Article 60 of the Limitation Act - To set aside a transfer of property made by the guardian of a ward- (a)by the ward who has attained majority. (b)by the ward's legal representative- Three years When the ward attains majority. i) When the ward dies within three years from the date of attaining majority. Three years When the ward attains majority. ii) When the ward dies before attaining majority.” Three years When the ward dies. = Whether the sale deeds executed by late Balaraman, the natural guardian of minor Palanivel, of the properties of the minor are valid in law when the said sale deeds were executed in gross violation of Section 8(2)(a) of the Hindu Minority and Guardianship Act, especially when the mother, who claimed under the minor avoided the sale immediately on the demise of the minor? =The suit is barred by limitation since the suit has not been filed within 03 years from the date of death of Palanivel i.e. 11.02.1986 = We are, thus, of the considered opinion that in the present case it was necessary for the person claiming through minor to bring an action within a period of three years from the date of the death of the minor to get sale deed executed by Balaraman set aside. We, thus, conclude that the sale deeds executed by Balaraman were not repudiated or avoided within the period of limitation as prescribed by law.

Hon'ble Mr. Justice Ashok Bhushan
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1782 OF 2019
(arising out of S.L.P. (C) No. 21091 of 2010)
MURUGAN & ORS. ...APPELLANTS
Vs.
KESAVA GOUNDER (DEAD)
THR. LRS. AND ORS. ...RESPONDENTS
J U D G M E N T
ASHOK BHUSHAN, J.
This is the plaintiff’s appeal challenging the
judgment of Madras High Court dismissing the second
appeal filed by the plaintiffs-appellants.
2. Brief facts of the case are:-
2.1 The suit property belongs to one Petha
Gounder. Petha Gounder had two sons namely
Kannan and Balaraman and three daughters.
Sengani Ammal was wife of Petha Gounder. On
17.05.1971 Petha Gounder executed a Will
bequeathing life interest to his sons Kannan
and Balaraman and thereafter to the two male
1
heirs of his both the sons, who were to take
the property absolutely. Will further
stipulated that in event, there is no male
heir to one of his sons, the male heirs of
other son will take the property. Petha
Gounder died on 28.11.1971 leaving behind his
wife, two sons Balaraman and Kannan and three
daughters. Petha Gounder’s wife Sengani
Ammal died on 02.02.1982. Balaraman had one
son namely Palanivel.
2.2 Balaraman on his behalf as well as on behalf
of his minor son had sold Item Nos.1 to 3 of
the suit properties by registered Sale Deed
dated 15.12.1981. Balaraman also sold Item
No.6 and a portion of Item No.7 by two Sale
Deeds dated 30.03.1981 and 31.03.1981 in
favour of the first defendant. Balaraman had
sold Item No. 6 in favour of the second
defendant by registered Sale Deed dated
29.03.1982. Balaraman died in 1983 and
Kannan died on 02.12.1984. Balaraman’s wife
was Lakshmi. The plaintiffs are sons of
Kannan. Palanivel, the son of Balaraman died
2
on 11.02.1986 while still a minor.
Palanivel’s mother Lakshmi Ammal executed a
registered Release Deed dated 24.03.1986 in
favour of the plaintiffs for a consideration.
The plaintiffs filed suit No.229 of 1992
praying for following reliefs:-
“VI. The plaintiffs therefore pray
that the Hon’ble Court may be pleased
to:-
(a) Declare that the plaintiffs are
entitled to the suit properties;
(b) Direct the Defendants to deliver
possession of the suit
properties failing which order
delivery of possession through
process of court;
(c) Direct the Defendants to pay the
cost of the suit and
(d) Grant such other reliefs as the
Hon’ble Court may deem fit in
the circumstances of the case.”
2.3 The plaintiffs’ case in the plaint was that
Balaraman had no authority to execute Sale
Deed on behalf of his minor son Palanivel and
the Sale Deeds executed by Balaraman were
void. The plaintiffs being sons of Kannan
are entitled for declaration and possession
of the properties from the defendants. It
3
was further pleaded that validity of the Will
dated 17.05.1971 has been upheld by the
Subordinate Judges Court, Cuddalore in O.S.
No. 447 of 1973.
2.4 The defendant filed written statement. The
defendant’s case was that Balaraman, in order
to discharge his debts and for family
necessity executed sale deed for himself and
on behalf of his minor son on 15.12.1981.
The sale deed binds the minor Palanivel. The
release deed executed by Lakshmi Ammal on
24.03.1986 will confer no right to the
plaintiffs. The suit is barred by limitation
since the suit has not been filed within 03
years from the date of death of Palanivel
i.e. 11.02.1986. The suit as framed is not
maintainable. The defendants are not in
illegal possession. The defendants are
bonafide purchasers for value. The
plaintiffs cannot file suit for declaration
without praying for setting aside the sale
deeds.
4
2.5 The trial court framed ten issues. Issue
No.7 was “Whether the suit is barred by
limitation?”. Issue No.8 was “Whether the
plaintiffs are entitled to seek for
declaration of title in respect of suit
properties?”. Issue No.9 was “Whether the
plaintiffs are entitled to seek for recovery
of possession?”. The trial court while
deciding Issue No.7 held that suit is not
barred by limitation. Trial court held that
plaintiff having filed the suit as
reversioner, Article 65 of the Limitation Act
will apply. As per Article 65, period for
limitation is 12 years, hence suit was within
time. The Will dated 17.05.1971 was held to
be a valid Will. The sale deeds executed by
Balaraman are voidable. On release deed, the
trial court held that Lakshmi Ammal had no
right in the suit properties, as such the
plaintiffs do not derive any new right from
the release deed. Trial court held that it
is not necessary to decide the truth and
validity of the release deed dated
5
24.03.1986. The trial court further held that
there was no necessity to file the suit
seeking a prayer to set aside the sale deeds
separately since those sale deeds are
voidable and they can be ignored. It was
held that plaintiffs are competent to recover
possession from the defendants. Trial court
vide its judgment and decree dated 13.08.1997
decreed the suit.
2.6 The defendants aggrieved by the judgment of
the trial court filed appeal. The Principal
District Judge vide its judgment dated
31.08.1999 allowed the appeal dismissing the
suit. Appellate Court held that since
Palanivel died on 11.02.1986, the suit should
have been filed to set aside the sale deeds
and for possession within 03 years from his
death. The suit filed in 1992 was barred by
limitation. The Appellate Court relied on
Article 60 of the Limitation Act. Aggrieved
against the judgment of the First Appellate
Court, the plaintiffs filed second appeal in
the High Court. High Court vide its judgment
6
dated 21.04.2010 dismissed the second appeal.
High Court had framed following substantial
questions of law for consideration:-
“i) Whether the Learned First Appellate
Judge is correct in holding that the
release deed Ex.A-15 dated 24.03.1986, is
not avoiding the transfers by sales under
Exs. A-9=B-9, A-10=B-7, A-11=B-2 and A12=B-9, executed by the natural guardian
late Balaraman, of the properties belong
to the deceased minor Palanivel?
ii) Whether the sale deeds executed by late
Balaraman, the natural guardian of minor
Palanivel, of the properties of the minor
are valid in law when the said sale deeds
were executed in gross violation of
Section 8(2)(a) of the Hindu Minority and
Guardianship Act, especially when the
mother, who claimed under the minor
avoided the sale immediately on the
demise of the minor?
iii)Whether first appellate Judge is correct
in holding that the suit is not
7
maintainable, since the suit was not
filed to set aside the sales within three
years from the date of demise of minor
Palanivel?
