What is “deeming” provision?

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At times, for various reasons, it is not possible to cover certain transactions within the tax-net. In such cases, the draftsman resort to “deeming” provision. Under this scheme of taxation, a particular transaction when applied the touchstone of the charging section will not appear to be taxable. However, it is brought within the tax-net through “deeming” provisions. Insertion of “Explanation” in clause 105(zzzh) and (zzq) extend the scope of the services relating to commercial and industrial construction and complexes by treating the amount received by the builder as services rendered. It is a legislative device. Under the same, what in fact has not been done is treated as having been done under fiction. Deeming section creates a legal assumption that a thing is true which is either not true or may be false or untrue. In construing the deeming provision, statutory fiction is required to be carried to its logical conclusion but the fiction cannot be extended beyond the language of ... more
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