AYODHYA RAMI REDDY ALLA
v/s
PRINCIPAL COMMISSIONER OF INCOME TAX (PCIT)
Submitted by: DVM-287
While legally permissible, tax avoidance emerges as a double-edged sword between financial stratagem and moral ambiguity. Deciding to delve into the labyrinth of this concept, variety of quandaries, too, unravel. Tax avoidance can be equated to navigation through a dense forest, where the poisonous ivies of the law should be skillfully avoided to minimize fiscal burdens. Just as the wanderer must adhere to his compass, individuals and corporations must manipulate loopholes and ambiguities within tax legislation to orchestrate their financial destinies. However, while navigating through these apertures, one ought to ask: at what point does legal maneuvering become ethically debatable?
Tax avoidance is largely indulged into by the luxuriant class. The rich continue to exploit such loopholes, inevitably shifting the burden on the working-middle and lower class. The ramifications of tax avoidance create a ripple effect and reverberate through every nook and bend of the society. Hence, through manifest provisions of the Constitution, our Judiciary assumes the position of ‘Torchbearer of Social Justice’. The Courts have, over the years, shouldered the character of protectors of constitutional ideals. Right from the inception of Supreme Court as the watchdog of the Constitution in Kesavananda Bharati v. State of Kerala1 establishing the basic structure doctrine, through Indira Nehru Gandhi v. Raj Narain2 and Minerva Mills Ltd. v. Union of India3, to S.R. Bommai v. Union of India4 vehemently advocating for reinforcement of federalism and democracy, the list is endless. Following the footsteps of the Apex Court, even High Courts and other subordinate courts have cautiously explored the mystical gardens of constitutional ideals, cutting lose any vines of malicious objectives which endeavor to threaten these quintessential morals.
1 Kesavananda Bharati v. State of Kerala, 1973 SUPREME COURT 1461 1973 4 SCC 225.
2 Indira Nehru Gandhi vs Shri Raj Narain & Anr, 1975 SUPREME COURT 2299.
3 Minerva Mills Ltd. & Ors vs Union Of India & Ors, 1980 AIR 1789.
4 S.R. Bommai vs Union Of India, 1994 AIR 1918.
In light of this protective duty, Hon’ble Telangana High Court too, recently, delivered a rather monumental judgement regarding the interpretation of Income Tax Laws. This essay aims to formulate a holistic analysis of the famed Ayodhya Rami Reddy Alla v/s Principal Commissioner of Income Tax (PCIT) case. This case marks the onset of judicial perspective of Income Tax related discrepancies in law, particularly GAAR (General Anti Avoidance Rules) and SAAR (Specific Anti Avoidance Rules) related nuances. Both of these provisions are described in the Income Tax Act, 1961. GAAR and SAAR often are complexly intertwined, with no clear demarcation of where one ends and the other begins, leading to an anticipated eclipse of fiscal rights and duties.
GAAR and SAAR can be understood to be two distinct mechanisms which operate towards the furtherance of the same objective – determination of anti-avoidance regulations in respect of income tax.
The Onset of History- Facts of the case
In this infamous case, the Petitioner (as well as the assessee), Ayodhya Rami Reddy Alla, held the shares of a private company by the name Ramky Estate and Farms Limited (REFL). During the Financial Year of 2018-19, corresponding to the Assessment Year 2019-20, the petitioner sold certain number of shares from REFL to Advisory Services Pvt. Ltd. (ADR). Prior to this sale, a new authorized capital was issued by REFL on 27/02/19. The petitioner was allotted 7,64,40,100 shares on a private-placement basis, and a company by the name of M/s. Oxford Ayyapa Consulting Services India Private Limited (OASPL) was allotted 5,56,52,175 shares on private placement basis – which were later bought by the petitioner at the face value of Rs.115 each. The petitioner sold 5,56,52,175 of these shares to Advisory Services Pvt. Ltd. (ADR), on 14/03/19. However, before this sale REFL, on 04/03/19, allotted bonus shares to its shareholders in a ratio of 5:1. This meant reduction of face value of each share by 1/6th of its original value. So, the face value of shares dropped from Rs.115 to Rs.19.20 for each share. This sale of REFL shares to ADR by the Petitioner resulted in a ‘Short-Term Capital Loss’ (STCL), as laid down in the Income Tax Act, 1961, of a whopping Rs. 462 crores. But the Petitioner set-off the STCL against ‘Long-Term Capital Gains’ (LTCG) made by him on another transaction of sale of shares held by him in another company, Ramky Enviro Engineers Ltd. (REEL).