2.7 The High Court held that alienations made by
Balaraman can be construed only as a voidable
alienations and not void alienations. High
Court held that plaintiffs suit ought to have
been filed within 03 years as per Article 60
of the Limitation Act. All substantial
questions of law were decided in favour of
the defendants-respondents. High Court
dismissed the second appeal. Aggrieved
against the judgment, this appeal has been
filed.
3. Shri V. Prabhakar, learned counsel for the
appellants in support of the appeal contends that
Article 60 of the Limitation Act shall not apply and
the suit was rightly held to be governed by Article
65 by the trial court, which was well within time.
It is submitted that the option to repudiate the
action on behalf of the minor having been exercised
8
by mother of the minor, the sale deed executed by
Balaraman become void from its inception. Sale deeds
executed by Balaraman were without permission of the
Court and were without legal necessity, hence was
rightly repudiated by his mother Lakshmi Ammal. On
the strength of repudiation of the alienation by
Lakshmi Ammal, the sale deeds become void and there
was no necessity for praying for setting aside the
sale deeds and suit for declaration and possession
was fully maintainable. Article 60 would have been
applicable only if the suit was filed for setting
aside the sale deeds.
4. Ms. V. Mohana, learned senior counsel appearing
for the respondents refuting the submissions of the
counsel for the appellants contends that suit was
clearly barred by time, it having been not filed
within 03 years from the date of death of the minor.
It is further submitted that release deed dated
24.03.1986 cannot be accepted as repudiation of the
sale deeds. It is submitted that without praying for
setting aside the sale deeds, the decree of
possession could not have been claimed by the
9
plaintiffs. Limitation was governed by Article 60 of
the Limitation Act.
5. Learned counsel for the parties have relied on
various judgments, which shall be referred to and
considered while considering the submissions in
detail.
6. From the submissions of the learned counsel for
the parties and pleadings on record, following are
the issues, which arise for consideration in this
appeal:-
(i) Whether the suit filed by the plaintiffsappellants was barred by limitation?
(ii) Whether without praying for setting aside
the sale deeds executed by Balaraman, the
suit for declaration and possession was
maintainable?
(iii) Whether the plaintiffs can successfully
contend that by execution of release deed
dated 24.03.1986 by Lakshmi Ammal, sale
deeds executed by Balaraman were
successfully repudiated?
10
Issue No. 1
7. The trial court has held that suit has been filed
within time relying on Article 65 whereas the
Appellate Court as well as the High Court relied on
Article 60 and held that suit was barred by time.
Part IV of the Limitation Act, which deals with suits
relating to “Decrees and instruments” contains
Articles 59 and 60. Article 60 is as follows:-
“_________________________________________________
 Description of suit Period of Time from which
 Limitation period begins to run
 __________________________________________________________
60 To set aside a
transfer of property
made by the guardian
of a ward-
(a)by the ward who
has attained
majority.
(b)by the ward's
legal representative-


 Three years When the ward attains majority.
i) When the ward dies
within three years
from the date of
attaining majority.
 Three years When the ward attains majority.
ii) When the ward
dies before
attaining majority.”
 Three years When the ward dies.
8. Article 65 is contained in Part V (suits relating
to immovable properties), which is as follows:-
“65. For possession of immovable Twelve Years When the possession of
 property or any interest therein the defendant becomes
based on title. adverse to the plaintiff.
Explanation.- For the purposes
of this article11
(a) Where the suit is by a
remainderman, a
reversioner (other than a
landlord) or a devisee,
the possession of the
defendant shall be
deemed to become
adverse only when the
estate of the
remainderman,
reversioner or devisee, as
the case may be, falls
into possession;
(b) where the suit is by a
Hindu or Muslim entitled
to the possession of
immovable property on
the death of a Hindu or
Muslim female, the
possession of the
defendant shall be
deemed to become
adverse only when the
female dies;
(c) where the suit is by a
purchaser at a sale in
execution of a decree
when the judgmentdebtor was out of
possession at the date of
the sale, the purchaser
shall be deemed to be a
representative of the
judgment-debtor who
was out of possession.”
9. Article 60(b)(ii) refers to a suit when a ward
dies before attaining majority. The present is a
case where Palanivel died on 11.02.1986 before
attaining majority, his date of birth being
16.07.1978, the limitation to avoid instrument made
12
by guardian of the ward is 03 years from the death of
ward when he dies before attaining majority. This
Court had occasion to consider Articles 60 and 65 of
the Limitation Act in reference to alienation made by
a de-facto guardian of a minor. In the case of
Madhukar Vishwanath Vs. Madahav and Others, (1999) 9
SCC 446, the maternal uncle of the appellant has
executed a sale deed. The appellant after becoming
major on 22.08.1966 filed a suit on 07.02.1973
praying that transferors be required to deliver the
possession of the property. On behalf of appellant,
Article 65 was relied for the purposes of limitation.
This Court held that it is Article 60 and not Article
65, which is applicable. Paragraph No. 4 and 5 of
the judgment are relevant, which are quoted as
below:-
“4. XXXXXXXXX
That the defendant, Baburao Madhorao
Puranik, was the appellant’s de facto
guardian had been established and,
therefore, the disposal by him of the said
property was void. Being void, it was open
to the appellant to file the suit for
possession of the said property and the
period for limitation for such suit was
prescribed by Article 65.
13
5. ……………………Even if the suit was entertained
as pleaded, no decree for possession could
have been passed without first finding that
the alienation was not for legal necessity
and was, therefore, bad in law. To such a
suit the provisions of Article 60 apply.
Article 60 relates to a suit to set aside a
transfer of property made by the guardian
of a ward by the ward who has attained
majority and the period prescribed is three
years commencing on the date on which the
ward attains majority………………………”
10. This Court in Narayan Vs. Babasaheb and Others,
(2016) 6 SCC 725 again had occasion to consider
Article 60 of the Limitation Act. In the above case,
this Court held that a suit by minor for setting
aside the sale of his property by his guardian is
governed by Article 60 of the Limitation Act. In
Paragraph Nos. 25 and 26, following was laid down:-
“25. A close analysis of the language of
Article 60 would indicate that it applies
to suits by a minor who has attained
majority and further by his legal
representatives when he dies after
attaining majority or from the death of the
minor. The broad spectrum of the nature of
the suit is for setting aside the transfer
of immovable property made by the guardian
and consequently, a suit for possession by
avoiding the transfer by the guardian in
violation of Section 8(2) of the 1956 Act.
In essence, it is nothing more than seeking
to set aside the transfer and grant
consequential relief of possession.
14
26. There cannot be any doubt that a suit
by quondam minor to set aside the
alienation of his property by his guardian
is governed by Article 60. To impeach the
transfer of immovable property by the
guardian, the minor must file the suit
within the prescribed period of three years
after attaining majority.”
11. Now, coming to Article 65, on which reliance has
been placed by learned counsel for the appellants.
The said period of limitation is available when suit
is filed for possession of immovable property on any
interest therein based on title. The present is a
case where by registered sale deeds the property was
conveyed by the father of the minor was eonominee
party. Thus, when sale deed was executed by Balaraman
he purported to convey the right of the minor also.
