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32 Supremo Amicus [1] (2023)

handle is hein.journals/supami32 and id is 1 raw text is: 



ISSN  2456-9704


By Sushanth Sreeram
From  NUALS,  Kochi


A  tax  can  be termed   as a  compulsory
contribution  to   the  support   of   the
Government,   levied on  persons, income,
commodities,  transactions etc.  However,
interpreting tax laws becomes quintessential
for many reasons. Interpreting tax laws in a
clear and consistent manner promotes legal
certainty, which helps taxpayers understand
their tax obligations and plan their affairs
accordingly. Besides, the interpretation of tax
laws   helps  to  provide  clarity to  tax
administrators and tax professionals, who can
rely on the clear and consistent interpretation
of the tax laws to perform their duties. Thus,
the strict interpretation of taxing statutes is
quintessential for promoting legal certainty,
fairness, compliance, the rule of law, and
clarity in tax administration.

A strict interpretation of taxing statutes refers
to the approach of interpreting tax laws and
regulations in a literal and precise manner. In
this approach, tax laws are viewed as strict
and  unambiguous,  and  any  ambiguity  or
uncertainty is resolved in  favour of  the
taxpayer. This interpretation is based on the
principle that taxes are the lifeblood and
source of income  for the Government  and

1 Constitutional Rights Foundation, The Income Tax
Amendment: Most Thought It Was a Great Idea in
1913,     https://www.crf-usa.org/bill-of-rights-in-

should be  imposed  only as authorized by
clear and unmistakable legislative intent.


The  interpretation of taxing statutes has a
long and complex history. The early days of
the  United  States witnessed the  federal
Government  relying primarily on tariffs and
excises to generate revenue. However, in the
late 19th and early 20th centuries, the Federal
Government  began  to rely more heavily on
income  taxes as a source of revenue. This
shift in  taxation  led to  several  legal
challenges, as the constitutionality of income
taxes was not firmly established.1

One  of the most notable cases in the history
of taxing statutes interpretation is Brushaber
v. Union Pacific Railroad Co2 (1916). The
Apex  Court upheld  the constitutionality of
the federal income tax imposed by the 16th
Amendment,   which provided Congress with
the power  to tax incomes  'from whatever
source derived.' This decision established the
principle that the Federal Government had
the authority to tax the income of individuals
and corporations and laid the foundation for
the modern federal income tax system.

Another  important case in  the history of
interpreting tax statutes is the  case  of
Helvering v. Gregory3 (1935). In this case,
the Supreme  Court established the principle
of  'economic  reality' as  the basis  for
interpreting tax statutes by laying out the
roots for the principle - the substance over
form doctrine. The Court observed that the
substance over form  doctrine applies only

action/bria-11-3 -b-the-income-tax-amendment-most-
thought-it-was-a-great-idea-in-1913. html/.
2 240 U.S. 1 (1916).
3 Gregory v. Helvering, 293 U.S. 465, 469-470 (1935).


PIF  6.242

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