When the income assessment for the Fiscal Year of 2019-20 was made, the Petitioner, in his Income Tax Return (ITR), adjusted the Short-Term Capital Loss of REFL sale against the Long- Term Capital Gain from sale of REEL shares, and paid taxes on such altered capital. The bona fide character of the transactions was uncertain, as ADR lacked the funds for purchase of shares and had to borrow the sum from OASPL. The funds were returned by rotation of funds within the group itself, through Inter-Corporate Deposits (ICDs). The aftermath of this series of transactions was that in pursuance of bonus-stripping, the Petitioner artificially created colossal losses with which he could set-off with his LTCGs and avoid paying taxes. The transactions had no commercial substance and no economic rationale.
During the course of Audit proceedings for the year 2019-20, the Principal Commissioner of Income Tax (PCIT) initiated proceedings against the Petitioner under Section 144A of the Income Tax Act, 1961, treating the transactions as Impermissible Avoidance Arrangement (IAA) as per General Anti-Avoidance Rules (GAAR) provisions under Chapter X-A. Aggrieved by this, the Petitioner sought a Writ Petition to the Hon’ble Telangana High Court.
Bonus-stripping and dividend-stripping have been the most sought-after ploys of advanced, strategic investors to soften the financial liability of paying taxes. Tax evasion encompasses civil liability, but tax avoidance, to some extent does not. Often the line is very blurry, and conveniently so. Bonus stripping enables the investors to buy shares, stocks or mutual fund units before allotment of bonus shares. After the allotment of bonus shares, when the face value of the share drops, it results in huge losses for the investor which in turn helps him to avoid paying heavy taxes.
In this progression of transactions, there was no commercial purpose or substance. The nature of transactions was solely tax-driven and although rather permissible under SAAR provisions, the transactions were impermissible under the GAAR provisions. Hence, the primary contention of the Petitioner was that in presence of SAAR regulations, GAAR regulations took a backseat as it has been common jurisprudence that specific provisions prevail over general provisions. In pursuance of this contention, the Petitioner heavily relied on the Shome Committee Report of 20125 which stated that where SAAR is applicable to a particular transaction, then GAAR should not be invoked to look into that element.
5The Shome Committee Report, available at: https://pib.gov.in/newsite/PrintRelease.aspx?relid=91556 (Last visited on November 14, 2024.)
Contentions of the Controversialists
Both factions contended on questions of facts as well as questions of law. The Petitioner, Mr. Ayodhya Rama Reddy Alla was represented by Mr. S. Ganesh, learned Senior Counsel appearing along with Ms. Rubaina S. Khatoon while the Respondent, Principal Commissioner of Income Tax was represented by Mr. N. Venkataraman, learned Additional Solicitor General of India along with Ms. Mamata.
Petitioner’s assertions
The counsel for the Petitioner argued that the transactions set forth by the Petitioner were those which were shielded by the provisions of section 94(8)6 of the Act, enacted for the deterrence of tax avoidance. It marks the tolerable threshold for bonus-stripping. This section provides that where a person procures shares three months prior to the record date, is allotted the bonus shares, and sells the original shares held by him within nine months after the allotment of bonus shares while continuing to hold the bonus shares, the loss arising shall be excluded from the scope of his income tax. It shall not be computed and the assessee will not be caught by the mischief of Section 94(8). Even if such an event amounts to tax-maneuvering, it’s within permissible limits demarcated by Section 94(8) and thus, no objection can be taken to the same.
Before 01/03/2023, the legal position was that section 94(8) applied only to mutual fund “units” and explicitly excluded shares. The Petitioner contended that the meaning and scope of this section could not be stretched to impliedly include shares, as this would contravene the rule of strict interpretation of fiscal statutes, an ascertained legal principle, and be deemed as impermissible under law. SAAR deals with the provisions of tax-maneuvering but leaves out a small area, i.e., bonus-stripping of shares. This definite exclusion of shares does not consequentially equate to address of such exclusion by the provisions of GAAR. Petitioner contended that these transactions were well within the realm of section 94(8), being SAAR
6(8) Where—
any person buys or acquires any [securities or] units within a period of three months prior to the record date;
such person is allotted additional [securities or] units without any payment on the basis of holding of such [securities or] units on such date;
such person sells or transfers all or any of the [securities or] units referred to in clause (a) within a period of nine months after such date, while continuing to hold all or any of the additional [securities or] units referred to in clause (b),
then, the loss, if any, arising to him on account of such purchase and sale of all or any of such [securities or] units shall be ignored for the purposes of computing his income chargeable to tax and notwithstanding anything contained in any other provision of this Act, the amount of loss so ignored shall be deemed to be the cost of purchase or acquisition of such additional [securities or] units referred to in clause (b) as are held by him on the date of such sale or transfer.