The sale deeds being voidable and not void,
plaintiffs cannot rely on Article 65. We, thus, are
of the view that first Appellate Court and the High
Court has rightly held that limitation for suit was
governed by Article 60 and the suit was clearly
barred by time.
12. It is important to find from the sale deed what
was conveyed. This we say, as appellant has a case
15
that the father of the minor was given a life estate
and after his death alone the minor was to get a
right. In this regard we may notice the distinction
between a vested right and a contingent right. Vested
right is the subject matter of Section 19 of the
Transfer of Property Act whereas a contingent
interest is dealt with Section 21 of the Transfer of
Property Act. Since the life estate followed by an
absolute right is created by a will, the relevant
provision is Section 119 of the Indian Succession
Act, 1925. Section 119 reads as follows:
“119. Date of vesting of legacy when
payment or possession postponed.—Where by
the terms of a bequest the legatee is not
entitled to immediate possession of the
thing bequeathed, a right to receive it at
the proper time shall, unless a contrary
intention appears by the Will, become
vested in the legatee on the testator’s
death, and shall pass to the legatee’s
representatives if he dies before that time
and without having received the legacy, and
in such cases the legacy is from the
testator’s death said to be vested in
interest.
Explanation.—An intention that a legacy
to any person shall not become vested in
interest in him is not to be inferred
merely from a provision whereby the payment
or possession of the thing bequeathed is
postponed, or whereby a prior interest
therein is bequeathed to some other person,
or whereby the income arising from the fund
16
bequeathed is directed to be accumulated
until the time of payment arrives, or from
a provision that, if a particular event
shall happen, the legacy shall go over to
another person.”
It is relevant that we notice illustration No.(iii)
which reads as follows:
“(iii) A fund is bequeathed to A for life,
and after his death to B. On the testator’s
death the legacy to B becomes vested in
interest in B.”
Therefore, the absolute right bequeathed in favour of
Palanivel became vested in him upon the death of
Petha Gounder.
Issue No.2
13. In the present case, there is no dispute that
sale deeds executed by Balaraman on behalf of himself
and his minor son Palanivel were executed without
obtaining permission of the Court. Section 8 of the
Hindu Minority & Guardianship Act, 1956, which is
relevant is as follows:-
8. Powers of natural guardian.- (1) The
natural guardian of a Hindu minor has
power, subject to the provisions of this
section, to do all acts which are necessary
or reasonable and proper for the benefit of
the minor or for the realisation,
protection or benefit of the minor's
estate; but the guardian can in no case
bind the minor by a personal covenant.
17
(2) The natural guardian shall not, without
the previous permission of the court,-
(a) mortgage or charge, or transfer by
sale, gift, exchange or otherwise any
part of the immovable property of the
minor or
(b) lease any part of such property for
a term exceeding five years or for a
term extending more than one year
beyond the date on which the minor
will attain majority.
(3) Any disposal of immovable property by a
natural guardian, in contravention of
subsection (1) or sub-section (2), is
voidable at the instance of the minor or
any person claiming under him.
(4) No court shall grant permission to the
natural guardian to do any of the acts
mentioned in sub-section (2) except in case
of necessity or for an evident advantage to
the minor.
(5) The Guardians and Wards Act, 1890 (8 of
1890), shall apply to and in respect of an
application for obtaining permission of the
court under sub-section (2) in all respects
as if it were an application for obtaining
the permission of the court under section
29 of that Act, and in particular-
(a) proceedings in connection with the
application shall be deemed to be
proceedings under that Act within the
meaning of section 4A thereof.
(b) the court shall observe the
procedure and have the powers
specified in sub-sections (2), (3)
and (4) of section 31 of that Act;
and
18
(c) an appeal shall lie from an order of
the court refusing permission to the
natural guardian to do any of the
acts mentioned in sub-section (2) of
this section to the court to which
appeals ordinarily lie from the
decisions of that court.
(6) In this section, "Court" means the city
civil court or a district court or a court
empowered under section 4A of the Guardians
and Wards Act, 1890 (8 of 1890), within the
local limits of whose jurisdiction the
immovable property in respect of which the
application is made is situate, and where
the immovable property is situate within
the jurisdiction of more than one such
court, means the court within the local
limits of whose jurisdiction any portion of
the property is situate.”
14. This Court time and again has considered the
cases of alienation by natural guardian in
contravention of Section 8 and Section 8(2) of the
1956 Act. This Court held that sale deed in
violation of Section 8(1) and 8(2) is a voidable sale
deed. Voidable has been defined in Black’s Law
Dictionary, Tenth Edition as under:-
“Valid until annulled; esp., (of a
contract) capable of being affirmed or
rejected at the option of one of the
parties. This term describes a valid act
that may be voided rather than an invalid
act that may be ratified.”
19
15. Salmonds on Jurisprudence, Twelfth Edition has
noticed the distinction between Valid, Void and
Voidable in following passage:-
“… A valid agreement is one which is
fully operative in accordance with
the intent of the parties. A void
agreement is one which entirely fails
to receive legal recognition or
sanction, the declared will of the
parties being wholly destitute of
legal efficacy. A voidable agreement
stands midway between these two
cases. It is not a nullity, but its
operation is conditional and not
absolute. By reason of some defect in
its origin it is liable to be
destroyed or cancelled at the option
of one of the parties to it. On the
exercise of this power the agreement
not only ceases to have any efficacy,
but is deemed to have been void ab
initio. The avoidance of it relates
back to the making of it. The
hypothetical or contingent efficacy
which has hitherto been attributed to
it wholly disappears, as if it had
never existed. In other words, a
voidable agreement is one which is
void or valid at the election of one
of the parties to it.”
16. This Court in Dhurandhar Prasad Singh Vs. Jai
Prakash University and Others, (2001) 6 SCC 534 had
noted the distinction between Void and Voidable. In
Paragraph No. 22, following has been laid down:-
“22. Thus the expressions “void and
voidable” have been the subject-matter of
20
consideration on innumerable occasions by
courts. The expression “void” has several
facets. One type of void acts,
transactions, decrees are those which are
wholly without jurisdiction, ab initio void
and for avoiding the same no declaration is
necessary, law does not take any notice of
the same and it can be disregarded in
collateral proceeding or otherwise. The
other type of void act, e.g., may be
transaction against a minor without being
represented by a next friend. Such a
transaction is a good transaction against
the whole world. So far as the minor is
concerned, if he decides to avoid the same
and succeeds in avoiding it by taking
recourse to appropriate proceeding the
transaction becomes void from the very
beginning. Another type of void act may be
which is not a nullity but for avoiding the
same a declaration has to be made. Voidable
act is that which is a good act unless
avoided, e.g., if a suit is filed for a
declaration that a document is fraudulent
and/or forged and fabricated, it is
voidable as the apparent state of affairs
is the real state of affairs and a party
who alleges otherwise is obliged to prove
it. If it is proved that the document is
forged and fabricated and a declaration to
that effect is given, a transaction becomes
void from the very beginning. There may be
a voidable transaction which is required to
be set aside and the same is avoided from
the day it is so set aside and not any day
prior to it. In cases where legal effect of
a document cannot be taken away without
setting aside the same, it cannot be
treated to be void but would be obviously
voidable.”
