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This maxim means that ‘general things will not derogate from the special
provisions’ .This maxim is invoked to determine the scope of a general enactment
with reference to a special enactment which precedes it.
(1) Both the general enactment and particular enactment must be simultaneously
operative, the general enactment covering the larger field and the particular
enactment covering a limited field out of a larger field covered by the general
enactment.
(2) There must be nothing contained in the general provisions indicating the
legislative intent to overrule or set aside the particular provision.
In other words this maxim will apply whenever there is particular enactment
and a general enactment in the same statute, and the latter, taken in its most
comprehensive sense, would overrule the former, the particular enactment must
be operative, and the general enactment must be taken to affect only the other
parts of the statute to which it may properly apply.
This maxim is applicable subject to the condition that there is nothing in the
general provision, expressed or implied, indicating an intention to the contrary.
If a special provision is made on a certain matter that matter is excluded from the
general provision.
of the Assessing Officer. On further appeal, the Tribunal confirmed the order of the
Commissioner (Appeals).On further appeal the court relying on this maxim held that
Section 37(4) specifically denies any depreciation on maintenance of such kinds of
guest house. This is a special provision and this will override the general provisions
of depreciation applicable in the Act. The Tribunal applying this principle had rightly
declined to grant any relief to the assessee. Once a particular provision has been
made, then that provision will prevail as against the general provision. It is a well
known dictum which has been accepted and known as “Generalia specialibus non
derogant . The Tribunal had rightly approached the matter and denied the
depreciation to the assessee in respect of the expenditure claimed.
The assessee-company had paid ex gratia bonus in excess of 8.33 per cent in the
relevant previous years. The Assessing Officer disallowed the excess amount. On
appeal, the assessee contended that those payments were made as per the agreement
with Workers’ Union dated 3-7-1985 and the purpose was to buy industrial peace. It
also claimed that the expenditure incurred on ex gratia payment was to be allowed
under section 37(1) and that as the amount did not exceed 20 per cent of the salary,
that was also allowable under section 36(1)(ii). The Commissioner (Appeals) allowed
the expenditure. On revenue’s appeal, the Tribunal held that from section 37(1) it
refers to the allowability of only those expenses, which are not described in sections
30 to 36. It is a general provision. If some expenditure is described in sections 30 to
36, the same cannot be considered under section 37(1). That is a residuary provision.
If the Act has prescribed any special provision for the allowability of such
expenditure, that special provision will prevail over the general provision. That is in
conformity with the principle enunciated in the dictum: generalia specibus non
derogant (general things will not derogate from special things). Relying on this
maxim the court held that in the instant case, the amount of bonus was reasonable
with reference to pay of the employees and the conditions of their services. It was also
reasonable with reference to the profit of the business. It was established with
reference to the records that there was general practice of making such ex gratia
bonus to the employees. As such, the assessee complied with the conditions contained
in section 36(1)(ii). For the reasonings adduced in the impugned order, the
Commissioner (Appeals) took a correct view in the matter and his order called for no
interference and, accordingly, it was to be upheld. In the result, appeal of the revenue
stood dismissed.
3) Deputy Commissioner of Income-tax, Circle 4(1), Mumbai v. RBS Equities India
Ltd. 141 TTJ 58 (Mum).
In this case the assessee was a corporate member of the Bombay Stock Exchange as
also National Stock Exchange. During the relevant year, the assessee carried out stock
application of CUP method only where reliable adjustments could be made for
different factors, which would affect the price, and since, in the instant case, no
reliable adjustments could be made to neutralize all the varying factors, it was not
possible to apply CUP method. In the course of the assessment proceedings, the
Assessing Officer referred the ascertainment of arm's length price to the Transfer
Pricing Officer (TPO). The TPO rejected the TNMM method and proceeded to adopt
CUP method. The TPO made an adjustment of Rs. 1,10,29,746 to the arm's length
price. This determination of price was also adopted by the Assessing Officer.
However, the Assessing Officer further observed that the TPO had calculated the
arm's length price in a very systematic method and his calculation was based on a
solid footing and, thus, the assessee had filed inaccurate particulars of his income to
evade tax. Therefore, the Assessing Officer imposed a penalty equivalent to 100 per
cent tax sought to be thus evaded. On appeal, the Commissioner (Appeals) concluded
that the explanation offered by the assessee was bona fide and there was neither any
concealment of income nor furnishing of inaccurate particulars and, accordingly,
deleted penalty imposed by the Assessing Officer. On further appeal , the Tribunal
allowed the appeal & by relying on this maxim, the court held that it is fairly well
settled in law that general provisions do not override specific provisions, as aptly
described by the maxim 'generalia specialibus non derogant'. A special provision
normally excludes the operation of a general provision and we are of the view that
such a principle governs the instant case also. In the case of South India Corpn. (P.)
Ltd. v. Secretary, Board of Revenue AIR 1964 SC 207, at p. 215, Hon'ble Supreme
Court had an occasion to consider whether Article 277 or Article 372 of the
Constitution of India should govern the particular situation involved therein.
Their Lordships then pointed out that "a special provision should be given effect
to the extent of its scope, leaving the general provision to control cases where
specific provisions do not apply". Therefore, in a situation in which Explanation
7 comes into play, the provisions of Explanation 1 cannot be applied. It is thus
clear that so far as the present case is concerned, the same is to be examined on
the touchstone of legal position under Explanation 7 to section 271(1)(c). In this
view of the matter, the Assessing Officer's reference to Explanation 1 to section
271(1)(c), and reliance upon judicial precedents on the scope of the said Explanation,
is wholly misconceived.