provisions, and while formulating the Income Assessment, the Respondent considered the transactions to fall within the sphere of section 967, which are GAAR provisions, and initiated proceedings under section 144A.
Strong dependance was also observed to be on the legal principle of Generalia Specialibus Non-Derogant which connotes that if two laws govern the same factual conundrum, the law governing special subject-matter (lex specialis) overrides a law governing only general matters (lex generalis). In the opinion of the petitioner, in a case where SAAR provisions are already functional, GAAR provisions cannot be initiated. Specific provisions should be favored over general provisions. Another supplementary contention was that since SAAR provisions, under Chapter X of the Act were in action before Chapter X-A, in form of GAAR provisions, was instituted, preference should be given to SAAR provisions. Further, the counsel for Petitioner heavily relied upon the report of the Shome Committee, where the Committee recommended that if SAAR provisions were already in force GAAR provisions shall not intervene. The recommendations of Shome Committee were largely accepted by the Central Government. Hence the Petitioner fervently contended that where the provisions of Chapter X (SAAR) are attracted, the provisions of chapter X-A (GAAR), by implication, stands excluded. The Petitioner was of the opinion that Respondent should have acted in accordance with the principle of harmonious construction in case of apparent repugnancy or inconsistency. Constant reference was made to the assertion that PCIT had overstepped the jurisdiction and authority that was prescribed to it in the enabling statute.
The counsel for Petitioner relied upon the judgements of the Hon'ble Supreme Court of India in the case of Union of India vs. Shiv Dayal Soin & Sons (P) Ltd. And Others8, Commercial Tax Officer, Rajasthan vs. Binani Cements Limited and Another9 and R.S. Raghunath vs. State of Karnataka and Anr.10
796. (1) An impermissible avoidance arrangement means an arrangement, the main purpose of which is to obtain a tax benefit, and it—
creates rights, or obligations, which are not ordinarily created between persons dealing at arm's length; (b)results, directly or indirectly, in the misuse, or abuse, of the provisions of this Act;
(c)lacks commercial substance or is deemed to lack commercial substance under section-97, in whole or in part; or
(d)is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bona fide purposes.
8 Union Of India vs Shiv Dayal Soin & Sons Pvt. Ltd. And Ors. AIR 2003 SUPREME COURT 1877
9 Commercial Tax Officer, Rajasthan vs Binani Cement Ltd. & Anr on 19 February, 2014
10 R.S. Raghunath vs State Of Karnataka And Anr 1992 AIR 81, 1991 SCR SUPL. (1) 387
Respondent’s Assertions
The counsel for Respondent, with fortitude, attacked the contentions of the Petitioner. To grasp the understanding of the Respondents, the intent of section 96 is to be deciphered. The simple objective of this section is to plug the loopholes in taxation statutes. When tax avoidance beyond the permissible limits is sought after, GAAR serves as a weapon in the arsenal of the Tax Authority. GAAR has been enacted keeping in mind that even though tax avoidance is permissible, it should not extend beyond an adjudicated boundary. Chapter X of the Act empowers the Tax Authority to identify Impermissible Avoidance Arrangements, in substance, and strip off the parts resulting in undue tax benefit. To maintain corporal integrity, GAAR envisages to lift off the corporate veil and treat multiple entities as one. Before, the lifting of corporate veil was limited only to mala fide intent of corporations but through GAAR, it has received statutory sanction.
The counsel for Respondent converged the attention of the Court towards the events that had transpired within a short span of time. On 27/02/19, REFL declared a new authorized capital allotting a number of shares to the Petitioner and a number of shares to OASPL- later purchased by the Petitioner. Thereafter, immediately on 04/03/19, REFL allotted bonus shares to its shareholders in a ratio of 5:1, plummeting the face value of the shares from Rs. 115 to Rs.