17. In Vishwambhar and Others Vs. Laxminarayan (Dead)
Through LRs. and Another, (2001) 6 SCC 163, which was
21
a case of challenge to alienation without Court’s
sanction and without legal necessity, this Court
held that the alienation by natural guardian was
voidable. In the above case, the mother, natural
guardian of two minors has executed the sale deed
before they attained majority. Minors after
attaining majority had filed suit pleading that sale
deeds are not binding and operative on the legal
rights of plaintiff, and prayed that the said sale
deeds be set aside to the extent of their share and
the suit for possession of the land be decreed. In
the above case, after considering Section 8 this
Court held that sale deeds were voidable at the
instance of the plaintiff. This Court further held
that if the plaintiffs were required to have the sale
deeds set aside before making any claim in respect of
suit properties sold then a suit without such a
prayer was of no avail to the plaintiffs. Following
was held in Paragraph No.9:-
“9. …………………………………The question is, in such
circumstances, are the alienations void or
voidable? In Section 8(2) of the Hindu
Minority and Guardianship Act, 1956, it is
laid down, inter alia, that the natural
guardian shall not, without previous
permission of the court, transfer by sale
22
any part of the immoveable property of the
minor. In sub-section (3) of the said
section, it is specifically provided that
any disposal of immoveable property by a
natural guardian, in contravention of subsection (2) is voidable at the instance of
the minor or any person claiming under him.
There is, therefore, little scope for doubt
that the alienations made by Laxmibai which
are under challenge in the suit were
voidable at the instance of the plaintiffs
and the plaintiffs were required to get the
alienations set aside if they wanted to
avoid the transfers and regain the
properties from the purchasers. As noted
earlier in the plaint as it stood before
the amendment the prayer for setting aside
the sale deeds was not there, such a prayer
appears to have been introduced by
amendment during hearing of the suit and
the trial court considered the amended
prayer and decided the suit on that basis.
If in law the plaintiffs were required to
have the sale deeds set aside before making
any claim in respect of the properties
sold, then a suit without such a prayer was
of no avail to the plaintiffs. In all
probability, realising this difficulty the
plaintiffs filed the application for
amendment of the plaint seeking to
introduce the prayer for setting aside the
sale deeds. Unfortunately, the realisation
came too late. Concededly, Plaintiff 2
Digamber attained majority on 5-8-1975 and
Vishwambhar, Plaintiff 1 attained majority
on 20-7-1978. Though the suit was filed on
30-11-1980 the prayer seeking setting aside
of the sale deeds was made in December
1985. Article 60 of the Limitation Act
prescribes a period of three years for
setting aside a transfer of property made
by the guardian of a ward, by the ward who
has attained majority and the period is to
be computed from the date when the ward
attains majority. Since the limitation
23
started running from the dates when the
plaintiffs attained majority the prescribed
period had elapsed by the date of
presentation of the plaint so far as
Digamber is concerned. Therefore, the trial
court rightly dismissed the suit filed by
Digamber. The judgment of the trial court
dismissing the suit was not challenged by
him. Even assuming that as the suit filed
by one of the plaintiffs was within time
the entire suit could not be dismissed on
the ground of limitation, in the absence of
challenge against the dismissal of the suit
filed by Digamber the first appellate court
could not have interfered with that part of
the decision of the trial court. Regarding
the suit filed by Vishwambhar, it was filed
within the prescribed period of limitation
but without the prayer for setting aside
the sale deeds. Since the claim for
recovery of possession of the properties
alienated could not have been made without
setting aside the sale deeds the suit as
initially filed was not maintainable. By
the date the defect was rectified (December
1985) by introducing such a prayer by
amendment of the plaint the prescribed
period of limitation for seeking such a
relief had elapsed. In the circumstances,
the amendment of the plaint could not come
to the rescue of the plaintiff.”
18. To the same effect is the judgment of this Court
in Madhegowda (dead) by LRs. Vs. Ankegowda (dead) by
LRs. and Others, (2002) 1 SCC 178, where in Paragraph
No. 25, following has been held:-
“25.……………………The minor, on attaining
majority, can repudiate the transfer in any
manner as and when occasion for it arises.
24
After attaining majority if he/she
transfers his/her interest in the property
in a lawful manner asserting his/her title
to the same that is sufficient to show that
the minor has repudiated the transfer made
by the “de facto guardian/manager”.
19. This Court further held in Nangali Amma Bhavani
Amma Vs. Gopalkrishnan Nair and Others, (2004) 8 SCC
785 that the alienation made in violation of Section
8(2) is voidable, holding it to be void would not
only be contrary to the plain words of the statute
but would also deprive the minor of the right to
affirm or ratify the transaction upon attaining
majority. Following was held in Paragraph No.8:-
“8. In view of the express language used,
it is clear that the transaction entered
into by the natural guardian in
contravention of sub-section (2) was not
void but merely voidable at the instance of
the minor. To hold that the transaction in
violation of Section 8(2) is void would not
only be contrary to the plain words of the
statute but would also deprive the minor of
the right to affirm or ratify the
transaction upon attaining
majority…………………………….”
20. The alienations, which were voidable, at the
instance of minor or on his behalf were required to
be set aside before relief for possession can be
claimed by the plaintiffs. Suit filed on behalf of
25
the plaintiffs without seeking prayer for setting
aside the sale deeds was, thus, not properly framed
and could not have been decreed.
Issue No.3
21. The question is as to whether by execution of the
release deed dated 24.03.1986 in favour of the
plaintiffs, there was repudiation of the alienation
made by Balaraman. The release deed has been brought
on the record as Annexure P-1. A perusal of the
release deed does not indicate that there is any
reference of alienation made by Balaraman in favour
of the defendants. There being no reference of the
alienation made by Balaraman on behalf of minor,
there is no occasion to read release deed as
repudiation of the claim on behalf of the minor.
Section 8(3) gives a right to the minor or any person
claiming under him, the relevant words in Section
8(3) are “at the instance of the minor or any person
claiming under him.” Thus, alienation made on behalf
of the minor can be avoided by minor or any person
claiming under him. In event, minor dies before
26
attaining majority, obviously, his legal heirs will
have right to avoid the alienation.
22. The submission raised by the learned counsel for
the respondents is that for avoiding sale of
immovable property of a minor as contemplated under
sub-section (3) of Section 8, the minor or any person
claiming under him has to bring an action i.e. to
file a suit within the limitation prescribed.
23. Learned counsel for the appellants has refuted
the submission and contended that the avoidance of a
sale of immovable property by a minor can be in any
manner. It is submitted that it is not necessary for
minor or the person claiming on his behalf to bring a
suit for avoiding a sale deed.
24. We have noticed above that sub-section (3) of
Section 8 refers to a disposal of immovable property
by a natural guardian in contravention of sub-section
(1) or sub-section (2) as voidable. When a registered
sale deed is voidable, it is valid till it is avoided
in accordance with law. The rights conferred by a
registered sale deed are good enough against the
whole world and the sale can be avoided in case the
27
property sold is of a minor by a natural guardian at
the instance of the minor or any person claiming
under him. A document which is voidable has to be
actually set aside before taking its legal effect.
