Per Pramod Kumar, A.M. - In this appeal, directed against CIT(A)’s order for the assessment year 1998-99, solitary grievance of the assessee is that the CIT(A) erred in rejecting assessee’s claim for exemption under section 10B of the Income-tax Act, 1961. This issue is set out in a narrow compass of undisputed facts and involves only a question of legal interpretation.

2. The assessee-company has a one hundred per cent export oriented unit (EOU), known as ‘Instant Tea Division’, in respect of which exemption under section 10B was claimed for this year, even though the assessee had already availed the benefit of section 10B for five consecutive years and section 10B(3), as it stood in the relevant assessment year and in fact prior to the amendment w.e.f. 1st April, 1999, provided that "the profits and gains referred to in sub section (1) shall not be included in the total income of assessee in respect of any five consecutive years". The assessee’s claim was that in view of amendment in section 10B, with effect from 1st April 1999, this benefit was available for ‘ten consecutive years’ and since the assessee had completed only five years of exemption under section 10B, the assessee was also eligible for further exemption for next five years. This claim was declined by the Assessing Officer by observing that the amendment, enhancing the number of eligible assessment years to ‘ten’ did not provide for retrospective amendment, and, accordingly, the benefit of ten years cannot be granted in the present assessment year. It was also observed that admittedly legal provision, as it stood in the relevant assessment year, provided for benefit of exemption under section 10B for five consecutive assessment years. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. Still aggrieved, the assessee is in second appeal before us.

3. We have heard the rival contentions, perused the orders of the authorities below and deliberated upon factual matrix of the case as well as applicable legal position.

4. The basic thrust of assessee’s submissions is that the Legislature clearly intended to ‘extend’ the benefit of exemption under section 10B from ‘five’ years to ‘ten’ years, and that, if this intent is to be put into effect, the law cannot be enforced in such a manner so as to deny the benefit to the existing units. A lot of emphasis was made on the Statement of Objects and Reasons (235 ITR St 1 at page 4) which inter alia states that "The proposed amendment seeks to extend the period of tax holiday from five years to ten years in order to give added thrust to exports. Clause 4 seeks to similarly extend the five years tax holiday period to ten years to the export oriented units under section 10B of the Act". A case is then made out for supplying the casus omissus because the intent of amendment warrants and justifies the same. Learned counsel has placed reliance on the judgment of Hon’ble Supreme Court in the case of CIT v. National Taj Traders [1980] 121 ITR 535¹ at pages 541-42 for that purpose. Learned counsel has also relied upon the judgment of Hon’ble Supreme Court in the case of M. Pentiah v. Muddalla Veeramalappa AIR 1961 SC 1107 at page 1115 which has taken note of, with approval, Lord Justice Denning’s following observations in the case of Seaford Court Estates Ltd. v. Asher [1949] 2 All ER 155 at page 164:

‘...when a defect appears, a judge cannot simply fold his hands and blame the draftsmanship. He must set out to work on the constructive task of finding the intention of Parliament...and then he must supplement the written word so as to give "force and life" to the intent of legislature...A judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it they would have straightened it out? He must do as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases’

We are thus urged to hold that, in order to implement the spirit behind the amendment i.e. extending the benefit to existing units also, the amendment is to be construed as retrospective in nature - particularly as there was no sunset or sunrise clause in the amending provisions. On the other hand, learned Departmental Representative has contended that unless the law specifically provides so, a provision cannot be deemed to be retrospective in nature. It is also contended that the provisions are plain and unambiguous and, therefore, there is no need to examine the intent of Legislature, and that, in any event, there is nothing to suggest that the Parliament intended to extend the period of benefit to the existing units, as learned counsel as strenuously argued. We are thus urged to confirm the orders of the authorities below and decline to interfere in the matter.

5. We find that it is not in dispute that the substitution of ‘ten consecutive assessment years’ in the place of ‘five consecutive assessment years’ was effective from 1st April, 1999 and that the law, as it stood at the beginning and even at the end of the relevant assessment year, provided for the benefit for five consecutive assessment years only. It is fairly well-settled that the general rule is that all statutes, other than those which are declaratory or procedural, are prospective and that retrospective effect is not to be given to the statute unless by express words such intention of the Legislature is unambiguous. In the case of Saurashtra Agencies (P.) Ltd. v. Union of India [1990] 186 ITR 634 , Hon’ble Calcutta High Court has summed up this principle by observing as follows:

"The law is very clear that, unless provided by the statute, the law is always presumed to be prospective in nature. There can not be any implied inference of any retrospective operation of law. The retrospective operation must be clear and unambiguous. Nothing could be inferred by any stretch of imagination."

