituent Assembly in interpreting Article 21 of the Constitution.

In India , reports of Select Committees or their chairmen can be studied to ascertain the meaning of an ambiguous provision. [S.P. Gupta vs. Union of India AIR 1982 SC 149 (para 313)]. Reports of the committee which preceded the enactment of the legislation, reports of Joint Parliamentary Committee, report of a commission set up for collecting information leading to the enactment are permissible aids to construction (R.S. Nayak vs. A.R. Antulay, (1984) 2 SCC 183). The question in CIT vs. P.K. Noorjahan (1997) 11 SCC 198; (1999) 237 ITR 570 (S.C.), was whether the word ‘may’ in section 69 of the Income Tax Act can be read as ‘shall’. The Supreme Court of India pointed out that in the Bill introduced in Parliament, the word ‘shall’ had been used, but during the consideration of the Bill and on the recommendation of the Select Committee, the word was substituted by the word ‘may’. It was held this clearly indicates the legislative intent and hence the word cannot be read as ‘shall’.

Report of Commissions & Committees — taken into Consideration

Haldiram Bhujiwala and another vs. Anandkumar Deepak Kumar &
Anr. (2000) 3 SCC 250

Rosy and Another vs. State of Kerala and others. (2000) 2 SCC 230

Reports of a joint parliamentary committee, report of a commission set up for collecting information leading to the enactment are permissible external aids to construction.

Nayak (RS) vs. Antulay (AR) AIR 1984 SC 684

Against – Asst. CIT vs. Velliappa Textiles Ltd (2003) 263 ITR 550, 560 (SC)

Dissenting M.V. Javali vs. Mahajan Borwell (1998) 230 ITR 1 (SC)

Q.14 Whether parliamentary debate can be considered for interpretation of taxing statute.?.

Ans. In cases of ambiguity, the legislative debate ,which resulted in coming in to existence of the provision can be looked in to .

S.P.Gupta vs. Union of India AIR 1982 SC 149. (para 313.) CIT vs. Mahindra & Mahindra Ltd (1983) 144 ITR225 1 (SC).

Q.15. Whether the Finance Ministers Speech is relevant for interpretation a provision.

Ans. In J.B. Boda &CO;vs. CBDT (1997) 223 ITR 271 (SC), the court held that the Finance Ministers speech is relevant for interpretation a provision. In Allied Motors (P)Ltd vs. CIT (1977) 224 ITR 677 (SC). ,the court held that the budget speech of the Finance minister and memorandum explaining the Finance Bill as also the Dept. circular showing the departmental understanding are relevant in construing the provision.

Q.16. Whether budget speech of finance minister and memorandum explaining the provision, are relevant for interpretation?

Ans. In Allied Motors (P) Ltd vs. CIT (1997) 224 ITR 677(SC), the court held that, finance ministers, speech, memorandum explaining the provisions are relevant in construing the provision.

In Kumar J.C. Sinh Eileen AIR 1955 SC 515, the court held that the statement of object and reasons of an enactment cannot be used to ascertain true meaning and effect of statutory provision, but it can certainly be seen for limited purpose of understanding the background, antecedent state of affairs object of legislation.

CIT vs. D’costa Brother (1963) 49 ITR 1 (Bom). CIT vs. Mahindra & Mahindra Ltd. (1983) 144 ITR 225(SC)

Finance Minister’s Speech before Parliament can be relied on to throw light on object & purpose of provisions.

Kerala State ID Corpn Lt d. vs. CIT 259 ITR 51 (SC) (2003)

Sound-N-Music (BR) vs. Bhardwaj (OP) 1988 173 ITR 433 (Bom)

Narisamha Rao (PV) vs. State CBI AIR, 1998 (SC) 2120

Q.17 What is the relevance of a meaning given in dictionaries and text books for interpretation?

Ans. When a word is not defined in the statute a dictionary is often useful in ascertaining its meaning. Courts usually rely on standard dictionaries, such as Webster’s or the Oxford Dictionary.

CIT vs. Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC)

Q.18 When are the provisions of the General Clauses Act applicable to interpretation of taxing statutes.

Ans. The General Clauses Act has been enacted to avoid superfluity and repetition of language in various enactments. The object of this Act is to shorten the language of Central Acts, to provide as far as possible, for uniformity of expression in the Central Acts, by giving definition of series of terms in common use, to state explicitly certain convenient rules for the construction and interpretation of the Central Acts, and to guard against slips and oversights by importing into every Act certain common form clauses, which otherwise ought to be inserted expressly in every Central Act. In other words, the General Clauses Act is a part of every Central Act and has to be read into each Act unless specifically excluded. Even in cases where the provisions of the Act do not apply, courts in the country have applied its principles keeping in mind the inconvenience that is likely to arise otherwise, particularly when the provisions made in the Act are based upon the principles of equity, justice and good conscience.
State of Punj vs. Harnek Singh (2002) 3 SCC 481, 490
Q.19 When there are two special statutes, both containing non obstante clauses, which will prevail.
Ans. Statute latter in time shall prevail.
Maruti Udyog Ltd vs. Ram Lal (2005) 2 Supreme Court Cases 638.
VI. PRECEDENTS
Q.20. Whether circulars issued by CBDT are binding on the tax authority?
Section 119 (1) of the Income-tax Act, 1961 specifically empower the CBDT to issue general instructions for the general administration of the Act and such instructions issued are binding on the officers of the Department. The only exception is that such instructions shall not be issued in a particular case nor shall it interfere with the exercise of judicial powers by the appellate authorities. As circulars of CBDT are binding on the authorities and if in spite of his attention being drawn to it, if an authority refuses to follow it, such orders could be set aside by the Appellate Authorities on the sole ground that the ITO was bound to follow the circular. In Navneetlal Zaveri vs. AAC (1965) (56 ITR 198) (SC) the Supreme Court laid down that the circulars are binding on the authorities, and they are bound to follow them. In both Navneetlal Zaveri and Ellerman Lines Ltd.’s case (1971) (82 ITR 913), even though the circulars were not strictly according to law, still the Supreme Court held that such circulars were binding. Contrary observations were made in State Bank of Travancore’s case (1986) (158 ITR 102). The contrary observations of Madras High Court have not been approved by the Supreme Court in UCO Bank vs. CIT (1999) 237 ITR 889 (SC). It has also been held that circulars bind the Department but not the assessee. It is open to an assessee to challenge its correctness before the Appellate Authorities.
Commissioner of Custom vs. IOC Ltd. (2004) 267 ITR 272, 277 (SC)
K. P. Verghesse vs. CIT (1981) 131 ITR 597 (SC)
A Circular which does not specifically state that it is issued under sec. 119 has still to be treated as one so issued as held in UOI vs. Azadi Bachao Andolan (2003) 263 ITR 706 (SC)

Q.21 What is the binding effect of withdrawal of circular in the middle of the accounting year?

If a circular was operative at the beginning of the relevant assessment year, its subsequent withdrawal has to be ignored, and for that relevant year the circulars should be given effect to [CIT vs. Edwards (1979) 119 ITR 335 (Ker) FB].

Unit Trust of India vs. Unny (PK) (2001) 249 ITR 612 (Bom)

Q.22 Whether notification can Act retrospective.?.

Ans. A notification cannot operate with retrospective effect, unless the statute expressly permits it.

Cannaore Spg & Wvg Mills vs. Collector 1978 ELT 375 SC..

Q.23 Whether the decision of other High Courts are binding?

Ans. In interpreting an all India statute, the decisions of other High Courts should ordinarily be followed, for sake of uniformity.

Flexoplast Abrasive Ltd vs. Union of India 1980 ELT 513 (Bom). Ramanlal Amarnath (Agency) LTD vs. CIT (1973) 91 ITR 250 (Bom).

UOI vs. Kamlakshi Finance Corpn Ltd. AIR 1992 SC 711, 712

CIT vs. G.M. Mittal Stainless Steel P. Ltd. (2003) 263 ITR 255, 258 (SC)

Q.24 Whether English and American decisions are binding on Indian Courts ?

Ans. In India we have adopted the common law system which pre vails in England , the United States , Australia etc and not the civil law system which prevails in continental Europe . Hence English and American decisions can be referred to, and on analogous provisions, fundamental concepts, and general principles unaffected by the specialities of the English or American tax statutes, such decisions are useful guides. (Nown Estates (P) Ltd. vs. CIT AIR 1977 SC 153 (para 6). The decisions relating to specific provisions are of little use, since the Indian tax laws are not in pari materia with those in foreign coun tries. (CIT vs. A. Gajapathy Naidu (1964) 53 ITR 114 (SC) (117).

Decision of the Privy Council rendered before 1950 would be binding upon the High Courts of India, unless, of course, there is a decisions to the contrary by the Supreme Court.

Salzgitter Industries Bav GMBH vs. CIT (1990) 184 ITR 7 (Bom)

Any decision of the House of lords (in UK ) likewise, only has persuasive values is entitled to respect

CIT vs. Bai Shirinbai K. Kooka (1962) 46 ITR 86 (SC)

Q.25 What is the relevance of Opinions expressed by courts of other countries.

Ans. Generally, opinions expressed by the courts of the countries of United States, Canada or Australia are not helpful in construing the collocation of legislative heads in the constitution of India, although they may be some relevance in determining the true character of particular legislation. (2005) 139 STC 537 (SC).

Q.26 What are the general principles of precedent?