This Court in Gorakh Nath Dube vs. Hari Narain Singh
and others, (1973) 2 SCC 535, while making
distinction between void and voidable document held:
“5………We think that a distinction can be made
between cases where a document is wholly or
partially invalid so that it can be
disregarded by any court or authority and one
where it has to be actually set aside before
it can cease to have legal effect. An
alienation made in excess of power to
transfer would be, to the extent of the
excess of power, invalid. An adjudication on
the effect of such a purported alienation
would be necessarily implied in the decision
of a dispute involving conflicting claims to
rights or interests in land which are the
subject-matter of consolidation
proceedings……”
25. In Amirtham Kudumbah vs. Sarnam Kudumban, (1991)
3 SCC 20, this Court had occasion to consider the
provisions of Section 8(3) of the Hindu Minority and
Guardianship Act, 1956. The facts of the case have
been noticed in paragraph 5 which is to the following
effect:
28
“5. The relevant facts are that the suit
property belonged to one Veerammal. She had
a daughter by name Kaliammal. Veerammal
died shortly after she purchased the
property in 1948. She left behind her
husband Kandayya and their daughter
Kaliammal. Subsequently, Kandayya married a
second time when his daughter Kaliammal was
a minor. She thereupon left her father’s
house and resided with her maternal
grandfather who protected and maintained
her. During her minority, Kandayya sold the
property on October 29, 1959 to
Jainulavudeen. On April 25, 1966,
Jainulavudeen in turn sold the property to
the defendant-appellant. Subsequently, on
May 26, 1966 the plaintiff obtained a deed
of sale of the suit property in his favour
from Kaliammal who had by then attained
majority. The plaintiff thereafter
instituted the present suit (O.S. No. 491
of 1968) against the appellant to set aside
the transfer of property made by Kandayya
and for recovery of its possession.”
26. One of the questions which came for consideration
in the above case was that “whether a transferee from
a minor after he attained majority, can file a suit
to set aside the alienation made by the minor’s
guardian or the said right is one to be exercised
only by the minor? A person entitled to avoid such a
sale is either the minor or any person claiming under
him. This Court held that either the minor, or his
legal representative in the event of his death, or
his successor-in-interest claiming under him by
29
reason of transfer inter vivos, must bring action
within the period prescribed for such a suit, i.e.
three years. Following is laid down in paragraph 9:
“9. The effect of this sub-section is
that any disposal of immovable property by a
natural guardian otherwise than for the
benefit of the minor or without obtaining
the previous permission of the court is
voidable. A person entitled to avoid such a
sale is either the minor or any person
claiming under him. This means that either
the minor, or his legal representative in
the event of his death, or his successor-ininterest claiming under him by reason of
transfer inter vivos, must bring action
within the period prescribed for such a
suit, i.e. three years from the date on
which the minor died or attained majority,
as the case may be. In the present case, the
suit was brought, as found by the courts
below, within three years after the minor
attained majority.”
27. In Vishwambhar and others vs. Laxminarayan(Dead)
through LRs. and another (supra) this Court has
observed that if in law the plaintiffs were required
to have the sale deeds set aside before making any
claim in respect of the properties sold, then a suit
without such a prayer was of no avail to the
plaintiffs.
28. This Court time and again held that setting aside
of a sale which is voidable under Section 8(3) is
30
necessary for avoiding a registered sale deed. We
may, however, not to be understood that we are
holding that in all cases where minor has to avoid
disposal of immovable property, it is necessary to
bring a suit. There may be creation of charge or
lease of immovable property which may not be by
registered document. It may depend on facts of each
case as to whether it is necessary to bring a suit
for avoiding disposal of the immovable property or it
can be done in any other manner. We in the present
case are concerned with disposal of immovable
property by natural guardian of minor by a registered
sale deed, hence, we are confining our consideration
and discussion only with respect to transfer of
immovable property by a registered deed by a natural
guardian of minor.
29. The Limitation Act, 1963 has been enacted by the
Parliament after the enactment of Hindu Minority and
Guardianship Act, 1956. Article 60 of the Limitation
Act, 1963 which provides for limitation “suits
relating to decrees and instruments”. The Limitation
Act contemplates suit to set aside a transfer of
property made by the guardian of a ward for which
31
limitation is contemplated as three years. Article 60
of the Limitation Act although provides for a
limitation of a suit but also clearly indicates that
to set aside a transfer of property made by the
guardian of a ward a suit is contemplated.
30. We may notice a judgment of this Court reported
in Madhegowda (Dead) by LRs. vs. Ankegowda (Dead) by
LRs. and others, (2002) 1 SCC 178. This Court in the
above case had occasion to consider Section 11 of the
Hindu Minority and Guardianship Act, 1956. In the
above case sister of a minor acting as guardian sold
immovable property by registered sale deed. In the
above reference this Court had made following
observations:
“25………Undoubtedly Smt Madamma, sister of
the minor, is not a “guardian” as defined in
Section 4(b) of the Act. Therefore, she can
only be taken to be a “de facto guardian” or
more appropriately “de facto manager”. To a
transfer in such a case Section 11 of the
Act squarely applies. Therefore, there is
little scope for doubt that the transfer of
the minor’s interest by a de facto
guardian/manager having been made in
violation of the express bar provided under
the section is per se invalid. The existence
or otherwise of legal necessity is not
relevant in the case of such invalid
transfer. A transferee of such an alienation
32
does not acquire any interest in the
property. Such an invalid transaction is not
required to be set aside by filing a suit or
judicial proceeding. The minor, on attaining
majority, can repudiate the transfer in any
manner as and when occasion for it arises.
After attaining majority if he/she transfers
his/her interest in the property in a lawful
manner asserting his/her title to the same
that is sufficient to show that the minor
has repudiated the transfer made by the “de
facto guardian/manager”.”
31. The above observations were made by this Court in
the context of Section 11 of the Act, 1956. Section
11 of the Act contains a statutory prohibition on “de
facto guardian” of the minor from disposing of the
property of the minor. The transfer made by de facto
guardian is, thus, void and can be repudiated in any
manner. It is well settled that it is not necessary
for a minor or any person claiming under him to file
a suit for setting aside a void deed. A void deed can
be ignored. The above observations cannot be held to
be applicable to transfer made by a natural guardian
under Section 8(3) of the Act.
32. We may notice one more judgment of this Court
relied on by the learned counsel for the appellants
that is G. Annamalai Pillai vs. District Revenue
33
Officer and others, (1993) 2 SCC 402. The question
which arose for consideration in the said case has
been noticed in paragraph 1 of the judgment in
following words:
“1. The short question for consideration in
this appeal is whether lease deed in dispute, which
was voidable in terms of Section 8(3) of the Hindu
Minority and Guardianship Act, 1956 (the Act) when
validly avoided, was effective from the date of the
lease deed so as to make the transaction void and
unenforceable from the very inception.”
33. The land in dispute was owned by one Janarthanan.
His father, Purushothaman executed a registered lease
deed in favour of appellant on 12.12.1971 on which
date the owner was minor. The appellant filed
application before Tehsildar to be registered as a
tenant which was contested by Janarthanan.
