M/S. GOVIND IMPEX (P) LTD. AND ORS. versus APPROPRIATE AUTHORITY, INCOME TAX DEPARTMENT

Citation: [2010] 14 S.C.R. 523 · Decided: 07-12-2010 · Supreme Court of India · Bench: H.S. BEDI · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2010] 14 (ADDL.) S.C.R. 523 
M/S. GOVIND IMPEX (P) LTD. AND ORS. 
v. 
APPROPRIATE AUTHORITY, INCOME TAX DEPARTMENT 
(Criminal Appeal No. 41 of 2004) 
DECEMBER 7, 2010 
[HARJIT SINGH BEDI AND CHANDRAMAULI KR. 
PRASAD, JJ.] 
A 
B 
Income Tax Act, 1961: Chapter XXC; s.269UA(f)(i), 
Explanation - Premises let out on lease for nine years with 
C 
an option to the lessee to renew it for a further period of nine 
years on fulfillment of certain terms and conditions -
Applicability of Explanation to s. 269UA(f)(i) -
Held: Is 
applicable since lease provided for extension of term, and the 
aggregate of /ease period and period of extension counted 
D 
together made it more than twelve years. 
Deeds and documents: Lease deed - Interpretation of -
Held: The terms of a lease deed are not to be interpreted 
following strict rules of construction - One term of the lease 
cannot be taken into consideration in isolation - Entire 
E 
document in totality has to be seen to decipher the terms and 
conditions of /ease. 
Interpretation of statutes: Penal statute which makes an 
act a penal offence or impose penalty - Held: Is to be strictly 
F 
construed and if two views are possible, one favourable to the 
citizen is to be ordinarily preferred. 
The appellants leased out the suit premises for a 
period of nine years and the lease was renewable for a 
G 
further period of nine years. The income tax department 
issued a show cause notice alleging that the lease was 
for a period of more than 12 years and, therefore, the 
provision of Chapter XXC of the Income Tax Act, 1961 
523 
H 
I 
524 SUPREME COURT REPORTS [2010] 14 (ADDL.) S.C.R. 
A was attracted. The appellants replied that the lease was 
only for a period of nine years and that the lease deed 
provided an option to the lessee to renew the lease for a 
further period of nine years and, therefore, the provision 
of Chapter XXC of the Act was not attracted. The 
B appropriate authority rejected the reply of the appellants 
and held them guilty of not complying with the provisions 
of Section 269UC of the Act. Accordingly, a complaint was 
laid under Section 267 AB read with Section 2788 of the 
Act before the Magistrate. The Magistrate took 
c cognizance of the offence. The appellant unsuccessfully 
challenged the same in the High Court. Aggrieved, the 
appellants filed the instant appeal. 
Dismissing the appeal, the Court 
D 
HELD: 1. A plain reading of the Explanation to 
Section 269UA(f)(i) of the Income Tax Act, 1961 shows 
that if a lease provides for the extension of the term 
thereof by a further term, it shall be deemed to be a lease 
for a term of not less than twelve years, if the aggregate 
E of the period for which the lease is granted and period 
of extension counted together makes it more than twelve 
years. There is no dispute in regard to the interpretation 
of Explanation to Section 269UA(f) of the Act and it will 
cover only such cases where provision for extension in 
F lease deed exists. The terms of lease deed are not to be 
interpreted following strict rules of construction. One term 
of the lease cannot be taken into consideration in 
isolation. Entire document in totality has to be seen to 
decipher the terms and conditions of the lease. In the 
G instant case, Clause 1 of the lease deed in no uncertain 
terms provided for extension of period of lease for a 
further period of nine years and clause 12 therl!of 
provided for renewal on fulfillment of certain terms and 
conditions. Therefore, when the document is constructed 
as a whole, it is apparent that it provides for the extension 
H 
GOVIND IMPEX (P) LTD. v. APPROPRIATE AUTH., 
525 
INCOME TAX DEPTT. 
of the term. If that is taken into account, the lease is for a 
A 
period of not less than twelve years. Once it is held so, 
the Explanation to Section 269UA(f)(i) is clearly attracted. 
The High Court rightly observed that the conjoint reading 
of clauses 1 and 12 of the lease deed showed that the 
lessor intended the lease to last for 18 years and the 
B 
lessor could not have refused to renew/extend the lease 
after first term if the lessee complied with the conditions. 
[Paras 6, 7] [529-8-D] 
Provash Chandra Dalui and another v. Biswanath 
Banerjee and another (1989) Supple.(1) sec 487; State of C 
U.P. and others v. Lalji Tandon (Dead) through Lrs. (2004) 1-
SCC 1; Hardesh Ores (P) Ltd. v. Hede and Company (2007) 
5 sec 614 - referred to. 
2. It is well settled that the penal statute which makes 
D 
an 

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