Ans. In CIT vs. B. R. Constructions (1993) 202 ITR 222 (AP) (FB), the AP High Court has discussed in detail the general principles regarding the binding nature of precedent which reads: The effect of a binding precedent in India is that the decisions of the Supreme Court are binding on all the Courts. Article 141 of the Constitution embodies the rule of precedents. All the subordinate Courts are bound by the j udgements of the High Courts. A single Judge of a High Court is bound by the judgement of another single Judge and a fortiori judgements of Benches consisting of more Judges than one. So also, a Division Bench of a High Court is bound by the judgement of another Division Bench or a Full Bench. A single Judge or Benches of High Courts can not differ from the earlier judgements of co-ordinate jurisdiction merely because they hold a different view on the question of law for the reason that certainty and uniformity in the administration of justice is of paramount importance. But if the earlier judgement is erroneous or adherence to the rule of precedents results in manifest injustice, differing from an earlier judgement will be permissible. When a Division Bench differs from the judgement of another Division Bench, it has to refer the case to a Full Bench. A Single Judge cannot differ from a decision of a Division Bench except when that decision or a judgement relied upon in that decision is overruled by a Full Bench or the Supreme Court, or when the law laid down by a Full Bench or the Supreme Court is inconsistent with the decision. It may be noticed that a precedent will not be binding (i) if it is reversed or overruled by a higher Court; (ii) when it is affirmed or reversed on a different ground; (iii) when it is inconsistent with the earlier decisions of the same rank (iv) when it is subsilentio; and (v) when it is rendered per incuriam.

A judgement can be said to be per incuriam if it is rendered in ignorance of the provisions of a statute or a rule having statutory force or a binding authority. But if the provision of the Act was noticed and considered before the conclusion was arrived at, merely on the ground that it has erroneously reached the conclusion, the judgement cannot be ignored as being per incuriam. The rule of per incuriam is of limited application.” A judgement can be said to be per incuriam if it is rendered in ignorance of the provisions of a statute or a rule having statutory force or a binding authority. But if the provision of the Act was noticed and considered before the conclusion was arrived at, merely on the ground that it has erroneously reached the conclusion, the judgement cannot be ignored as being per incuriam. The rule of per incuriam is of limited application.

In Union of India vs. Raghubir Singh (1989) 178 ITR 548 (551-57) (SC), the Apex Court held that, the doctrine of binding precedent has merit of promoting certainty and consistency in judicial decisions and enables an organic development of law, besides providing assurance to an individual as to the consequence of transactions, forming part of his daily affairs.

In Union of India vs. Dhanwanti Devi (1998) 6 SCC 44, 51-52, the Hon’ble Supreme Court held that a decision is an authority for what it decides. The essence of a decision is its ratio. The principle on which a question has been decided is alone binding precedent.

Director of Income Tax vs. Paper Product Ltd. ( Del ) 257 ITR 1 (2002)

Y.S.C. Babu vs. Charmanand Managing Director, Syndicate Bank (AP) 253 ITR 1 (2002)

Agarwal Warehousing & Leasing Lt d. vs. CIT (MP) 257 ITR 235 (2002)

Sayaji Iron & Engg. Co. vs. CIT (Guj) 253 ITR 749 (2002)

Goodyear India Ltd. vs. State at Haryana (SC) 188 ITR 402 (1991)

Baba Parasu Kaikadi vs. Babu (2004) 1 SCC 681

Q.27 What is Ratio decidendi?

A decision is only an authority for what it actually decides and not for what may logically follow from it. It is the rule deductible from the application of law to the facts and circumstances of the case which constitutes its ratio decidendi [UOI vs. Dhanwanti Devi (1996) 6 SCC 44, 51-52] A case is a precedent and binding for what it explicitly decides and no more. The ratio decidendi is the underlying principle, namely, the general reason or the general ground upon which the decision is based on the test of abstract from the specific peculiarities of the particular case which gives rise to the decision. In the course of delivering a judgement the judge may make observations which are not relevant to the issue before the court. These observations may not strictly be relevant to the issue involved or may not be relevant for deciding the issue in question. These observations are known as ‘obiter dicta’.

It is easy to describe what is ratio decidendi. But it is very difficult to trace the ratio in a judgement. Several tests are suggested for the purpose of deducing a ratio in a judgement. One of the tests which is supposed to be fairly workable is the test of reversal. As per this test one has to identify the proposition of law put forward in a judgement, reverse it and then see if the reversal would have altered the actual decision. If it alters the decision, then the proposition is the ratio of the decision; on other hand if the reversal does not affect the decision, then the proposition is not the ratio of the decision. In other words, the ratio is the general rule without which the case would have been decided otherwise. This test however is not helpful when no proposition of law is given in support of the decision, nor it is very helpful where a court gives several reasons for its decision logically in such cases it may follow that the first reason is ratio and other reasons are obiter. Where a case has been argued on several points, the judge may decide on one of the propositions of law and merely indicate his views on the remaining points.

The proposition of law which was material to decide the case shall constitute ratio. However, where the judge declares that he is deciding the case on more than one ground, then each proposition on which he bases his decision will qualify as a ratio.

Thus, to be the ratio decidendi amongst others the minimum requirements are: (1) that the matter was directly in issue; (2) that the issue needs to have been decided; and (3) the matter has been decided by giving reasons [Industrial Credit & Investment Corporation of India Ltd. vs. Dahanesh D. Ruparelia (2000) 99 Comp. Case 181, 185 (Bom).

UOI vs. Chajju Ram (2003) 5 SCC 568, 576

Q.28 To what extent would a judgment of the Supreme Court constitute a binding precedent?

Ans. Article 141 of the Constitution of India provides that the law declared by the Supreme Court shall be binding on all courts within the territory of India . Thus the law as interpreted by the Supreme Court is binding on all Courts and Tribunals in India CGT vs. Aluminium Corporation of India Ltd. (1972) 85 ITR 167, 172 (SC). The decision of the Supreme Court in taxation matters amounts to a declaration of law as contemplated by Article 141 of the Constitution of India. Karamchand Premchand Pvt. Ltd. vs. CIT (1975) 101 ITR 46, 52 (Guj.). The High Court cannot ignore a decision of Supreme Court on the ground that the relevant provision was not brought to the notice of the Supreme Court, Badlachandas Mathurdas Lukhani Municipal Committee AIR 1970 SC 1002. Tata Iron & Steel Co. Ltd. vs. D.V. Bapat ITO (1975) 101 ITR 292, 327 (Bom). The Tribunal is bound to follow the principle of law laid down by the Supreme Court. It is not open to the Tribunal to say that the Supreme Court decision was not relevant simply because, it was not under the statute under which the Tribunal is working. Bhavnagar University vs. Palitana Sugar Mill Pvt. Ltd. AIR 2003 SC 511. Ratio is Binding AIR 2002 SC 1598, AIR 2002 SC 834. CIT vs. Vallabhdas Vithaldas & Others (2002) 253 ITR 543 (Guj.)

The view expressed by the Supreme Court is an authority on the subject provided the facts and situation is identical. The Supreme Court in State of West Bengal vs. Kesoram Industries Ltd. (2004) 266 I.T.R. 721 (SC) corrected inadvertent error in India cement Ltd. vs. State of Tamil Nadu (1990) 1 SCC 12 on the aspect of ‘Royalty is not tax after 14 years.’

Deys Medical Stores Ltd. vs. Commissioner of Trade Tax (2004) 134 SC 1,
8, 9 (All)

U.P. Pollution Board and others vs. Kaneria Industrial Limited & others 259 ITR 321 (SC)

Delhi Administration vs. Manoharlal (2002) 7 SCC 222, 227

Q.29 Whether rejection of SLP can be considered as an order of Supreme Court? What is the binding effect?

Ans. A mere dismissal of SLP does not mean that the judgement of the High Court stands affirmed by the Supreme Court. The effect of a dismissal is that no appeal was permitted and not that an appeal against the said judgement was dismissed by the Supreme Court affirming the view of the High Court. J. K. Charitable Trust vs. WTO (1996) 222 ITR 523 (All.)

Rejection of SLP does not mean that the judgement of High Court has been approved by the Supreme Court on merit.

CIT vs. Quality (1997) 224 ITR 77 (Pat.)

Smt. Tej Kumari vs. CIT (2001) 247 ITR 210 ( Patna ) (FB)

V.M. Salgaonkar vs. CIT (2004) 243 ITR 383 (SC)

Kunhayammed vs. State of Kerala (2000) 245 ITR 360 (SC)

Q.30 Whether appeal dismissed by the Supreme Court is binding on the Tribunal though the order may not be speaking?

Ans. Where a decision of the Supreme Court is virtually a non speaking order which does not set out the facts or the reason for the conclusion or direction given, it cannot be treated as a binding precedent. Government of India vs. Workmen of State Trading Corporation (1997) 11 SCC 641. State of Manipur vs. Thinjujam Brojen Muti AIR 1996 SC 2124. Ajith Kumar Rath vs. State of Orissa AIR 2000 SC 85.

Kanhayamal vs. State of Kerala (2000) 245 ITR 360 (SC)

Q.31 Whether a judgement of the Supreme Court is retrospective or prospective?

Ans. Law is settled by the Supreme Court. Law laid down by Supreme Court is the law in existence since its enactment. It is retrospective in operation. Such law is from inception unless and until spelt as prospective by the Supreme Court. All Courts, Tribunals, authorities and citizens are bound to follow the diction laid by the Supreme Court or else shall be liable to contempt.

M. A. Murthy vs. State of Karnataka and Others (2003) 264 ITR 1 (SC), Kil Kotagiri Tea and Coffee Estate Co. Ltd. vs. ITAT (1988) 174 ITR 579 (Ker.)