Janarthanan contended that his father has no right or
title to deal with land and lease by his father is in
contravention of Section 8 of Hindu Minority and
Guardianship Act, 1956. Tehsildar held that there was
no valid lease which order was confirmed by the High
Court against which judgment appeal was filed. In
paragraphs 5 and 6 following has been laid down:
34
“5. We have heard learned counsel for the
parties. We have been taken through the
orders of the Revenue authorities, judgment
of the learned Single Judge and of the
Division Bench of the High Court in writ
appeal. The Division Bench of the High
Court, in a lucid judgment, answered the
question — posed by us in the beginning —
in the affirmative and against the
appellant-Annamalai Pillai on the following
reasoning:
“We have already seen that clause (3) of
Section 8 of the Hindu Minority and
Guardianship Act, 1956, specifically makes
the transaction voidable. The lease
executed by the guardian in this case is
prohibited and in that sense it was
without any authority. On the legal
efficacy and the distinction between
valid, void and voidable agreements, we
find the following passage in Salmond on
Jurisprudence, Twelfth Edition at page
341:
‘… A valid agreement is one which is
fully operative in accordance with the
intent of the parties. A void agreement
is one which entirely fails to receive
legal recognition or sanction, the
declared will of the parties being
wholly destitute of legal efficacy. A
voidable agreement stands midway
between these two cases. It is not a
nullity, but its operation is
conditional and not absolute. By reason
of some defect in its origin it is
liable to be destroyed or cancelled at
the option of one of the parties to it.
On the exercise of this power the
agreement not only ceases to have any
efficacy, but is deemed to have been
void ab initio. The avoidance of it
relates back to the making of it. The
hypothetical or contingent efficacy
35
which has hitherto been attributed to
it wholly disappears, as if it had
never existed. In other words, a
voidable agreement is one which is void
or valid at the election of one of the
parties to it.’
This distinction has also been
judicially noticed in the Privy Council
judgment reported in Satgur Prasad v.
Harnarain Das and in the Division Bench
judgment in S.N.R. Sundara Rao and Sons,
Madurai v. CIT. The Division Bench held,
following the said Privy Council judgment as
follows:
‘When a person, who is entitled to
dissent from the alienation, does so, his
dissent is in relation to the transaction
as such and not merely to the possession
of the alienee on the date of such
dissent.
The effect of the evidence is,
therefore, to get rid of the transaction
with the result that in law it is as if
the transaction had never taken place.’
We have, therefore, no doubt that when the
fifth respondent avoided the lease executed
by his father, the fourth respondent, the
lease became void from its inception and no
statutory rights, could, therefore, accrue
in favour of the appellant herein.”
6. We agree with the reasoning and the
conclusions reached by the Division Bench
of the High Court and as such this appeal
has to be dismissed.”
34. Learned counsel for the appellants relying on the
above decision contends that sale by Balaraman when
has been avoided by release deed it became void from
36
the very beginning. There can be no quarrel to the
proposition laid down in G. Annamalai Pillai vs.
District Revenue Officer and others(supra). In the
present case there having been no repudiation of sale
deed on behalf of minor, the question of voidable
sale deed becoming void does not arise.
35. We are, thus, of the considered opinion that in
the present case it was necessary for the person
claiming through minor to bring an action within a
period of three years from the date of the death of
the minor to get sale deed executed by Balaraman set
aside. We, thus, conclude that the sale deeds
executed by Balaraman were not repudiated or avoided
within the period of limitation as prescribed by law.
Issue No.3 is answered accordingly.
36. In view of the foregoing discussions, we do not
find any merit in this appeal. The appeal is
dismissed accordingly.
......................J.
 ( ASHOK BHUSHAN )
......................J.
 ( K.M. JOSEPH )
New Delhi,
February 25, 2019.
37

"Whether an assessee who sets up a new industry of a kind mentioned in sub-section (2) of Section 80-IC of the Act and starts availing exemption of 100 per cent tax under sub-section (3) of Section 80-IC (which is admissible for five years) can start claiming the exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit?” = 24.The aforesaid discussion leads us to the following conclusions: (a) Judgment dated 20th August, 2018 in Classic Binding Industries case omitted to take note of the definition ‘initial assessment year’ contained in Section 80-IC itself and instead based its conclusion on the definition contained in Section 80-IB, which does not apply in these cases. The definitions of ‘initial assessment year’ in the two sections, viz. Sections 80-IB and 80-IC are materially different. The definition of ‘initial assessment year’ under Section 80-IC has made all the difference. Therefore, we are of the opinion that the aforesaid judgment does not lay down the correct law. (b) An undertaking or an enterprise which had set up a new unit between 7th January, 2003 and 1st April, 2012 in State of Himachal 25 Pradesh of the nature mentioned in clause (ii) of sub-section (2) of Section 80-IC, would be entitled to deduction at the rate of 100% of the profits and gains for five assessment years commencing with the ‘initial assessment year’. For the next five years, the admissible deduction would be 25% (or 30% where the assessee is a company) of the profits and gains. (c) However, in case substantial expansion is carried out as defined in clause (ix) of sub-section (8) of Section 80-IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become ‘initial assessment year’, and from that assessment year the assessee shall been entitled to 100% deductions of the profits and gains. (d) Such deduction, however, would be for a total period of 10 years, as provided in sub-section (6). For example, if the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five years. On the other hand, if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes ‘initial assessment year’ once again. 26 However, this 100% deduction would be for remaining three years, i.e., 8th, 9th and 10th assessment years. 25.In view of the aforesaid, we affirm the judgment of the High Court on this issue and dismiss all these appeals of the Revenue. Likewise, appeals filed by the assessees are hereby allowed.

Hon'ble Mr. Justice Arjan Kumar Sikri
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 1784 OF 2019
(ARISING OUT OF SLP (C) NO. 23172 OF 2018)
PR. COMMISSIONER OF INCOME TAX
SHIMLA
.....APPELLANT(S)
VERSUS
M/S. AARHAM SOFTRONICS .....RESPONDENT(S)
W I T H
CIVIL APPEAL NO(S). 1785 OF 2019
(ARISING OUT OF SLP (C) NO. 23176 OF 2018)
CIVIL APPEAL NO(S). 1786 OF 2019
(ARISING OUT OF SLP (C) NO. 23179 OF 2018)
CIVIL APPEAL NO(S). 1788 OF 2019
(ARISING OUT OF SLP (C) NO. 24678 OF 2018)
CIVIL APPEAL NO(S). 1787 OF 2019
(ARISING OUT OF SLP (C) NO. 23414 OF 2018)
 CIVIL APPEAL NO(S).1789 OF 2019
(ARISING OUT OF SLP (C) NO. 24679 OF 2018)
MISC. APPLICATION NO. 2880 OF 2018
IN
CIVIL APPEAL NO. 7218 OF 2018
CIVIL APPEAL NO(S). 1790 OF 2019
(ARISING OUT OF SLP (C) NO. 5486 OF 2019)
(ARISING OUT OF DIARY NO. 34756 OF 2018)
2
MISC. APPLICATION NO. 2879 OF 2018
IN
CIVIL APPEAL NO. 7222 OF 2018
MISC. APPLICATION NO. 2852 OF 2018
IN
CIVIL APPEAL NO. 7236 OF 2018
MISC. APPLICATION NO. 2850 OF 2018
IN
CIVIL APPEAL NO. 7215 OF 2018
MISC. APPLICATION NO. 2841 OF 2018
IN
CIVIL APPEAL NO. 7221 OF 2018
MISC. APPLICATION NO. 2840 OF 2018
IN
CIVIL APPEAL NO. 7217 OF 2018
MISC. APPLICATION NO. 2976 OF 2018
IN
CIVIL APPEAL NO. 7223 OF 2018
CIVIL APPEAL NO(S). 1795 OF 2019
(ARISING OUT OF SLP (C) NO. 2296 OF 2019)
CIVIL APPEAL NO(S).1796 OF 2019
(ARISING OUT OF SLP (C) NO. 1983 OF 2019)
CIVIL APPEAL NO(S). 1797 OF 2019
(ARISING OUT OF SLP (C) NO. 3278 OF 2019)
AND
CIVIL APPEAL NO(S). 1798 OF 2019
(ARISING OUT OF SLP (C) NO. 4483 OF 2019)
J U D G M E N T
3
A.K.SIKRI, J.