19.20. Consequently, on 14/03/19, the Petitioner sold the shares purchased by him from OASPL to ADR at the depleted value, incurring a loss of Rs. 462 crores. The Petitioner also made gains from the sale of shares he held in REEL.
This entire series of transactions was carefully orchestrated, for the mere purpose of mitigating tax liability to any extent possible. The transactions could not be sanctioned, as they did not have any economic, rational or commercial substance and as required under Section 9711 of the
11 97. (1) An arrangement shall be deemed to lack commercial substance, if—
the substance or effect of the arrangement as a whole, is inconsistent with, or differs significantly from, the form of its individual steps or a part; or
it involves or includes—
round trip financing;
an accommodating party;
elements that have effect of offsetting or cancelling each other; or (contd.)
(contd.) (iv) a transaction which is conducted through one or more persons and disguises the value, location, source, ownership or control of funds which is the subject matter of such transaction; or
it involves the location of an asset or of a transaction or of the place of residence of any party which is without any substantial commercial purpose other than obtaining a tax benefit (but for the provisions of this Chapter) for a party; or (contd.)
Income Tax Act, 1971. Section 96 becomes applicable when the nature of transaction is an Impermissible Avoidance Arrangement (IAA), without any commercial substance, solely for the acquisition of tax benefit. Hence, the circumstances and facts of the case play a crucial role for GAAR to be relevant. Once such nature is detected, the transaction has to fall within the scope of section 96, containing an exhaustive list of what would construe IAA. GAAR does not apply to bonus stripping simpliciter, and the stance of the counsel for Respondent was that the conditions of section 96 are clearly and wholly satisfied by these series of contrived transactions, lacking any commercial substance or justification.
Further, as far as statutory interpretation of Generalia Specialibus Non-Derogant is concerned, the maxim holds merit as a rule of interpretation of statutes. However, the dichotomy lies in the fact that GAAR encapsulated in Chapter X-A of the Act begins with a non-obstante clause. It unmistakably states that GAAR is to be given precedence over all other encompassing provisions of the Act. Hence, where the question of superiority of specific provisions over general provisions is concerned in this context, non-obstante clause causes the skepticism to evaporate.
The counsel for Respondent laid down in a very crisp and composite manner that had the transactions been isolated and unrelated, spanning through a longer period of time arising out of genuine strategic intentions which was not unequivocally tax-driven, the scheme of GAAR would have never come into play; but the transactions in this instant case, owing to an awfully condensed time spell, with fund rotation within a handful of interrelated corporations, yielded the malicious intent of the petitioner in furtherance of tax maneuvering. Hence the precedence of GAAR over SAAR was never separately contended and maximum focus was afforded to the nature of transactions and the circumstances related to it.
Court’s Verdict and Author’s Two Cents
(Contd.) (d) it does not have a significant effect upon the business risks or net cash flows of any party to the arrangement apart from any effect attributable to the tax benefit that would be obtained (but for the provisions of this Chapter)
(2) For the purposes of sub-section (1), round trip financing includes any arrangement in which, through a series of transactions—
funds are transferred among the parties to the arrangement; and
such transactions do not have any substantial commercial purpose other than obtaining the tax benefit (but for the provisions of this Chapter).
The Hon’ble Telangana High Court judiciously reflected upon each issue and delivered a thoroughly articulated judgement. It went on to address each issue posed and liberate the prevailing misconceptions related to fiscal provisions.
Principally, the densely knit yarn of two similar-but also atypical characters – GAAR and SAAR provisions was untangled. The court cast-off the Petitioner’s argument pertaining to the precedence of special provisions over general provisions. It did so by stating the following in paragraph 27 of the judgement12:
"27. It is worth taking note of the fact that here is a situation where the special provision of law was already there in the Act when the general provision of law has been subsequently enacted by way of an amendment. Normally it is the vice-versa, i.e., where the general provision of law already being in force, the special provision of law is subsequently enacted. It is in those said circumstances, the Hon’ble Supreme Court of India as also the various High Courts have repeatedly held that when a special provision of law stands enacted, then the general provision of law would not and cannot be invoked. In the instant case chapter X-A has been only brought into force with effect from 01.04.2016 in terms of the Finance Act, 2013. Thus, the said contention of the learned Senior Counsel appearing for the petitioner cannot be accepted."