CESC Ltd. vs. Dy. CIT (2004) 270 ITR 383, 387 ( Cal .)

Q.32 When there are two judgements of the Supreme Court, which are contrary to each other, which judgement should the Tribunal follow? Is obiter dicta of the Supreme Court binding on the Tribunal?

Ans. Article 141 of the Constitution prescribes that judgements of the Supreme Court are binding on all Courts and based on the rule of precedent the latest judgement is to be followed as that is the last word spoken by the Apex Court . The Supreme Court sits in Division Bench of two or three Judges. In Jawed Ahmad‘s case the Supreme Court observed that it may be inappropriate for a Division Bench of three Judges to purport to overrule the decision of Division Bench of two judges, although it may be otherwise where a Full Bench or a Constitution Bench does so. Obiter dicta of the Supreme Court is binding on the Tribunal. The Full Bench of the Andhra Pradesh High Court in Ushodaya Enterprises Ltd. vs. Commissioner of Commercial Taxes (1993) 111 STC 711 observed “ In a case of conflict arising from the decisions of co-equal Benches of the Supreme Court, the High Court is free to disregard the decision which is based on an obvious mistake of fact or the one which purports to follow the ratio of an earlier decision though such ratio is found to be non-existent. The High Court can legitimately decline to follow such decision and follow the earlier decision which is backed by reasoning – whether it is accepted to the High Court or not, and which is free from an such apparent flaw. The later decision need not be automatically followed despite the fact that it rests on a conclusion based on an erroneous impression that an earlier decision took a particular view which in fact it has not taken.” In our view the same principle may be followed by the Tribunal.

Delhi Development Authority vs. Ashok Kumar Behal, (2002) 7 SCC 135, 141

Divisional Controller vs. Mohadeva Shetty, AIR 2003 SC 4172, 4178

Q.33 What is the binding nature of the decision of High Courts?

Ans. As per the doctrine of precedent, all lower courts, Tribunals and authorities exercising judicial or quasi-judicial functions are bound by the decisions of the High Court within whose territorial jurisdiction these courts, Tribunals and authorities function. In CIT vs. Kantilal Nathuchand (1964) 53 ITR 420 (Guj.), the Court doubted, but followed for the sake of uniformity among the High Courts the judgement of another High Court in the matter of interpretation of the Income-tax Act. Also refer CIT vs. Chimanlal J. Dalal & Co. (1965) 57 ITR 285 (Bom). Tribunals functioning within the jurisdiction of a particular High Court are bound to follow the decision of the jurisdiction High Court — State of AP vs. Commercial Tax Officer (1988) 169 ITR 564 (AP); Air Conditioning Specialists Pvt. Ltd. vs. Union of India (1996) 221 ITR 739 (Guj). The Assessing Officer is bound to follow the decision of Supreme Court as also the decision of High Court of the State within whose jurisdiction he is functioning — K. Subramanian, ITO vs. Siemens India Ltd. (1985) 156 ITR 11 (Bom). The order of the Tribunal not applying the decision of jurisdictional High Court was held to be erroneous — Shri Mahabir Industries vs. CIT (1996) 220 ITR 459 (Guwahati). Not following the decision of the High Court within whose jurisdiction the ITO acts, would tantamount to committing contempt of that court — Siemens India Ltd. vs. K. Subramaniam (ITO) (1983) 143 ITR 120 (Bom.).

The decision of a High Court does not have binding force outside the State. Dr. T. P. Kapadia vs. CIT (1973) 87 ITR 511 (Mys.). CIT vs. Thana Electricity Supply Ltd. (1994) 206 ITR 727 (Bom.), Geoffrey Manners & Co. Ltd. vs. CIT (1996) 221 ITR 695 (Bom.), CIT vs. Vardhman Spinning (1997) 226 ITR 296 (P&H), N. R. Paper and Board Ltd. & Others vs. DCIT (1998) 234 ITR 733 (Guj.). No reference can be made on a question of law which is settled by a decision of the jurisdictional High Court. CIT vs. HIM Containers Ltd. (1995) 216 ITR 674 (Guwahati) Kiersentec vs. CIT 11 Taxman 70 (Bom.) (1982), CIT vs. G.M. Mittal Stainless Steel P. Ltd. (2003) 263 ITR 255, 258 (SC) , R.D. Joshi & Co. vs. CIT (2001) 251 ITR 332 (MP), Nicco Corpn. Ltd. vs CIT (2001) 251 ITR 791 (Cal.)

The decision of one High Court is neither binding precedent for another High Court nor for Courts or Tribunals outside the territorial jurisdiction. The fact that there is only one decision of any one High Court on a particular point or that of different High Courts have taken identical views in that regard is not at all relevant for that purpose. Whatever may be the conclusion, the decisions cannot have the force of binding precedent on other High Courts or any other subordinate courts or Tribunals outside their jurisdiction. That status is reserved only for the decisions of the Supreme Court, which are binding on all courts in the country by virtue of Article 141 of the Constitution. Consolidated Pneumatic Tool Co. (India) Ltd. vs. CIT (1994) 209 ITR 277, 282 (Bom), Universal Ferro & Allied Chemicals Ltd. vs. P.G.K. Warrier (1983) 143 ITR 959 (Bom.).

In CIT vs. G. Dalabhai & Co. (1997) 226 ITR 922 (Guj), it was observed

“Before parting with the case, we notice with anguish the language used by the Income Tax Officer in his assessment order saying that ‘With due respect to the decision of the Gujarat High Court, I do not follow the same’. The Income Tax Officer in not following the decision of the Gujarat High Court within whose supervisory territory he was functioning, is far from satisfactory, that is the least we can say. The minimum decorum of the system of hierarchy that Tribunals in the administration of justice and their Judicial subordination to the High Court of the territory in which they function requires that they restrain in the use of proper expression while following or not following the decision of the High Court”.

Agrawal Werehousing and Leasing Ltd. vs. CIT (2002) 257 ITR 235 (MP)

Q.34 When there are two judgements of the jurisdictional High Court, which are contrary to each other and the latter judgement is delivered without referring to the earlier judgement, which judgement should the Tribunal follow?

Ans. It is clear that when there are conflicting judgements of the jurisdictional High Court, normally the latter judgement would prevail provided it has referred to the earlier decision and distinguished the same. However, if the earlier judgement is not referred to at all, and there are two conflicting judgements, it is open to the Tribunal to follow that judgement, the reasoning of which appeals to the Tribunal. Since both the jurisdictional High Court judgement are binding the Tribunal has to prefer one or the other judgment and in such a case it can prefer either of the two judgments. Amarsingh Yadav vs. Santi Devi AIR (1987) Patna 191 and CIT vs. Madhukant M. Mehta (1981) 132 ITR 159 (Guj).

Yogiraj Charity Trust vs. CIT (1984) 149 ITR 7, 17, ( Del ).

Q.35 When there are two judgements of the jurisdictional High Court which are contrary to each other which will be binding on Income Tax Appellate Tribunal?

Ans. The later judgement shall be of binding on the Tribunal.

When there are conflictory decisions of Courts of Co-ordinate Jurisdiction, the later decision is to be preferred if reached after full consideration of the earlier decision.

CIT vs. Thomas Electricity Suppliers Ltd. (1994) 206 ITR 737 (Bom.) (738).

Q.36 What is the precedent value of orders passed by different Benches of Tribunal?

Ans. A decision of a Division Bench and Third Member Bench is binding on the Single Member Bench. A decision of a Special Bench is binding on all the Benches of the Tribunal. A decision of the Special Bench can be distinguished or disregarded if there is any contrary view of the jurisdictional High Court or of the Supreme Court. A co-ordinate Bench should follow the view of another co-ordinate Bench or else refer the matter to a larger Bench through the President. S. I. Roopal and Others vs. Government through Chief Secretary, Delhi & Others AIR 2000 SC 594, Union of India vs. Paras Laminates Pvt. Ltd. (1990) 186 ITR 722 (SC), Pradip Chandra Parija vs. Pramod Chandra Patniak (2002) 254 ITR 99 (SC), Agrawal Warehousing and Leasing Ltd. vs. CIT (2002) 257 ITR 235 (MP), CIT vs. L. G. Ramamurthi & Others (1977) 110 ITR 453 (Mad.), Export House vs. ITO (1985) 23 TTJ 285 (Amritsar), Chandulal Venichand vs. ITO (1991) 38 ITD 138 (Ahd.)

Q.37 Whether one Bench of the Tribunal is bound to follow the order of another Bench?

Ans. For the sake of uniformity, one Bench of the Tribunal is bound to follow the view expressed by another Bench of the Tribunal unless the earlier view is per-incurium — CIT vs. L. G. Ramamurthi (1977) 110 ITR 453 (Mad), CIT vs. S. Devaraj (1969) 73 ITR 1 (Mad). Modu Timblo (Individual) vs. CIT (1994) 206 ITR 647(Bom.) – Union of India vs. Paras Laminates Pvt. Ltd. (1990) 186 ITR 722 (SC), Pradip Chandra Parija vs. Pramod Chandra Patnaik (2002) 254 ITR 99 (SC), Agrawal Warehousing & Leasing Ltd. vs. CIT (2002) 257 ITR 235 (M.P.), The Bench should not come to a conclusion totally contradictory to the conclusion reached by the earlier Bench of the Tribunal. Where a Bench wants to differ from an earlier Bench decision, the matter should be referred to a larger Bench on a request made to the President — CIT vs. Goodlass Nerolac Paints Ltd.. (1991) 188 ITR 1 (5) (Bom). Sayaji Iron and Engineering Co. vs. CIT (2002) 253 ITR 749 (Guj.), Sis Ram Sharma & Co. vs. ITO (1988) 25 ITD 410 (Delhi) (TM), Subarna Plantation & Trading Co. Ltd. vs. ITO (1989) 28 ITD 177 (Cal.), Longwalia Poultry Farm vs. Dy. CIT (1998) 67 ITD 45 (Chan.) (TM), Birumal Gaurishankar Jain vs. Income Tax Settlement Commission (1992) 195 ITR 792 (ITSC) (SB), Union of India vs. Paras Laminates Pvt. Ltd. (1990) 186 ITR 722, 726, 727 (SC), Sub. Inspector Rooplal & Another vs. Lt. Governor, New Delhi & Others (2000) 1 SCC 644, 654 (SC), Dy. CIT vs. Reliance Industries Ltd. (2004) 88 ITD 273 (Mum) (SB).

Q.38 Whether the decision of Tribunal is binding on lower authorities?

Ans. Judicial discipline demands that authorities subordinate to the Tribunal accept as binding the decisions of the Tribunal. In Khalid Automobiles vs. Union of India (1995) 4 SCC (Suppl.) 653, the Court held that an order of the Tribunal was binding on the assessing officer and the first appellate authority and that failure to follow the same may constitute contempt of Tribunal’s order. See Rajendra Mills Ltd. vs. Jt. CIT (1971) 28 STC 483 (Mad.), Serethil Raja Metal vs. CTO (1990) 79 STC 38 (Mad.) and Union of India vs. Kamlakshi Finance Corporation Ltd. AIR 1992 SCC 711, 712 (SC).

In Voest Alpine Ind. GmbH vs. ITO (2000) 246 ITR 745, (749) (Cal.), the Court condemned the action of assessing officer in making an assessment contrary to the decision of the Tribunal which had become final. Also see Bank of Baroda vs. H. C. Shrivatsava & Another (2002) 256 ITR 385 (390) (Bom.), Asstt. CCE vs. Dunlop India Ltd. (1985) 154 ITR 172 (SC), Govindram Seksaria Charity Trust vs. ITO (1987) 168 ITR 387 (MP), Agarwal Warehousing & Leasing Ltd. vs. CIT (2002) 257 ITR 235 (MP), C. D. Thandani ITO vs. Universal Ferro & Allied Chemicals Ltd. (1988) 172 ITR 30 (Bom.)

Q.39 Is CIT(A) bound to follow the decision of the Tribunal?

Ans. Yes. CIT(A) being subordinate to the Tribunal is bound to follow the view of the Tribunal. Agrawal Warehousing and Leasing Ltd. vs. CIT (2002) 257 ITR 235 (MP)

Q.40 When there is a special bench decision and after the decision of Special Bench a High Court other than jurisdictional High Court has taken a contrary view whether Tribunal has to follow Special Bench or High Court.

Ans. High Court decision does not extend beyond its territorial jurisdiction.

CIT vs. Thana Electricity Supply Ltd 206 ITR 727 (Bom)

Q.41 Whether Third member decision is binding on division bench.

Ans. Third member decision is a decision of full bench because Three Judges have applied their mind.

P.C. Puri vs. CIT (1985) 151 ITR 584 ( Del )

Q.42 When there are two orders of Tribunal, which one has to be followed.

Ans. Where there are conflicting decisions of courts of co-ordinate jurisdiction, the later decision is to be preferred if reached after full consideration of the earlier decisions.

CIT vs. Thana Electricity Supply Ltd (1994) 206 ITR 727 (Bom)

Q.43 When there are two orders of tribunal one of Mumbai Bench against the assessee and the other of Ahmedabad Bench in favour of assessee, which order is binding on the Mumbai Bench.

Ans. If the Ahmedabad Tribunal decided the matter in favour of assessee, after considering the Mumbai Tribunal. The order of Ahmedabad Tribunal required to be followed or otherwise?

The matter may be referred to special Bench.

CIT vs. L.G. Ramamurthi & Others (1977) 110 ITR 453 (Mad),

Pradeep Chandra Parija and others vs. Pramod Chandra Patnaik & Others. (2002) 254 ITR 99 (SC)

VII. DOUBLE TAXATION AGREEMENTS CONVENTION

Q.44. What is the binding effect of treaties?

Ans. liberal interpretation of the agreement and the treaty will override t he provisions of domestic law has been accepted by the Apex Court .

Circular No. 333, dated 2-4-1982 (1982) 137 ITR ( St. ) 1

Provisions of treaty will prevail over provisions of I. T. Act.

UOI vs. Azadi Bachao Andolan (2003) 263 ITR 706 (SC)

Q.45. What is the binding effect of types of international instruments, such as, Convention, Protocol, Agreement, Arrangement, Declaration?

Ans. International conventions cannot override express provisions of statute.

Peoples union for civil Liberties v Union of India (2005) AIR 2419(SC)

VIII. GENERAL

Q.46 When orders passed by the taxing authorities are neither speaking nor reasoned, can it be challenged?

Ans. An order should be speaking, should contain detailed recording of evidence for and against, explanation of both sides, arguments raised by both sides and the reasons for arriving at a particular view. A reasoned and speaking order is bedrock of justice whether or not an appeal or revision lies against it. The Supreme Court in Siemens Engineering & Manufacturing Co. vs. UOI, AIR 1976 SC 1785 stated:— “It is now well settled law that where an authority makes an order in exercise of a quasi judicial function, it must record its reasons in support of the order it makes and the order must be supported by reasons. The Supreme Court in S. N. Mukherjee vs. UOI, AIR 1990 (SC).

The Supreme Court in State of West Bengal vs. Atul Krishna Shaw, 1990 SC 2205 stated “giving of reasons is an essential element of administration of justice. A right to reason is, therefore, an indispensable part of sound system of judicial review. Reasoned decision is not only for the purpose of showing that the citizen is receiving justice but also a valid discipline for the Tribunal itself. Therefore, statement of reasons is one of the essentials of justice.”

It stated that the order should be a speaking order. The Supreme Court in Kishan Lal vs. UOI observed that even though in section 220(2A) of the IT Act, it is not stated that any reasons are to be recorded in the order deciding such an application, it is implicit in the said provision that whenever such an application is filed the same should be decided by a speaking order. The principles of natural justice in this regard would be clearly applicable. A decision which is taken by the authority under section 220 (2A) can be subjected to judicial review, by filing a petition under Article 226 of the Constitution. This being so and where the decision of the application may have repercussion with regard to the amount on interest which an assessee is required to pay, it would be imperative that some reasons are given by the authority while disposing of the application. The matter was restored to the file of the Chief Commissioner to decide in accordance with law.

Anusayaben A. Doshi vs. JCIT (2002) 256 ITR 685, 686 (Bom)

UOI vs. GTC Inds. Ltd. (2003) 5 SCC 106, 112

Q.47 High Court deciding the case without considering the Judgement of Supreme Court, which judgement, the tribunal has to follow

Ans. Article 41 of the Constitution of India -

‘The Law declared by the SC shall be binding on all courts – within the territory of India ’. Once there is pronouncement of the highest court of land, same is binding on all courts tribunals and all authorities in view of this article. Tribunal must follow the decision of Supreme Court.

Q.48 Can revenue take conflicting stands?

Ans. The revenue cannot take conflicting stands. It has got the assistance of technical persons and should be consistent. It cannot discriminate between the assessees. Seshasayee Paper and Boards Ltd. vs. CIT (2003) 260 ITR 419 (Mad.), Union of India vs. Kaumudini Narayan Dalal (2001) 249 ITR 219 (SC), Berger Painters vs. CIT (2004) 266 ITR 99 (SC), Union of India vs. Satish Panalal Shah (2001) 249 ITR 221 (SC).