SLP(C) Nos. 23172 of 2018, 23176 of 2018, 23179 of 2018, 24678 of 2018,
23414 of 2018, 24679 of 2018, 2296 of 2019, 1983 of 2019, 3278 of 2019
and 4483 of 2019 :
Leave granted.
2. Origin of these appeals can be traced to the judgment dated 28th
November, 2017 rendered by High Court of Himachal Pradesh in a
batch of appeals. Vide the said judgment, the High Court decided many
issues. However, in these proceedings we are concerned with only one
question of law which is formulated in the following terms:
"Whether an assessee who sets up a new industry of a kind
mentioned in sub-section (2) of Section 80-IC of the Act and starts
availing exemption of 100 per cent tax under sub-section (3) of
Section 80-IC (which is admissible for five years) can start
claiming the exemption at the same rate of 100% beyond the
period of five years on the ground that the assessee has now
carried out substantial expansion in its manufacturing unit?”
3. The High Court has answered the aforesaid question in the affirmative
thereby holding that when the assessees started availing exemption of
100% tax on the setting up of a new industry of the kind mentioned in
sub-section (2) of Section 80IC, which is admissible for 5 years, and
either on the expiry of 5 years or thereafter (but within 10 years) from the
date when these assessees started availing exemption, they carried out
substantial expansion of its industry, from that year the assessees
become entitled to claim exemption @ 100% again.
4
4. The Income Tax Department (hereinafter referred to as the ‘Revenue’)
had challenged the judgment of the High Court on the aforesaid issue by
filing number of special leave petitions which were converted into
appeals after leave was granted in those special leave petitions.
Thereafter, these appeals were heard and decided by a Division Bench
of this Court, which comprised one of us (A.K. Sikri, J.). By its judgment
dated August 20, 2018. The judgment of the High Court was reversed
on the aforesaid issue.
5. It so happened that in some of the appeals, assessees who were
respondents, were not served with the notice and they remained
unrepresented. Since the appeals in respect of these assessees were
decided in their absence, they filed miscellaneous applications for recall
of the order, with prayer to decide the appeals afresh after giving hearing
to them. Since, these assessees remained unrepresented, as even the
notice was not served upon them, by a separate order passed in their
cases, those applications have been allowed and their appeals being
C.A. No. 7218, 7882, 7236, 7215, 7221, 7217 and 7223 of 2018 have
been restored. Even the Revenue has filed few SLPs against the
common judgment of the High Court as these SLPs were not filed earlier
when batch of appeals was decided on 20th August, 2018 by this Court.
Appeals arising out of these SLPs have also been heard along with
5
other appeals in which the earlier judgment rendered has been recalled.
All these appeals have been heard afresh and are being disposed of by
the present judgment.
6. We have already taken note of the question of law that arises for
determination. Factual background in which this question of law arises
for consideration has been taken note of in the judgment dated 20th
August, 2018 which may again be reiterated, in order to understand the
niceties of this issue:
To understand the aforesaid question of law in clear terms, it may
be mentioned at this stage itself that sub-section (2) of Section 80-IC
applies to an undertaking or enterprise which has, inter alia, begun or
begins to manufacture or produce any article or thing by setting up a
new factory in the area specified therein which includes State of
Himachal Pradesh as well. Sub-section (3) of Section 80-IC is in two
parts: in certain cases, exemption from income is provided at the rate of
100% of such profits and gains earned from the aforesaid undertaking or
enterprise for 10 assessment years commencing with the initial
assessment year. The present appeals do not fall in that category. Other
clause relates to another category of undertakings or enterprises (these
cases belong to that category) where the exemption is at the rate Civil
Appeal No. 7208 OF 2018 & Ors. Page 4 of 17 of 100% of profits and
6
gains for five assessment years commencing with the initial assessment
year and, thereafter, 25% of profits and gains. Total exemption, thus, is
for a period of 10 years, namely, @100% for 1st five years and @ 25%
for remaining five years. In these cases, all the assessees started
claiming exemption @ 100% on profits and gains and availed it for a
period of five years. During this period these assessees carried out
“substantial expansion” and they claimed that, on that basis, they should
be allowed exemption from profits and gains for another five years @
100% instead of 25% from 6th to 10th year as well. Interestingly, they
admit that the total period during which they are entitled to exemption
would not exceed 10 years, as per the mandate of sub-section (6). In
this backdrop, the question is as to whether the assessees can again
start claiming 100% exemption for the next five years from profits and
gains after availing the same for first five years on the ground that they
have now carried out substantial expansion. The High Court has
answered the question in affirmative and for this reason, it is the
department which has come up to this Court challenging the said
decision by filing these appeals.
Section 80-IA was inserted by the Finance (No. 2) Act, 1991, with
effect from 1st April, 1991. By virtue of said Section, the gross total
income (profits and gains) of an assessee derived from any business of
7
an industrial undertaking, so specified therein, was entitled to certain
deductions for a period commencing from 1st April, 1993. With effect
from 1st April, 2000, the said provision was bifurcated with the insertion
of another Section, i.e., 80-IB, dealing with “certain industrial
undertakings other than infrastructure development undertakings.”
Thereafter, the Legislator, in its wisdom, enacted a special provision, in
respect of “units” established in certain special category States. Thus,
Section 80-IC came to be inserted by virtue of Finance Act, 2003,
applicable with effect from 1st April, 2004. At this point., It may only be
noticed that correspondingly certain provisions of Section 80-IB were
also amended/repealed. Deductions under the said Section were
discontinued for the Assessment Years commencing from 1st April, 2004
(Sub-section (4) of Section 80- IB).
7. At this juncture, we would like to take note of the relevant provisions of
Section 80-IC of the Act. Therefore, we extract below the relevant
portion of this provision:
"[80-IC. Special provisions in respect of certain undertakings
or enterprises in certain special category States.—(1) Where
the gross total income of an assessee includes any profits and
gains derived by an undertaking or an enterprise from any
business referred to in sub-section (2), there shall, in accordance
with and subject to the provisions of this section, be allowed, in
computing the total income of the assessee, a deduction from
such profits and gains, as specified in sub-section (3).
