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What is ‘indentation’ and what is its significance in the I.T. Act

In my last article on “Definition of words and phrases under the Income Tax Act, 1961” we have seen how each and every word is important in a statute. Now let us make an attempt to know the significance of ‘indentation’ in a statute particularly the Income tax Act, 1961(the Act). ‘Indentation’ for this purpose means “the blank space between a margin and the beginning of an indented line”. We know that a ‘Proviso’ generally defeats the operation or conditionality of a provision of section or sub-section or clause or sub-clause below which it is placed. We further know that a sub-section may have a few clauses. Now when a ‘Proviso’ is placed below the last clause of a sub-section then a question arises whether the said ‘Proviso’ is applicable to only the last clause or to the whole of sub-section as the said ‘Proviso’ is also placed below the sub-section. ‘Indentation’ of the ‘Proviso’, that is, blank space between a margin and the beginning of the Proviso shall guide to find the answer. Proviso below clause (d) of sub-section (1) of section 112 of the Act or in other words proviso below sub-section (1) of section 112 of the Act refer to the same proviso. In Timken France Sas vs DIT (2007) CTR AAR 347 the issue came up for discussion. Again in the case of Cairn U. K. Holdings Ltd [AAR 950 of 2010] this issue was raised. Notice the arguments from the appellants.

When the Proviso and the sub-section have same ‘indentation’ that is same space then the Proviso relates to sub-section and when the Proviso and the clause has same ‘indentation’ then the Proviso relates to clause. Keeping this view in mind please read various provisos and try to observe the pattern for better understanding.

ITKP on May 04 2015 13:55:44

I am speechless.

lathakumar on May 04 2015 15:29:43

Great!! Now, shall observe this aspect closely. Thanks Sir

Sudha Ramakrishnan on May 04 2015 15:40:16

Great info Timir Sir!!! We can observe these aspects from now on and understand them properly!!!

avnair on May 05 2015 10:17:38

Sir... Simply great.
I had read IT act from 1992 to 2014, but never ever thought of this. Thanks again sir

Jitendra Kumar Verma on July 23 2016 06:12:43


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