Q.49 What is the rule of interpretation of documents/ agreements?
Ans. It is the duty of Court to interpret a document of contract as was understood between the parties. The terms of the contract have to be construed strictly without attending the nature of the contract as it may affect the interest of parties adversely (2005) 123 Companies Cases 663 (SC) Polymat India Ltd. and others vs. National Insurance Co. Ltd.
Q.50 How to interpret the delay in filing of appeal?
Ans. The Supreme Court in Collector of Land Acquisition vs. Mrs. Katiji & Others (1987) 167 ITR 471, has held that the Court should have a pragmatic and liberal approach. The Hon’ble Supreme Court in N. Balakrishnan vs. M. Krishnamurthy (1998) 7 SCC 123 condoned delay of 883 days and has observed that condonation of delay is a matter of discretion of the court. Section 5 of the Limitation Act does not provide discretion only in the cases of delay within a certain limit. The only criterion is the acceptability of explanation irrespective of the length of delay. The primary function of the court, being the adjudication of the disputes between the parties and to advance substantial justice, it is not enough to turn down the plea of the litigant and to shut the door against him for some lapse on his part which has caused the delay. If theaost consideration to the suitor. The Supreme Court in Vedabai vs. Shantaram Baburao Patil & another (2002) 125 S.T.C. 375 observed that the Court has to exercise its discretion, keeping in mind that the principle of advancing justice is of prime importance and the expression “sufficient cause” should receive a liberal construction. The approach of Courts should be pragmatic so as to impart substantial justice and substantial Justice.
Collector land acquisition vs. MST, Katiji and Others (1987) 167 ITR 471 (SC)
Q.51 Whether mistake of Lawyer or Accountant
Ans. Wrong legal advice given or other mistake made by the assessee’s lawyer or chartered accountant may constitute good reason or sufficient cause for condoning delay in filing an appeal or an application or a writ or for not imposing penalty, or for setting aside an ex parte order passed on non appearance of a party. Ordinarily, a case should not be dismissed for failure of the lawyer to appear at the hearing.
Concord of India Ins. Co. Ltd Vs. Nirmaladevi & Ors (1979) 118 ITR 507 (SC); Manoj Ahuja and Anr. vs. IAC (1984) 150 ITR 696 (P & H); IAC vs. Kedarnath Jhunjhunwala (1981) 133 ITR 746, 755 (Pat); Arun S. Meher vs. M.A. Twigg (1984) 153 ITR 131 (Bom); Avtar Krishandas vs. CIT (1979) 133 ITR 338 (Del);CIT vs. Khemraj Ramshmichand (1976) 114 ITR 75 (MP); Subhkaran & Sons vs. N.A. Kazi (1984) 152 ITR 231 (Bom); Kwality Restaurant & Ice Cream Co. vs. CIT (1984) 158 ITR 188 (Del); CIT vs. India Capacitors Ltd (1987) 180 ITR 641 (Cal); Ganesh, Dass Ram Gopal vs. IAC (1982) 142 ITR 101 (Allah)
Q.52 How to interpret sections dealing with procedure?
Ans. There is no vested right in procedure or as to cost. Enactments dealing with this subject apply to pending action, unless a contrary intention is expressed or clearly implied.
The Hon’ble Supreme Court the case of Shreenath vs. Rajesh (AIR 1998 SC 1827) noted as under:
“In interpreting any procedural law, where more than one interpretation is possible, the one which curtails the procedure without eluding justice is to be adopted. The procedural law is always subservient to and is in aid to justice. Any interpretation which eludes or frustrates the recipient of justice is not to be followed. “
K.M. Sharma vs. ITO (2002) 254 ITR 772, 779 - 80 (SC)
Haresh Dayaram Thakur vs. State of Maharashtra (2000) 6 SCC 179, 187
Q.53 How to interpret sections dealing with limitation?
Ans. Limitation law has to be liberally construed (Collector Land Acquisition vs. Mst. Katiji (1987) 167 ITR 471 (SC); Premchand Bansal & Sons vs. ITO (1999) 237 ITR 65 (Del), Seshammal (R) vs. ITO (1999) 237 ITR 185 (Mad.), Concord of India Insurance Co. Ltd. vs. Nirmala Devi (1979) 118 ITR 507 (SC) followed in Avtar Krishnan Das vs. CIT (1982) 133 ITR 338 (Del.)
In CST vs. Auraiya Chamber of Commerce, (1987) 167 ITR 458 (SC); the Supreme Court directed admission of delayed claim for refund on the ground that “in interpreting relevant procedural provisions, fairness and justice should be the approach, and even in fiscal statute, equity should prevail wherever language permits”.
Q.54 When AO followed the order of Tribunal can CIT, review the order of AO, on the ground that, there is contrary judgement of Courts ?
Ans. An order passed by ITO following the decision of the tribunal can not be held to be erroneous & prejudicial of the interest of the revenue.
Kiran Agencies vs. ITO (1983) 15 TTJ 460 (Nag)
Indures (P) Ltd. vs. IAC (1991) 38 ITD 635 Del.
Q. 55 Whether finding of settlement Commission is binding on tribunal.
Ans. Settlement Commission is a Tribunal and not court
The Finding given by the Tribunal is not binding on the Income Tax Appellate Tribunal Similarly the order of the Income tax Appellate Tribunal will not have binding effect on the Settlement Commission. Order of Settlement Commission and Tribunal will have persuasive value.
CIT vs. B.N. Bhattacharya (1979) 118 ITR 461 (SC).
VII. LEGAL MAXIMS - PRINCIPLES
Q.56 . Whether interpretation of penal provisions should be construed strictly?
Ans. The penal provisions must be construed strictly.

CIT vs. Sundaram Iyengar & Sons (P) Ltd (1975) 101 ITR 764 (SC)

ITO vs. Kaysons India (2000) 246 ITR 489 (P & H)

However the penal provision giving benefit to a assessee such as section 273A has to be construed liberally. Handa (RP) vs. ITO (1992) 198 ITR 54 (P & H)

Q.57 What is the binding effect of orders of authority for advance rulings?

Ans. The Act has made the ruling binding in the case of one transaction only and the parties involved in that case in respect of that transaction. For other transactions and for other parties the ruling will be of persuasive nature. Advance ruling are judgments in personam and not in rem. Cyril Engg. Pereira , In re (1999) 239 ITR 650 ( AAR )

Union of India vs. Azadi Bachao Andolan (2003) 263 ITR 706 at 742(SC)

In Dy. CIT vs. Biston Consulting Group Pvt. Ltd. (2005) 93 TTJ 293 (Bom.), the Tribunal held that the Ruling of given by the Authority for Advance Rulings are not certainly not binding precedents on the Tribunal.

Q.58. How to interpret statutes relating to appeals?

Ans. A right of appeal is the creation of the statute and an assessee has a right of appeal only if there is a statutory provision for it CIT vs. Ashok Engg. (1992) 194 IRR 645 (SC). But a provision for appeal should be liberally construed and should be read in a reasonable and practical manner CIT vs. T.V. Sundaram (1999) 236 ITR 524 (Mad.). It is always desirable not to place, a restricted meaning to such a provision and take away the right of appeal provided to a party.

DCIT vs. Shanthabaram (2003) 260 ITR 156 (Kar.)

Q.59. What is the rule for lifting the corporate veil?

Ans. A company is a legal personality entirely distinct from it’s members and a company is capable of enjoying rights and being subjected to duties which are not the same as those enjoyed or borne by its members. But, in certain exceptional cases, the court is entitled to lift the corporate veil and to pay regard to the economic realities behind the legal facade. (Jindal (MD) vs. CIT (1987) 164 ITR 28 ( Cal ).

The doctrine of lifting of corporate veil has been invoked in the following cases ;

(a) where a corporate entity is attempted to use for fraudulent purpose PNB Finance Ltd. vs. Shital Prasad Jain (1983) 54 Comp Case 66 (Del.)

(b) To willfully disobey the courts order Jyoti Ltd vs. Kanwalji Kaur Bhasin (1987) 62 Comp Cases 626 (Del.)

(c) To frustrate sales tax or capital gains tax liability – Trackways (P) Ltd. vs. CST (1981) 47 STC 407 (MP), Wood Polymer Ltd. In re (1977) 109 ITR 177 Guj.

To deprive workman of the legitimate bonus – Workmen of Associated Rubber Inds. Ltd. vs. Associated Rubber Inds. Ltd. (1986) 157 ITR 77 (SC)

Q.60 How to interprete the law relating to Refunds.

Ans. Provisions giving refund must be interpreted liberally in favour of the assessee Calcutta Electric Supply Corporation (Indian) Ltd. vs. ITO (1992) 197 ITR 563 (Cal.)

Q.61 In case of two contradictory decisions, which decision to be followed ?

Ans. If there are two apparently contradictory decisions, decision of larger bench to be followed.

CIT vs. Sundaram Industries Ltd (2002) 253 ITR 396 (Mad),

Siemens India Ltd. vs. State of Maharashtra (1986) 62 STC 40, 50 (Bom)

N.C. Dhoundial vs. Union of India (2004) 2 SCC 579, 587

Q.62 What is the principle of Resjudicata

The principle is that the cause of action cannot survive, if it is covered by an earlier judgment. It literally means a matter already decided.

The strict doctrine of resjudicata is not applicable to tax matters. The reason being each assessment year being independent of others all issues relevant to a particular assessment year could be considered and decided, irrespective of the fact that the same issues arose in the earlier years. However questions of fundamental nature or questions relating to assessment which do not vary every year but depends on the nature of the property or questions on which the rights of parties to be taxed are based, principle of res-judicata to that extent would apply to tax matter. Further, principle of finality to a decision and rule of consistency does apply to income tax proceedings.

Kotak Mahindra Fin. Ltd. vs. Dy. CIT (2004) 265 ITR 114, 149 (Bom)

Ashok Leyland Ltd. vs. State of T.N. (2004) 3 SCC 1, 144.

Q. 63 What is the Rule of Estoppel

Estoppel is a rule of equity which forbids truth being pleaded or a representation, on the faith of which another has acted to his detriment, being retracted

Nirmala L. Mehta vs. CIT (2004) 269 ITR 1, 11 (Bom)

B.L. Sreedhan vs. K.M. Munireddy (2003) 2 SCC 355, 366

CIT vs. Bhattachargee (BN) (1979) 118 ITR 461 (SC )

UOI vs. Anglo Afghan Agencies Ltd. AIR 1968 (SC) 718

The principle of estoppel strictly does not apply to income tax proceedings (CIT vs. VMRP Firm (1965) 56 ITR 67 (S.C.). But rules similar to the rule of estoppel may be applicable under certain circumstances. In any case there cannot be estoppel against a statute. The principle of promissory estoppel was considered in detail by the Supreme Court in Motilal Padampat Sugar Mills case (1979) 118 ITR 326 (SC)

RM6.5 million settlement on land rights

KUALA LUMPUR, MALAYSIA

The landmark settlement recoreded in the Federal Court of Malaysia was with highway authorities in considerastion of the taking away of their ancestral land for development.

Authorities forcibly acquired 38 acres of land in 1995 related to the Kuala Lumpur International Airport. A 15-year legal battle for the Temuan tribe would be precedent for more than 150 land rights cases still pending in court. Was this change in tune led by another recent Court decision in East Malaysia?