In this view of the matter, and in the absence of any express provision for retrospective operation of amendment, we are of the considered view that the assessee was indeed not entitled to the benefit of exemption under section 10B for the relevant previous year.

6. To put a question to ourselves and with the benefit of having conscientiously heard erudite and ingenious, even if legally unsustainable, arguments of enthusiastic counsel, what, after all, could have been intention of Legislature which, according to the assessee, justifies and warrants that the amendment in section 10B is to be construed as retrospective in application.

7. Learned counsel’s emphasis is on the expression "to extend the period of tax holiday from five years to ten years in order to give added thrust to exports" appearing in the Statement of Objects and Reasons (235 ITR St 1, at page 4) of the amendment. However, this does not suggest that the intention was to "extend" the period of tax holiday for existing units also which have already exhausted the eligible period, though, of course, it could have been perhaps more equitable and just to give added five years to those old units as well. As learned counsel has pointed out, a sunrise or sunset clause could have been perhaps more desirable but then, if law- makers intended to put such clauses, nothing prevented them from providing for the same. The whole case of the assessee, even as per assessee’s own admission, hinges on the connotations of expression "extend" appearing in the ‘statement of objects and reasons’ but then the connotations of this expression, as canvassed by the assessee, appear to be that this expression indicates ‘increase in the period of tax holiday’ and, accordingly, the period of tax holidays is to be construed as enhanced to ‘ten’ years for all the EOUs including, of course, the EOUs in respect of which tax holiday period has already exhausted. During the course of arguments, we did ask the assessee as to why could it not be the sole objective of the amendment to make setting up of new EOUs more attractive from tax point of view, and how, after all, added thrust could be given to exports by enhancing the period of tax holidays for the units which are already in existence and in the export business. Such a proposition may be unreasonable but then there is nothing ‘in the statute’ to conclusively establish that the intent of the Legislature was more than that and that the amendment was specifically with a view to enhance the tax holiday period of existing units which have exhausted the benefit of section 10B for five consecutive years. Learned counsel submitted that such a view will be inequitable, but then, as are the famous words of Rowlett, J, "in a taxing Act one has to look at merely what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used". In any event, we are of the considered view that there is no support for the factual element embedded in assessee’s submissions about the ‘true intent of Legislature’. Whether an omission can be inferred or not could perhaps be construed as a debatable question but it is well-settled that the intent is not to be inferred and that the same must be found in the plain and unambiguous words. There is nothing before us to establish assessee’s interpretation of intent of Legislature. Be that as it may, even assuming, for argument’s sake, that giving five more years of tax holiday to existing unit was indeed intention of the law-makers but that question can only be examined in the year in which the amended law is to take effect, i.e., assessment year 1999-2000, or thereafter.

8. Casus omissus, which broadly refers to the principle that a matter which has not been provided in the statute but should have been there, cannot be supplied by us, as, to do so will be clearly beyond the call and scope of our duty which is only to interpret the law as it exists. Hon’ble Supreme Court, in the case of Smt. Tarulata Shyam v. CIT [1977] 108 ITR 345 at page 356 has observed:

"We have given anxious thought to the persuasive arguments..., (which) if accepted, will certainly soften the rigour of this extremely drastic provision and bring it more in conformity with logic and equity. But the language of sections...is clear and unambiguous. There is no scope for importing into the statute the words which are not there. Such interpretation would be, not to construe, but to amend the statute. Even if there be a casus omissus, the defect can be remedied only by legislation and not by judicial interpretation...To us, there appears no justification to depart from normal rule of construction according to which the intention of Legislature is primarily to be gathered from the words used in the statute. It will be well to recall the words of Rowlatt, J. in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64 (KB) at page 71, that: "...in a taxing Act one has to look at merely what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." Once it is shown that the case of the assessee comes within the letter of law, he must be taxed, however great the hardship may appear to the judicial mind to be."