Summarily, the Court rejected the application of the doctrine of Generalia Specialibus Non- Derogant, by stating that even if a general provision has been enacted after the special provision, it cannot be favored merely due to such reason. The provision which is enacted and inserted later on will be preferred, even if in this situation a general provision was affixed after the special provision.
However, this view of the Court does not incorporate the view of Hon’ble Supreme Court in the case of R S Raghunath Vs State of Karnataka & Ors13, where, similar to the instant case, general rules were enacted after special rules. It held:
“In Maxwell on the Interpretation or Signites, Eleventh Edition at page 168, this principle of law is stated as under:
"A general later law does not abrogate an earlier special one by mere implication. Generalia specialibus non derogant, or, in other words," where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects
12 Ayodhya Rami Reddy Alla vs. PCIT (2024) 163 taxmann.com 277 (Telangana)
13 R S Raghunath Vs State of Karnataka & Ors [(1992) 1 SCC 335 (SC)].
specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely by force of such general words, without any indication of a particular intention to do so. In such cases it is presumed to have only general cases in view, and not particular cases which have been already otherwise provided for by the special Act."
In Eileen Louise Nicole v. John Winter Nicolle14, Lord Phillimore observed as under:
"It is a sound principle of all jurisprudence that a prior particular law is not easily to be held to be abrogated by a posterior law, expressed in general terms and by the apparent generality of its language applicable to and covering a number of cases, of which the particular law is but one. This, as a matter of jurisprudence, as understood in England, has been laid down in a great number of cases, whether the prior law be an express statute, or be the underlying common or customary law of the country. Where general words in a later Act are capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, that earlier and special legislation is not to be held indirectly repealed, altered, or derogated from merely by force of such general words, without any indication of a particular intention to do so."
The Petitioner’s contention on the applicability of SAAR over GAAR, on the premise of SAAR being a special provision and Court’s refusal to accept it, thus, births the dilemma of how the application of these two contrasting views – one given by Supreme Court and a plethora of High Courts, consistently revolutionized throughout innumerable precedents; and one given by Telangana High Court in the instant case, surprisingly without placing an ounce of reliance on authenticated case laws – is to be applied synchronically. The Hon’ble Court did not lend much justification to this question of law, leaving it at the discretion of the deciding Court. Some room for the benefit of the doubt can be made for the High Court, by trying to understand the source of such derivation and the purpose of the Court’s rationale. One look at the facts of the case makes it safe to say that the Petitioner had artificially concocted the entire fiasco to deliberately escape tax obligations, not merely being a bonus-stripping tactic. Any Court’s primary calling is to make the ends of justice meet. For that, at times, Courts try to see through controversial opinions and circumstances, but they are still bound by the letter of Law. Court cannot unreservedly take up the vast hiatus that exists between the personal opinion of the
14 Eileen Louise Nicole v. John Winter Nicolle, [1992] 1 AC 284
judges and the dominance of evidence, even though they might not individually agree to the evidence presented. This would be a disastrous course as the entire institution of doctrine of separation of powers would be laid to waste. However, public trust and faith in the judiciary is also a deciding factor of great magnitude. The Legislature may fail the society, the Executive may hamper the belief of the society and the media may manipulate the society; but the Judiciary does not only function as the Fourth Pillar of Democracy, but also the stand-alone pillar of absolute faith. Realization of this conscientiousness is, therefore, the duty of paramount significance.
Secondly, it was also observed that GAAR provisions in Chapter X-A of the Act began with a non-obstante clause, giving it the authority of dominate all other provisions of the Act. It was stated as follows by the Hon’ble Court in paragraph 28 of the Judgement:
“28. What next to be appreciated is the fact that chapter X-A begins with a non-obstante clause, where in Section 95(1) dealing with the applicability of the General Anti-Avoidance Rules, it has been held that, notwithstanding anything contained in the Act if the Assessing Authority finds that an arrangement entered into by the Assessee is an impermissible avoidance arrangement, the determination has to be done in respect of the consequential tax arising there from and shall be subject to the provisions of chapter X-A. This in other words means that by virtue of the aforesaid non- obstante clause, the provisions of chapter X-A gets an overriding effect over and above the other existing provisions of law.”