The High Court ruled in 2002 that the Orang Asli enjoyed native title rights and should be compensated. The verdict was upheld by the Court of Appeal in 2005 but the defendants appealed to the Federal Court. Pursuant to the Settlement, the Appeal by Malaysian Highway Authority, the federal government and the contractor withdrew their appeal and agreed to compensate some 26 Temuan families

This is unlike other land Settlement cases as this Settlement “recognises” native title rights to their traditional land. (There is a plethora of cases on compulsory acquisition with regard to this project, just now being decided in KL High Court)

This Judgment on ancestorial rights echoed the other legal cases in East Malaysia. Land rights are a key concern for the country's indigenous people, many of whom have been pushed off land without compensation by state governments to make way for development.

Interview with the Chief Justice, YAA Tun Dato’ Seri Zaki bin Tun Azmi

The Malaysian Bar
link http://www.malaysianbar.org.my/bar_news/berita_badan_peguam/interview_with_the_chief_justice_yaa_tun_dato_seri_zaki_bin_tun_azmi_on_19/11/2009.html

Monday, 23 November 2009 01:33pm
Many members of the Bar, particularly those in Kuala Lumpur, Selangor, Penang and Johor Bahru, are encountering numerous problems on the ground, arising from (inter alia) the present judicial reform, in particular the introduction of the KPI and the implementation of the Tracking System for the disposal of cases in our courts (especially in the subordinate courts). A newspaper has described the lawyers as being “up in arms” on this issue.

Armed only with a pen, Yeo Yang Poh, a past president of the Malaysian Bar, interviewed the Chief Justice on 19/11/09, in order to discuss with him some of the pressing issues and problems. Also present at the interview were the Chief Judge of Malaya, YAA Tan Sri Dato’ Arifin bin Zakaria, and Christopher Leong.

The following is the interview.

Yeo: Tun, thank you for agreeing to this interview, and Tan Sri as well, and for being always accessible to the Bar. I hope that, through this interview, the Bar can have a better understanding of Tun’s thoughts and intentions concerning some pressing issues in our courts. At the same time, I will also put across some views for Tun or Tan Sri to either give an immediate response or to consider them in due course.

Tun, when I was organizing my thoughts on what questions to ask in this interview, it struck me that the easiest thing for a person in Tun’s position to do is not to introduce any drastic changes. Don’t rock the boat, and have a smooth passage through your tenure in the highest judicial position. But instead, you have chosen to do the opposite – you have chosen the hard way by introducing very drastic changes. It occurs to me that a person who chooses the hard way rather than the easy way must surely have a mission or a vision for doing that. So, I want to start by asking you what your mission or vision is.

CJ: My immediate concern, as I have said so many times in the past, is the backlog of cases. More important of the 2 types of cases, civil and criminal, are the criminal cases because they involve the liberty of individuals. Take for example those who have been charged and are waiting to be tried, or those detained under preventive detention laws and waiting for their habeas corpus to be heard. The instructions now to the High Court Judges are to dispose of habeas corpus applications within a few weeks, or a maximum of a month or so. Previously, I noticed from the records that habeas corpus cases had been postponed over and over again. I have seen records where persons had been detained up to 22 months, i.e. 2 months before their detentions would expire, before the case came up before the Federal Court. That is obviously not justice.

Then there are the cases of those who are detained pending trial. There were in March this year 1,600 capital punishment cases waiting to be tried. Some of these accused have been detained up to 6 – 7 years. Sometimes, after hearing a case, the Judge takes another couple of years to write his judgment. These are basically our concerns. Solving backlog is not as easy as a matter of just adding more judges. For example, we all know that the Criminal Bar is very limited in numbers, particularly when it involves serious crimes. In Penang, because of the heavy backlog of 270 – 280 capital punishment cases in March this year, the CJM decided to increase from 2 to 4 criminal courts there. Unfortunately, the Bar could not cope up with the increased speed, so we had to reduce it to 3 criminal courts.

The prosecution is also facing the problem of producing their witnesses, because it is the same IO who is appearing in many courts. My circular to the Judges is that a Judge should not have more than 10 part-heard cases at any one time and that applies to Sessions Court Judges as well (except for road-accident cases), because when it comes to promotion, we take that into consideration.

Clearing the backlog is not done for me, but for the public. As far as commercial cases are concerned, I am told that, if we can improve our disposal rate, that would attract investors to Malaysia.

Yeo: Members of the Bar may be interested to know what Tun’s style of leadership is. There are Chief Justices who would introduce certain reforms by just saying, “This is what we do. Like it or not, we will implement it.” Other Chief Justices may be more consultative. They would tell the Bar: “This is what I think is a good reform. I will explain to you why. If you have any views or feedback, I will listen to you and consider them.” Members would like to know which leadership style you prefer.

CJ: You can see that from what we have been doing. It is definitely the second one [the consultative style]. There is no doubt about that. First, let us talk about the tracking system. I must confess that it was the idea of the CJM together with Dato' James Foong and Dato’ Md Raus Sharif who had some experience in it during Tun Dzaiddin’s time. When he came up with the idea, I said, “Try it, let us see how it works”. If at that time you had asked us how it was going to work out in detail, I can tell you that what we had pictured was different from the way it is functioning today. This is because we change and modify as we go along.

Secondly, as far as the Bar is concerned, before we do or implement anything, we will call up the Chairman and tell him what we want to do. For example, I forewarned the Bar President and Chairman of the Selangor Bar that: “I’m going to increase the number of Judges in Shah Alam in 3 months’ time. Be ready”. Or I would say: “Tell your members we are going to increase the Judges in Penang, or Johor Bahru, by a certain number. Be ready”. Whenever the Bar President calls or messages me, “CJ, can we meet you?” I always say, “Yes, can we meet tomorrow?” We want to improve the system. In the process of implementation, I do not deny that there are difficulties. Handling human beings is the most difficult. The CJM and I may have certain ideas at the top here, but when these are passed down, the ideas or intentions may be misconstrued and misinterpreted. In fact, the Bar is now coming back to us giving specific examples about what has happened in some cases. That enables us to check and definitely correct all those misunderstandings by individual Judges and Magistrates. I think the problem is not so much with the system, but with individuals who are implementing the system.

Yeo: From what Tun has just said, both Tun and Tan Sri are very agreeable to refining the implementation process as we go along, and receiving feedback from the Bar. Therefore I take it that you would be agreeable to sit down with the Malaysian Bar and the State Bars on a very regular basis to review ongoing matters and to speedily correct obvious injustices?

CJ: Yes, in fact we’re doing this. We have already planned to go to the North and the South regionally. At first we wanted to call all the Magistrates to come to KL. But then I thought this might not work. Instead, let us see them in smaller groups. Then we can discuss specific cases. So our plan is to go to Ipoh, Johor Bahru, Penang, and meet small groups of Magistrates, Sessions Court Judges and Registrars, maybe 30-40 of them in a group so that we can discuss with them specific cases as examples. There are so many other things we want to look at, e.g. how the Registry is functioning, what difficulties the staff are facing. One Magistrate may not have enough cases, while another is overloaded.

We are looking into the dissatisfaction raised by the Bar. As I have said before, we must achieve justice. Justice is our end, not the KPI, not the clearing of backlog. If clearing backlog has to be slowed down in order to maintain justice, we have to do that. But what is happening in KL has proven that we can go for speed without sacrificing justice.

Yeo: I would like to move on to discuss specific issues. The Bar is certainly aware that in the past, cases took too long to be heard and disposed of. That is not acceptable. The Bar does not want to go back to that state of affairs. But it seems that, from that previous extreme we are jumping to the opposite extreme, which is that now cases must go on, no matter what. I must emphasize the words “no matter what”. This is the root of many problems faced by members of the Bar. Is it your intention that, no matter what, adjournments are not to be granted, even if a person is sick, even if he comes to court in a wheelchair, or if he has some other good reason?

CJM: There was a circular on postponements issued during the former CJ, Tun Hamid Omar’s time. Tun Zaki’s circular and letter must be read in the light of that earlier circular.

CJ: Not only that. At the end of the day, postponement is a matter of judicial discretion. Judicial discretion means that your decision must bring about justice. Judicial discretion means that you look into all aspects of a matter and then decide. If you simply apply one standard rule that cases must go on, then I don’t need a Magistrate to do that. I can put a clerk or a computer to make the decision.

Yeo: It is good that Tun is clarifying this issue. The Bar wishes to inform Tun and Tan Sri that what is happening on the ground everyday can be very different from what is originally intended by you. And I can see another problem. The previous situation, especially in the lower courts, was brought about because judicial discretions were sometimes exercised in the wrong fashion, i.e. postpone cases at every slight excuse. However, it is virtually the same judicial officers who are now tasked to exercise their discretion in the opposite direction, i.e. to be strict on postponements. Is there not a danger that these officers, who previously were erring in their discretion by being too relaxed, may be prone to equally err in the opposite direction now, therefore causing genuine problems on the ground?

CJM: We have to look at both sides – officers and lawyers. Lawyers have to play their part. Some of them are misleading the court and not telling the truth, e.g. not bringing their witnesses to court and giving excuses. If all lawyers are honest, we can accept their word. That was the honour of our profession in the old days. Gone are those days.

Yeo: But surely there are ways of dealing with lawyers who are not honest. When one is on the Bench or at the Bar long enough, one will be able to tell the genuine cases from the not-genuine ones. What is happening on the ground now is that discretion is frequently being erred in the other direction.