Even in the case of National Taj Traders (supra), relied upon by the assessee, Their Lordships of Hon’ble Supreme Court have referred to, with approval, Maxwell on Interpretation of Statutes’ observation that "A case not provided for in a statute is not to be dealt with merely because there seems no good reason why it should have been omitted, and that the omission appears in consequence to have been unintentional". Their Lordships then observed that "In other words, under the first principle, a casus omissus cannot be supplied by the court except when reason for it is found to be in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute". In the present case, the reason for casus omissus is admittedly not in the statute itself but, as we could make out, only because, according to the assessee, there is no good reason for excluding the existing EOUs from the benefit of extended period. Even going by the principles enunciated in National Taj Trader’s case (supra), this cannot be a reason enough for the casus omissus. It is not that interpreting the time limit in section 10B as ‘ten consecutive assessment years’ with effect from 1st April, 1999 would, to use the words approved by Their Lordships, ‘defeat the obvious intention of legislation and to produce a wholly unreasonable result’, but, even according to the assessee, only that there is no good reason as to why this amendment was not effective from 1st April, 1998 or, to put it definitely, such a retrospective operation would have been more in harmony with the perceived objects of the amendment. By no stretch of logic, such a situation could be a fit case for inferring the omission. It has been recognized by the Hon’ble Supreme Court, in the case of Petron Engineering Construction (P.) Ltd. v. CBDT AIR 1989 SC 501 that in respect to a matter provision of which may have been desirable but has not been really provided by the Legislature, the omission can not be called a defect of the nature which can be cured or supplied by recourse to the mode of construction advocated by Lord Denning in Seaford Court Estates Ltd.’s case (supra).

9. As for the Lord Denning’s observations in the Seaford Court Estates Ltd. (supra), which have been heavily relied upon by the learned counsel, we wish to make some observations. The House of Lords itself, in a later judgment in the matter of Magor & St. Mellons Rural District v. Newport Corpn. [1951] 2 All ER 839, did not approve the proposition advanced by Lord Denning. It is interesting to note the articulate expressions of Lord Simonds, supporting the majority view and at page 841 of All England Report Volume 2 (1951), unequivocally and categorically rejecting Lord Denning’s theory on the relevance of intent of Legislature:

"My Lords, the criticism which I venture to make of the judgment of learned lord justice (Denning LJ) is not directed at the conclusion he has reached. It is after all a trite saying that on questions of construction different minds may come to different conclusions...But it is on the approach of lord justice to which is a question of construction and nothing else. I think it desirable to make some comment, for, at a time when so large a proportion of the cases that are brought before the Courts depend on the construction of modern statutes, it would not be right for this House to pass unnoticed the propositions that the learned lord justice lays down for the guidance of himself and presumably others...

...The part which is played in judicial interpretation of a statute by reference to the circumstances of its passing is too well known to need re-statement...The duty of the Court in to interpret the words that the Legislature has used. Those words may be ambiguous, but, even if they are, power and duty of the Court to venture outside them on a voyage of discovery are strictly limited; see, for instance, Assam Railways & Trading Co. Ltd. v. Inland Revenue Commissioners (2) and particularly the observations of Lord Wright [1935] AC 458...

...What the Legislature has not written, the court must write, and fill in the gaps. This proposition, which restates in a new form the view expressed by the lord justice in the earlier case of Seaford Court Estates Ltd. v. Asher (to which lord justice himself refers) cannot be supported.

...It appears to me to be naked usurpation of Legislative function in the thin guise of interpretation and it is less justifiable when it is guesswork with what material the Legislature would, if it had to discover the gap, have filled it in. If a gap is disclosed, the remedy lies in an amending Act..."

Lord Denning’s aggressive definition of the power of the Courts, so far as question of casus omissus is concerned, was severely criticized by Lord Simonds and other law lords in the above case. Lord Morton observed that "These heroics are out of place" and pointed of Lord Tucker "Your Lordships would be acting in a legislative rather than judicial capacity of the view put forward by Denning LJ were to prevail" (at page 850). As observed in Cross: Statutory Interpretation (2nd Edition, at page 45), the current tendency among English judges would appear to incline away from the Denning approach. These views are also echoed by Hon’ble Supreme Court of India from time to time. In the case of State of Kerala v. Mathai Verghese AIR 1987 SC 33, Hon’ble Supreme Court has taken a view that the court cannot reframe the legislation for the very good reason that it has no power to legislate. In Jumma Masjid v. Kodiamaniandra AIR 1962 SC 847, at page 850 Hon’ble Supreme Court referred to, with approval, Lord Loreburn’s observation, "We are not entitled to read words into an Act of Parliament unless clear reasons for it is to be found within the four corners of the Act itself." Vickers Sons & Maxim Ltd. v. Evans [1910] AC 444 HL, at page 445. Lord Simonds rejection of Denning’s approach was cited, with approval, by Hon’ble Supreme Court in the case of Punjab Land & Development Corpn. v. Presiding Officer 1990 (3) SCR 111, at pages 153-54. We leave it at that.

10. In view of the above discussions, we see no merit in assessee’s grievance. In our considered view, the assessee, having already availed section 10B benefit for five consecutive assessment years, was not eligible for exemption under section 10B any further, so far as assessment year 1998-99 is concerned. Accordingly, we confirm the conclusions arrived at by the authorities below and decline to interfere in the matter.

11. In the result, assessee’s appeal is dismissed.

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