LOHIA MACHINES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) These Writ Petition raise an interesting question of law relating to the interpretation of S. 80-J of the Income Tax Act, 1961, and on the basis of certain interpretation, they challenge the validity of Rule 19-A of the Income Tax Rules, 1962 and also call in question the constitutionality of the retrospective amendment made in S. 80-J by Finance (No. 2) Act, 1980. The questions arising in these Writ Petition are of considerable importance since they involve revenue aggregating to crores of rupees and they have been argued at great length on both sides.

(2.) The principal controversy between the parties turns on the true interpretation of S. 80-J of the Income Tax Act, 1961 and hence we may begin our discussion of the issues arising in the writ petitions by examining the language of that section. But before we do so, we may usefully refer to the genesis of the provision enacted in S. 80-J and the transformation it has undergone from time to time over the years. It is in fact necessary to trace the historical evolution of this provision in order to arrive at its true interpretation, for, as observed by Cardozo, J. in Duparquet Huat v. Evans, in questions relating to construction, "history is a teacher that is not to be ignored". The first time that a provision of this kind was introduced in the Indian Income Tax Act, 1922 was by the Taxation Laws (Amendment) Ordinance, 1949 when S. 51-C was added in that Act with effect from 31/03/1949. Ss. (1) of S. 15-C exempted a part of the profits and gains of a new industrial undertaking from tax and this provision as originally enacted was in the following terms :

(3.) The Taxation Laws (Amendment) Ordinance, 1949 was replaced by the Taxation Laws (Extension to Merged States and Amendment) Act, 1949 which came into force on 31/12/1949 and by S. 13 of this Act, S. 15-C was continued and though some minor modifications were made, Ss. (1) which granted the exemption remained unchanged. Ss. (2) , (4) and (6) suffered some minor changes and, as re-enacted, these Ss. read as follows: