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Issues involved: Interpretation of statutory provisions u/s 54E(3) and principles of taxation.
Summary: The High Court of Karnataka heard an appeal regarding the interpretation of the provisions of section 54E(3) of the statute book. The appellant's counsel argued that the benefit should not be afforded to the assessee as the provision was omitted from the statute book when the additional compensation was received. The Tribunal's order was criticized for lack of application of mind, leading to a suggestion of remanding the case for re-decision. However, the respondents' counsel argued against a remand, citing principles upheld by the Andhra Pradesh High Court and emphasizing that a remand would not serve any useful purpose. The appellant's counsel referred to decisions of the Andhra Pradesh High Court to support the argument that the situation changes if enhanced compensation is received after the provision's deletion. The court emphasized the need to harmoniously construe the provisions of sections 54E(3), 155(7A), and 155(10B) to achieve the effective purpose of the law. It was highlighted that a strict time factor application would lead to incongruous results and that the compensation should be viewed from a rational angle. Citing Supreme Court decisions, the court emphasized that if a strict interpretation of a statute leads to an absurd result, a different construction should be preferred. Equity and justice should guide the interpretation of statutory provisions. Applying the principles expounded by the Andhra Pradesh High Court, the High Court of Karnataka held that the assessee qualifies for the benefit despite setting aside the Tribunal's order. The appeal technically succeeded, but it was noted as a paper decree for the Department. In conclusion, the court ruled in favor of the assessee based on the principles of statutory interpretation and equity. No costs were awarded in the circumstances of the case.
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