Again, this leaves out a lot of grey area for the correct interpretation of the nature of non- obstante clause and its application. The Court adopted a strict approach and stated that because of the existence of the non-obstante clause, GAAR provisions were to be given preference. Contradictorily, through judicial predicaments, following view held by the Court in Bank of India Vs ACIT15 has echoed through retrospective as well as prospective judgements:
“Clearly, therefore, what is to be seen is "what the provision containing non-obstante clause provides", and, to that extent, the provision containing non-obstante clause sets aside, as no longer valid, any other provision which is inconsistent with such a provision. As Chaturvedi & Pithisaria's Income-tax Law [2020 edition; page 626] puts it, citing authorities for this proposition, a non-obstante clause "is equivalent to saying that in spite of the provisions of the Act, or any other Act mentioned in the non-obstante clause, or any contract or document
15Bank of India Vs ACIT, TS-656-ITAT-2020(Mum)
embraced in the non-obstante clause, it will have its full operation, and that the provisions embraced in non-obstante clause would not be an impediment for operation of the enactment"
Thus, once again, the Court’s judgement on this issue comes under scrutiny as minimal importance has been accrued to the accepted cases; and even if any precedent has been relied upon for such philosophy, has not been cited by the Court.
Thirdly, when deciding upon the factual segment and considering the legislation in question, Court marked the extent of bonus stripping in tax arrangements. As aforementioned, bonus- stripping in a designated genus is permissible, as long as it coincides with tax avoidance strategy and not tax evasion strategy. The provisions of SAAR, particularly section 94(8), were understood in detail. The Court elucidated that, at the time of institution of the suit section 94 only dealt with “units”, which could not automatically be meant to include securities in form of shares and stocks. As discussed in detail earlier, exclusion by one class of provisions does not equate to instinctive inclusion by another. Hence, calculated exclusion of stocks and securities from the realm of SAAR could not be construed as automatic inclusion of such instruments in GAAR. This view holds a lot of merit as any other route would lead to serious catastrophe in the context of strict interpretation rule.
The colossal blunder birthed by the Petitioner was that Petitioner contended to both of these opposing notions – a) that section 94(8) of SAAR should be preferred over applicability of GAAR; and b) section 94(8) does not include shares and stocks under the word “units”, hence its provisions do not apply. This, in the opinion of the Court weakened the Petitioner’s argument.
Lastly, while lifting the veil from the transactions made by the Petitioner, the court relied on the doctrine of commercial substance under section 97. The transactions were a series of interdependent, interrelated and indivisible operations that had the ultimate goal of avoiding tax through legal lacunas. The petitioner vigilantly laid down the platter of counterfeit transactions and aimed to pluck the sinful fruit of pure tax avoidance, by exploring any and all possible means to do so. The lack of commercial substance was a clear indication. The court relied on a vast assortment of decided cases such as the notorious Vodafone International Holding (VIH) v. Union of India (UOI)16 and McDowell & Co. Ltd. v. CTO17, where the Apex
16 Vodafone International Holding v. Union of India, (1972) 4 Supreme Court Cases 15
17 McDowell & Co. Ltd. v. CTO, 1936 AC 1:1935 All ER Rep 259
Court held similar views. Court ultimately held that the initiation of proceedings by the PCIT under section 144A for Impermissible Avoidance Arrangements was indeed lawful and within the scope of its jurisdiction.
“And Miles To Go Before I Sleep”- the Road-Map Ahead
Hon’ble Telangana High Court’s course in reaching the decision in the case of Ayodhya Rami Reddy Alla v/s Principal Commissioner of Income Tax (PCIT) takes the form of a gargantuan river emerging out of the confluence of umpteen number of tributaries, none other than the issues contended and argued upon. The fog around the future of judicial analysis of fiscal and tax-related statutes has now cleared up, though not in full measure, but substantially enough. Varying from the usual type of legislations upon which writ petitions are founded, this instant case displayed, altogether, a new spectrum of interpretation of law and rules associated with fiscal statutes. It is common knowledge that fiscal and penal statutes are not to be interpreted ordinarily due to their punitive nature. The Hon’ble Court, too, tried to imbibe this principle and do it justice. A few setbacks could be pin-pointed in the Court’s approach, but it still shows promise for future discrepancies. The judgement destroyed the shibboleth that the loopholes in the Income Tax legislations could be tampered with and exploited to any extent under the pretext of “sophisticated strategy”. It does much more than laying down the stepping stones for future tax-based litigations; it reaffirms that the faith of the nation in the Judiciary, once again putting on display the fact that Justice is Blind, but Judges are not sightless.