CJ: We understand that. But some lawyers “double-park” or “multiple-park”, expecting that only 1 case will go on. The courts on the other hand, also do the same. When I get daily reports, I notice Magistrates fixing 4–6 or even 10 hearings per day. Why do they do that? One Judge said that if he did not do that, his next available hearing dates would go over to the following year. I said, “So what?” Why give a hearing date knowing full well that 90% of the time the case on that day will not go on? I appreciate this, because I was in practice before.

Yeo: This is important information for the Bar. Do I summarize it correctly by saying that lawyers should not double-park, and, equally importantly, the courts should also not double-park?

CJM: Oh, yes.

CJ: As far as the courts are concerned, if we only fix (say) 2 cases, and the 2 do not go on, then the court’s time that day will be wasted. So, we have to put a bit extra. For example, for road-accident matters, the court may fix 5 cases; on that day 2 might have been settled, the others can be heard or part-heard.

CJM: In doing that, we go by the previous experience in the locality.

Yeo: The Bar would like to see the courts going in the direction where there will not be any double-parking by the courts at all. We appreciate that judicial time should be fully utilized. But we feel that, if cases are settled or vacated for the day, that day is not wasted. It can be spent by the judge writing judgments, or keeping up with the law, which are important things to do as well. Can this suggestion be considered?

CJ: That is good in theory, so long as we do not go back to what it was before, when there were very few sittings in the courts in the afternoon, despite the “multiple-parking”. It can happen once in a while. But if it happens 3 or 4 days a week, then we are going back to square one. Now the waves are shaking, like water in a cup. The water will come to a settled level, where the Bar understands the changes in the courts’ mindset, and the Bar also changes its mindset. Why is it that there is no such problem in other countries like Hong Kong? There, if you double-park, you’ll get disciplinary action immediately.

Yeo: Will Tun discuss with the Bar on how to minimise double-parking by the courts?

CJ: That is what we are doing now. We are discussing and continuing the process. But in order to do that, we have to take specific cases. We cannot just go on theory.

Yeo: Members of the Bar are not objecting to the change of mindset itself. If the courts want us to be ready for every hearing, then the courts must be able to go on with every hearing fixed. If lawyers are ready, go to the court, wait until 4:30 pm only to be told that their case cannot go on that day; that is also a waste of valuable time and resources.

CJM: We are trying to minimize that kind of situation as much as we can, by tracking. In KL now, only 1 case is fixed per Judge per day in T-track. In cases involving witnesses, 2 or 3 cases are fixed per week at the most. There is no postponement [by the court]. This will also be done in the Sessions Courts and Magistrate's Courts in due course.

CJ: In KL this has been working successfully. If it is not 100%, it is 90%. It is working well in KL. We are moving to Shah Alam, and then to Penang and Johor Bahru. Basically, it is a matter of case management. KL will be the benchmark. We can supervise the Judges easier from Putrajaya. Whatever difficulties encountered, we can iron them out so that when we move to Shah Alam, Penang and Johor Bahru, the system should be working well already. Now is the testing period.

Yeo: I would like to move on to ask Tun some questions in relation to specific scenarios.

CJ: Before you do that, I wish to stress that we’re grateful to the Bar for bringing to our attention the specific instances where the courts have not been exercising their judicial discretion properly with regard to the granting or refusal of adjournments. My circular dated 20th July 2009 must have been misconstrued by some judicial officers. The clearing of backlog of cases and the achievement of KPI cannot be at the expense of justice. Justice is fundamental. People come to court to seek justice. Each case must therefore be considered on its own merits. It is not possible to spell out in detail and individually how a Judge or judicial officer should exercise his judicial discretion. But a mature and reasonable person should know how to exercise it. I think some judicial officers have gone overboard. We will go down to the ground and discuss this issue with them.

Let us progress towards correcting and improving as we go along. Changing people’s culture and practice is surely most difficult. But once a system is implemented and found to be good, it will be accepted.

Yeo: Thank you for the assurances given. It would help if certain information are quickly disseminated to the Bar, so that members are aware of the thinking of the Judiciary. I would like to describe a few scenarios and seek your views on them. First scenario: a Judge, Magistrate or Timbalan Pendaftar is fixing a hearing date that one of the parties says is not suitable to him. That party is able to suggest other suitable dates within a reasonable time, say 2 weeks or a month from that date. In those circumstances, should a Magistrate or judicial officer still insist on fixing that unsuitable date, and say, e.g., “No, I don’t care. You must come on that day”?

CJM: I am going to the dentist at 9:00 am. I get his free date, not my free date. It is impossible for the dentist to suit everybody’s time, but as far as possible the dentist will try to accommodate your date. That is all. The court’s calendar is not determined by one counsel. We have to accommodate everybody.

Yeo: Tan Sri, I have been to dentists and doctors. I’ve always managed to get dates suitable to me.

CJ: At the end of the day, we have to get dates that are acceptable. It depends on the circumstances. If a person says it is not suitable because he has a wedding to attend; that is not a good reason. But if it is not suitable because the lawyer already has another case fixed on the same day, then it is different. You should also look at it from the courts’ perspective of wanting to sit at optimum pace. For example, last November when the Federal Court was fixing dates, many lawyers did not want a date in December because of the holidays. They also did not want a date in February, because of Chinese New Year. At the High Court I think you have to be more accommodating. If the lawyer definitely cannot come, then I think it is wrong for the Judge to fix that unsuitable date.

Yeo: The feedback we get is that this kind of problems is more serious in the lower courts. High Court Judges are more accommodating.

CJ: It is more in criminal cases. Am I right?

Yeo: Civil cases as well. We’ve got a lot of complaints about fixing of dates in civil cases too. I feel that the Bar’s request is reasonable. In the scenario I described, I did qualify it by saying that the lawyer is able to suggest alternative dates in the near future. It would be different if the lawyer comes to court and says that his next available date is 18 months later.

CJ: Let us go to the ground and explain to the Registrars on this issue.

Yeo: Can I take it that this is something that Tun and Tan Sri will go to the ground and speak to the judicial officers about, to advise them to exercise their discretion reasonably, and to avoid the fixing of dates unsuitable to the lawyers?

CJ: Yes, but not to the extent that we would be reverting to the old ways.

Yeo: We are not talking about a situation where a date had been fixed well in advance, and a lawyer on that day wants an adjournment because it is not suitable to him. We are concerned with the point of time of fixing of a hearing date for a matter. If a lawyer informs the court that the date will not be suitable, then the court should not insist on fixing that unsuitable date.

CJM: How often is this happening?

Yeo: They are more than isolated incidents, Tan Sri.

CJ: It is not right to force dates on lawyers. But there are also instances where the lawyers could be persuaded to change their other engagements. Then the lawyers should be accommodative too. Sometimes, when I ask a Registrar about such a matter, the Registrar might tell me that the date was in the end accepted by the lawyer.

Yeo: The second scenario I want to ask Tun about is this. Trial dates have been fixed, say, from 10 – 12 December. Suddenly, the Registrar calls up and asks the lawyers to come on the 8th or 9th, when those earlier dates are not suitable to the lawyers or to one of them. The lawyers are not asking for a postponement of the original dates fixed. They just cannot have the dates brought forward like that. Should not this kind of things be avoided?

CJM: That [position of the lawyer] is fair.

CJ: Those cases should be called up on a voluntary basis, because this is what we are encouraging. Assuming a Judge has finished his work for the week; he can ask the Registrar to call up the parties to come earlier.

Yeo: Surely only if the parties agree?

CJ: They involve interlocutory applications?

Yeo: Trials as well.

CJ: This is what we are encouraging in KL. Some Judges say that they are free, and have written all their judgments, so they can hear other cases.

Yeo: I will come to the next scenario. A case is fixed for, say, 3 days. By 3:00 pm of the second day, the case had proceeded faster than the parties expected. There is another witness who would be appearing on the next day, and is not in court that afternoon of the 2nd day. Should the Judge or Magistrate be saying to the lawyer that, since your next witness is not here, you must close your case now?

CJ: Unless it has been agreed upon from the beginning that you have all your witnesses from the first day itself. It depends on what the agreement is between the parties.

Yeo: Let us say that there is no agreement that all witnesses have to come on the first day and wait.

CJ: To me, if a Judge has done a good part of the job for the day, he can go and read up the MLJ and catch up with his writing of judgments.

Yeo: So, I take it that this scenario I have described should not happen?

CJ: General speaking. But again, it depends on the circumstances of the individual case.

Yeo: I understand that. To every general statement there are exceptions. But generally, that should not happen.

CJM: For example, the lawyer brings only 1 or 2 witnesses when he knows it’s not going to take the whole day. A lawyer should know how long his witness will take.

Yeo: Tan Sri, the best estimate is still an estimate. Nobody can be right on the dot about an estimate. It will also depend on how long one’s opponent takes to cross-examine a witness.

Yeo: Let me move on. We are given to understand that judicial officers have to regularly explain why they grant postponements. This, coupled with their not having to explain why they refuse postponements, gives the strong message that granting postponements is problematic for judicial officers, but refusing postponements is not. So, they become very strict, sometimes unreasonably strict.

CJ: I don’t agree that we only ask questions why they granted postponements, and not why they did not grant postponements. There are instances where we discovered that there has been unfair refusal of postponement. The CJM has stepped in, in one or two cases. What I have been doing is this. They give me daily reports. I only go into the extreme cases. I ask for feedback as to why certain cases were postponed. That is done after the event. I intend it as guidance for future exercise of discretion.

Yeo: Tun, if a member of the Bar feels that, on a particular morning, his request for postponement has been unreasonably refused, what kind of speedy remedy does he have? Filing an appeal against postponement can work satisfactorily only in an ideal world.

