2015 Supreme(SC) 792

SUPREME COURT OF INDIA
A.K. Sikri, R.F. Nariman, JJ.
M/S FIBRE BOARDS (P) LTD. BANGALORE – APPELLANT
VERSUS
COMMISSIONER OF INCOME TAX, BANGALORE – RESPONDENT
CIVIL APPEAL NOS. 5525-5526 OF 2005
Decided on : 11-08-2015

IMPORTANT POINTS
Budget Speech, notes on clauses and memorandum explaining the Finance Bill can be taken help of in determining intention of the legislature.
On repeal of section 280ZA of the Income Tax Act and enactment of section 54G, section 280Y(d) was repealed by implication.
Not referring to a provision of law or earlier judgment renders a judgment per incuriam.
Repeal and omission have the same effect. Hence both are covered by section 24 of the General Clauses Act.

Headnote:(a) Interpretation of statute – Intention of legislature – External aid – Budget Speech, notes on clauses and memorandum explaining the Finance Bill – Can be taken help of in determining intention of the legislature. (Para 12, 14, 15)

       (b) Interpretation of statute – Repeal by implication – Section 280ZA repealed and section 54G introduced in the Income Tax Act by the same Finance Act – Section 280Y(d) defining ‘urban area’ for the purpose of section 280ZA not omitted simultaneously with 280ZA – Omitted in 1990 – However Explanation to section 54G defining ‘urban area’ in the same terms as section 280Y(d) – Both provisions could not exist simultaneously till 1990 when section 280Y(d) was omitted – Held, section 54G repealed section 280Y(d) by implication. (Para 12)

       (1964) 4 SCR 461; (1989) 3 SCC 537 – Relied upon

       (c) General Clauses Act – Section 24 – Repeal and omission – Section 6 of the Act saves certain rights, but Section 24 merely continues notifications, orders, schemes, rules etc. made under a repealed and reenacted Central Act, with or without modification – Section 24 continues uninterruptedly the subordinate legislation made under such repealed and reenacted central legislation – Application of section 24 has to be specifically excluded. (Para 18)

       1992 Supp. (1) SCC 182; (2002) 3 SCC 481 – Relied upon

       (d) Income Tax Act, 1961 – Section 54G r/w section 24, General Clauses Act – ‘Thane’ notified as urban area u/s 280ZA which was omitted and reenacted as section 54G – On omission of Section 280ZA and its re-enactment with modification in Section 54G, Section 24 of the General Clauses Act would apply – High Court, in not referring to section 24 of the General Clauses Act at all in the impugned judgment, fell into error – Notification of 1967, declaring Thane to be an urban area, would be continued under and for the purposes of Section 54G. (Para 18, 35)

       1992 Supp. (1) SCC 182; (2002) 3 SCC 481 – Relied upon

       (e) Interpretation of statute – Repeal and omission – Per incuriam – Constitution Benches in (1969) 2 SCC 412 and (2000) 2 SCC 536 construing section 6 of General Clauses Act – Not referring to section 6A – Also not referring to earlier Constitution Bench judgment in (1964) 4 SCR 461 – Renders them per incuriam – Makes them not binding. (Para 29)

       (1975) 3 SCR 834; (1991) 3 SCR 64; (1964) 4 SCR 461 – Relied upon

       (1969) 2 SCC 412; (2000) 2 SCC 536; (2002) 7 SCC 1 – Referred

       (f) Interpretation of statute – Repeal – General Clauses Act – Section 6 – Temporary statute – Section 6 does not apply to temporary statute because they expire by afflux of time – There is no repeal, either express or implied – However if even a temporary statute is repeal before expiry of its time, section 6 would apply. (Para 33)

       (1955) 1 SCR 893 – Relied upon

       (g) General Clauses Act – Section 6 and 24 – Repeal, implied repeal and omission – Repeals may take many forms – Express or implied – Effect is the same, obliteration – On omission and reenactment of a provision section 24 will apply. (Para 31, 35)

       (1964) 4 SCR 461; (1999) 3 SCC 632 – Relied upon

       (h) Income Tax Act, 1961 – Section 54G – Capital gains – Purchase of machinery or acquisition of land to be done within three years of transfer of old assets – In the assessment year of getting capital gains, Assessee has only to ‘utilize’ the amount for purchase/acquisition of machinery or land etc. – If assessee is required to complete the purchase/acquisition in the assessment year of getting capital gains then the window of three years will be rendered nugatory – Impugned judgment cannot be sustained. (Para 36, 38)

       Facts of the case:

       The appellant had its plant and machinery situated at Majiwada, Thane to Shree Vardhman Trust and thereby earned a capital gain of Rs.1,08,33,044/-. Since it intended to shift its industrial undertaking from an urban area to a non-urban area, the appellant claimed exemption under Section 54G of the Income Tax Act on the entire capital gain earned from the sale proceeds of its erstwhile industrial undertaking situate in Thane in view of the advances so made being more than the capital gain made by it.

       The Assessing Officer imposed a tax on capital gains, refusing to grant exemption to the appellant under Section 54G.

       The Commissioner, Income Tax (Appeals) dismissed the appellant’s appeal.

       The Income Tax Appellate Tribunal allowed the assessee’s appeal stating that even an agreement to purchase is good enough and that the explanation to Section 54G being declaratory in nature would be retrospective.

       The High Court reversed the judgment of the Income Tax Appellate Tribunal.

       Finding of the Court:

       Impugned judgment cannot be sustained.

       Result: Appeals allowed.