legal fiction (deemed) - Definition / Legal Terminology - Income Tax

Word legal fiction - A legal fiction is a supposition of law that a thing or event exists even though, in reality, it does not exist. The word deemed is used to treat a thing or event as something, which otherwise it may not have been, with all the attendant consequences. The effect of a legal fiction is that a position which otherwise would not obtain is deemed to obtain under the circumstances. In K Prabhakaran v. P Jayarajan- 2005 (1) TMI 674 - SUPREME COURT , Chief Justice R C Lahoti, speaking for the majority, observed that: 39. [ ] While pressing into service a legal fiction it should not be forgotten that legal fictions are created only for some definite purpose and the fiction is to be limited to the purpose for which it was created and should not be extended beyond that legitimate field. A legal fiction presupposes the existence of the state of facts which may not exist and then works out the consequences which flow from that state of facts. Such consequences have got to be worked out only to their logical extent having due regard to the purpose for which the legal fiction has been created. Stretching the consequences beyond what logically flows amounts to an illegitimate extension of the purpose of the legal fiction. A legal fiction is created for a definite purpose and it should be limited to the purpose for which it is enacted or applied. It is a well-established principle of interpretation that the courts must give full effect to a legal fiction by having due regard to the purpose for which the legal fiction is created. The consequences that follow the creation of the legal fiction have got to be worked out to their logical extent. The court has to assume all the facts and consequences that are incidental or inevitable corollaries to giving effect to the fiction. In Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] , this Court created a legal fiction by deeming the Section 148 notices issued under the old regime as show cause notices under Section 148A(b) of the new regime. The purpose of the legal fiction was to enable the Revenue to proceed further with the reassessment proceedings as per the substituted provisions of the Income Tax Act. Accordingly, all the reassessment notices issued under the old regime were deemed to always have been show cause notices issued under Section 148A(b) of the new regime. The fiction replaced Section 148 notices with Section 148A(b) notices with effect from the date when the notices under Section 148 of the old regime were issued between 1 April 2021 and 30 June 2021, as the case may be. This ensured the continuance of the reassessment process initiated by the Revenue from 1 April 2021 to 30 June 2021 under the old regime. [UNION OF INDIA ORS. VERSUS RAJEEV BANSAL- 2024 (10) TMI 264 - SUPREME COURT (LB)]