CJ: I am against interfering with Judges’ decisions summarily. The CJM has intervened only in 1 or 2 rare instances.

CJM: Those were criminal cases. I asked the Judge to call up the file and see if there was a need for a revision.

Yeo: What if it is a civil case?

CJM: You can appeal.

Yeo: That sounds good only in theory. Tun, some would say that what Tun is doing, although done after the event, is also an indirect way of interfering and telling or putting pressure on the judicial officer as to how to exercise his discretion next time.

CJ: It is just as a guidance, because they are not exercising their discretion properly.

Yeo: Is there any speedy mechanism that we can provide for lawyers facing unreasonable refusals of postponements?

CJ: We will be having regional meetings with Magistrates and Sessions Court Judges. These issues will be brought up and discussed. Hopefully the situation will improve.

Yeo: I would like to move on to the KPI issue. The impression given to the Bar is that the predominant factor now is the KPI, even though it is not the only factor. But the other relevant factors are more difficult to quantify. For example, you regard judicial temperament and quality of judgment as important; but it is very difficult to quantify them, unlike the giving of statistics on the number of cases disposed of. So, invariably what is left is that KPI becomes in practice the determining factor, whether so intended or not. The Bar feels that this has many drawbacks. Judges and lawyers are rushed. Careful deliberations become rushed decisions. Good Judges can also feel pressured to make hasty decisions. Judicial mindset is changed, from the desire to do justice in each and every case, to the desire to dispose of as many cases as possible. Your comments on this, please.

CJ: I think that is more of a perception. If that is what Magistrates and Sessions Court Judges are thinking, that in order to get promotion they have to clear a large number of cases, or that those who clear the most cases will be promoted, then we will go down and correct that misperception. This sort of thing cannot be done by way of circular. We have to meet them and explain to them that KPI is not the only criterion.

Yeo: The Bar observes that, on a daily basis, even good Judges who were patient and efficient now become more rushed. Good judges are pressured by KPI.

CJM: The KPI is just to set a target. Previously, we were wanderers with no target. That is all we want of the KPI.

CJ: Yes, KPI is only a target. But it does not mean that you can breach everything else in order to achieve the target.

[Yeo thanked the CJM, who left at this stage for a prior engagement]

Yeo: Tun, it really boils down to what the main objective is, doesn’t it? If the main objective is just to reduce backlog, I have no doubt it will be achieved. But the question is at what cost, or what is the sacrifice? I know Tun has said many times that justice cannot be sacrificed in the wish to reduce the statistical numbers of backlog cases. That is well and good. Unfortunately, when this message is translated everyday on the ground, it does not get correctly carried some of the times.

I get the feeling that there is an underlying sentiment that, if something works 90% of the time, and will improve in future, then it should be acceptable. In many types of reform, this is the case. Temporary, short-term inconvenience is an acceptable price for the longer-term benefits. Unfortunately, the same cannot apply to a justice system. Allow me to illustrate using an analogy. Say, there is a road construction or repair that will go on for 2 years. I suffer the resultant traffic jams for 2 years, but I know that, along with many others, I will benefit from the highway in time to come. A justice system is different. Most people who come to seek justice in court have only one case in their entire lifetime. It will not help him if, 5 years later, everything is tip-top. If injustice is done to his case because of the “repair period”, that’s it for him. The harm will not be compensated later, even if everything is up and running in a near-perfect fashion.

That being the case, can Tun please drive home the point to all Judges and Magistrates, that although clearing the backlog is a very noble and important priority, it is not as important as, and it must come second to, doing justice to each and every case?

CJ: Yes, we are going to have regional meetings. The CJM will go to Penang on Friday. Dato' James Foong is going to Johor Bahru on Monday or Tuesday next week. On top of that, we will have other regional meetings and continue this part of the education. Maybe it is because there is a sudden change from one mode to another. In any organisation or system, when you suddenly change the system, it takes some time for people to accept the changes.

Chris: Tun mentioned that the KPI is not the sole criterion. For the record, what are the other criteria?

CJ: Quality of work, quality of judgments, judicial temperament. If a judge keeps on scolding people, making wrong decisions, or refusing postponements on the wrong grounds, then he is not suited to be a Judge or a judicial officer.

Chris: The present perception is that KPI is everything, that the whole system is driven by KPI.

CJ: We’ll go down and explain. Also, the KPI is a reasonable target. It is not as if the target is 5 hearings per day. There has been some misunderstanding along the line.

Yeo: I hope Tun would be able to publish the KPI figures.

CJ: We can do that. The KPI is not an unreasonable target. It was set at the meeting in Langkawi, and everybody agreed that it was a reasonable KPI. It also does not mean that if a Judge cannot meet his KPI, he will be sacked tomorrow. We will look into other things.

Yeo: What happens to a Judge who is good in many ways, who is fair, who is patient in listening, who is thorough and takes a bit more time to go into the law and the facts of every case, but who as a result does not complete as many cases as the KPI would like; will he be considered less efficient than, or not as good as, other Judges who make it their top priority to meet their KPI?

CJ: We look at other factors as well, like whether a judge is trying his best, his integrity, and so on. It is not just the KPI.

Yeo: I would like to move to the next topic: managing the justice system. Tun, you bring with you very valuable experience from the corporate sector. However, would you agree with me that there are important differences between managing a corporation and managing the justice system? For example, a lot of strong corporate leaders are very tough drivers and taskmasters. A CEO who says, “This is the target. I don’t care how you do it, but you must do it”, may be considered a good CEO. Can the same method be appropriate in managing a justice system?

CJ: I cannot do that, and I don’t do that. But I do make changes. For example, if I ask a Managing Judge how many cases he has in his court, and he cannot give me the answer, or gives a totally wrong answer, then I will change the Managing Judge.

Yeo: The success of a corporation is easy to measure. If you provide services or goods, and your business improves, turnover is higher, more people prefer your products, then your corporation is successful. Similarly, the success of a justice system must depend on the opinions of its consumers. A justice system has 2 types of consumers. The direct consumers are the lawyers, prosecutors, etc. The ultimate consumers are the people. Therefore, would Tun agree that it is very important that whatever reform is introduced, it must be guided by the feedback of the people? For example, the people may agree that clearing backlog is good, but they may not want it if the price is that they are not getting justice in the process of change. If this happens, the reform, or its implementation, would be counter-productive.

CJ: Yes, I know. I’m fully aware of that.

Yeo: Then, Tun, would you gear your reforms with that constantly in mind, i.e. bearing in mind that the more important task is how to make sure that all your judicial officers understand perfectly that meting out justice in every case is more important?

CJ: That is why we have regular meetings and conferences. I totally agree. I keep telling my Judges and officers that we are working for the Rakyat. Without the Rakyat, they won’t get their salaries or their jobs. I tell them that they must strive to be part of an organization that the people will respect. Don’t make bad decisions.

Yeo: That being the case, would you agree to have regular and constant feedback from the Bar, including on things like judicial temperament and good judgments, about which members of the Bar collectively can give the best assessment? Would you be happy to meet the Bar on a very regular basis for these purposes?

CJ: Yes, I don’t mind meeting the Bar regularly, say, every other month. All you need to do is to message me or call my Secretary. Meetings would probably have to be in the evenings or towards the end of the week. I look forward to meeting the Bar to sort out problems that may arise from time to time, as we have been doing. Your Chairman can assure you of this. I can also assure the Bar that I am not an unreasonable person and neither is the CJM. I’m always ready to hear the Bar’s grievances. There is no need for an EGM to draw my attention. A meeting is more beneficial.

Yeo: Can Tun encourage the Judges in the States to do that as well?

CJ: State Bar Committees are most welcome to meet me at any time. All they need to do is to call my Secretary, and I’ll fix a date. I’ll bring along the PCA and CJM as well. As far as the local Judges are concerned, I also encourage the Managing Judge to meet the State Bar Committee to iron out problems before they get blown out of proportion.

Yeo: About getting feedback from members of the Bar; sometimes there is a real problem that members encounter when they are required to identify and reveal particulars of specific cases or incidents. They fear that, after that, they might be victimised by the officer involved.

CJ: If they don’t identify the case or incident, how do I investigate? If I get one side of the story, I have to investigate and hear the other side as well. That is why I need the particulars. Take for example the incident brought to my attention yesterday.

Yeo: Yes, that serves as a good example. How do you protect a person who is victimized as a result of bringing a matter or an incident to your attention?

CJ: We will take the necessary action.

Yeo: It has to be very strong action, Tun. Otherwise members of the Bar will not be willing to come forward in future. In my view, taking retaliatory action against someone who has made a complaint is judicial misconduct. When found to be the case, the officer deserves the strongest disciplinary action. For example, a mere transfer to another place is ineffective. He can continue the same kind of conduct there. A member of the Bar places his trust on you, Tun, when he provides the particulars. If only something mild or ineffective is done, not only will he not come forward in future, other members will not as well.

CJ: I have told Magistrates publicly at the Raja Chulan meeting last April that, if somebody complains against them and I check on them, and then they go after that person or complainant, I’ll come after them.

Yeo: If effective action is taken, everybody will come to know about it. Then more people will be prepared to come forward and cooperate. The system will be improved. Good measures will not be tarnished because of bad implementation.

Chris: And lawyers will have more confidence in the system.

CJ: I will take stern action.

Yeo: Thank you very much, Tun, for this interview. Because of time constraints, we have to end here. There are in fact other questions and matters which we would love to have been able to discuss and explore with you; perhaps another time. We welcome Tun’s assurance of a consultative approach, and we hope the process will continue and intensify