8
(2) This section applies to any undertaking or enterprise,—
(a) which has begun or begins to manufacture or produce any
article or thing, not being any article or thing specified in the
Thirteenth Schedule, or which manufactures or produces any
article or thing, not being any article or thing specified in the
Thirteenth Schedule and undertakes substantial expansion during
the period beginning—
(i) on the 23rd day of December, 2002 and ending before the
2 [1st day of April, 2007], in any Export Processing Zone or
Integrated Infrastructure Development Centre or Industrial
Growth Centre or Industrial Estate or Industrial Park or
Software Technology Park or Industrial Area or Theme Park,
as notified by the Board in accordance with the scheme
framed and notified by the Central Government in this
regard, in the State of Sikkim; or
(ii) on the 7th day of January, 2003 and ending before the
1st day of April, 2012, in any Export Processing Zone or
Integrated Infrastructure Development Centre or Industrial
Growth Centre or Industrial Estate or Industrial Park or
Software Technology Park or Industrial Area or Theme Park,
as notified by the Board in accordance with the scheme
framed and notified by the Central Government in this
regard, in the State of Himachal Pradesh or the State of
Uttaranchal; or
(iii) on the 24th day of December, 1997 and ending before
the 1st day of April, 2007, in any Export Processing Zone or
Integrated Infrastructure Development Centre or Industrial
Growth Centre or Industrial Estate or Industrial Park or
Software Technology Park or Industrial Area or Theme Park,
as notified by the Board in accordance with the scheme
framed and notified by the Central Government in this
regard, in any of the North-Eastern States;
(b) which has begun or begins to manufacture or produce any
article or thing, specified in the Fourteenth Schedule or
commences any operation specified in that Schedule, or which
manufactures or produces any article or thing, specified in the
Fourteenth Schedule or commences any operation specified in
that Schedule and undertakes substantial expansion during the
period beginning—
(i) on the 23rd day of December, 2002 and ending before the 2
[1st day of April, 2007], in the State of Sikkim; or
9
(ii) on the 7th day of January, 2003 and ending before the 1st day
of April, 2012, in the State of Himachal Pradesh or the State of
Uttaranchal; or
(iii) on the 24th day of December, 1997 and ending before the 1st
day of April, 2007, in any of the North-Eastern States.
(3) The deduction referred to in sub-section (1) shall be—
xxx xxx xxx
(ii) in the case of any undertaking or enterprise referred to in
sub-clause (ii) of clause (a) or sub-clause (ii) of clause (b), of
sub-section (2), one hundred per cent of such profits and gains for
five assessment years commencing with the initial assessment
year and thereafter, twenty-five per cent. (or thirty per cent. where
the assessee is a company) of the profits and gains.
xxx xxx xxx
(6) Notwithstanding anything contained in this Act, no deduction
shall be allowed to any undertaking or enterprise under this
section, where the total period of deduction inclusive of the period
of deduction under this section, or under the second proviso to
sub-section (4) of section 80-IB or under section 10C, as the case
may be, exceeds ten assessment years.
(8) For the purposes of this section,—
xxx xxx xxx
(v) ”Initial assessment year” means the assessment year relevant
to the previous year in which the undertaking or the enterprise
begins to manufacture or produce articles or things, or
commences operation or completes substantial expansion;
xxx xxx xxx
(ix) “Substantial expansion” means increase in the investment in
the plant and machinery by at least fifty per cent of the book value
of plant and machinery (before taking depreciation in any year),
as on the first day of the previous year in which the substantial
expansion is undertaken.
8. This section makes special provisions in respect of certain undertakings
or enterprises in certain special category States. Section 80-IC was
10
inserted by the Finance Act, 2003 w.e.f. Civil Appeal No. 7208 OF 2018
& Ors. Page 12 of 17 April 1, 2004. As per this provision, certain
undertakings or enterprises in certain special category States are
allowed deduction from such profits and gains, as specified in
sub-section (3) of Section 80-IC. The provisions of Section 80-IC
provided deduction to manufacturing units situated in the State of
Sikkim, Himachal Pradesh and Uttaranchal and North-Eastern States.
The deduction was provided to new units established in the aforesaid
States, and also to existing units in those States if substantial expansion
was carried out. The deduction was available @ 100% for ten
Assessment Years for the units located in North-Eastern and in the State
of Sikkim and for the units located in Himachal Pradesh, the deduction
was available @ 100% for five years and @ 25% for next five years.
9. In all these cases assessees had started availing exemption under
Section 80-IC on the setting up of new industrial units. All these
assessees have availed 100% deduction for a period of 5 years. As
noticed above, from sixth year, in normal course, deduction is admissible
@ 25% of the profits and gains, for next five years (or 30% where the
assessee is a company. However, all these assessees, after the expiry
of five years, carried out substantial expansion of their existing units.
This substantial expansion is in accordance with the provisions of
11
Section 80-IC and there is no dispute about the same. From the year
such substantial explanations were carried out by the assessees, the
assessees demanded deduction @ 100%, instead of 25%/30% for the
remaining period of 10 years which is the maximum period for which
deduction is admissible.
10.Sub-section (3), as noted above, mentions the period of 10 years
commencing with the initial Assessment Year. Subsection (6) puts a cap
of 10 years, which is the maximum period for which the deduction can
be allowed to any undertaking or enterprise under this section, starting
from the initial Assessment Year. Another significant feature under
sub-section (3) is that the deduction allowable is 100% of such profits
and gains from an undertaking or an enterprise for five Assessment
Years commencing with the initial Assessment Year and thereafter the
deduction is allowable at 25% (or 30% where the assessee is a
company) of the profits and gains. It brings out the following aspects:
(a) Those undertakings or enterprises fulfilling the conditions
mentioned in sub-section (2) of Section 80-IC become entitled to
deduction under this provision.
(b) This deduction is allowable from the initial Assessment Year. ‘Initial
Assessment Year’ is defined in Section 80-IB(14)(c) of the Act.
12
(c) The deduction is @ 100% of such profits and gains for first 5
Assessment Years and thereafter a deduction is permissible @ 25% (or
30% where the assessee is a company).
(d) Total period of deduction is 10 years, which means 100% deduction
for first 5 years from the initial Assessment Year and 25% (or 30% where
the assessee is a company) for the next 5 years.
11.In the judgment dated 20th August, 2018, while holding that deduction @
100% cannot be allowed for more than 5 years from the ’initial
assessment year’, the reasoning that was given is contained in
paragraph 20 of the judgment. Which reads as under:
"When we keep in mind the aforesaid scheme and spirit behind
this provision, such a situation cannot be countenanced where an
Civil Appeal No. 7208 OF 2018 & Ors. Page 14 of 17 assessee is
able to secure deduction @ 100% for the entire period of 10
years. If that is allowed it will amount to doing violence to the
provisions of sub-section (3) read with sub-section (6) of Section
80-IC. A pragmatic and reasonable interpretation of Section 80-IC
would be to hold that once the initial Assessment Year
commences and an assessee, by virtue of fulfilling the conditions
laid down in sub-section (2) of Section 80-IC, starts enjoying
deduction, there cannot be another “Initial Assessment Year” for
the purposes of Section 80-IC within the aforesaid period of 10
years, on the basis that it had carried substantial expansion in its
unit.”
12.As can be seen from the aforesaid passage, this Court took the view
that once ‘initial assessment year’ starts on fulfilling the conditions laid
down in sub-section (2) of Section 80-IC, there cannot be another ‘initial
13
assessment year’ for the purposes of Section 80-IC within the aforesaid
period of 10 years. While doing so, the Court referred to Section
80-IB(14)(c) of the Act, on the basis of which an opinion was formed that
there cannot be another ‘initial assessment year’ for the purpose of
Section 80-IC within the aforesaid period of 10 years. As pointed out in
the later part of the judgment, this is the apparent error which was
committed. Section 80-IB(14) starts with the words ‘for the purpose of
this section’. Thus, ‘initial assessment year’ defined therein is relatable
only to the deductions that are provided under the provisions of Section
80-IB, namely, in respect of profits and gains from certain industrial
undertakings other than infrastructure development undertakings.
Section 80-IB is materially different from Section 80-IC of the Act.
Inasmuch as Section 80-IC is a special provision in respect of certain
undertakings, all enterprises mentioned in Section 80-IC are limited in
contrast with Section 80-IB, the deduction under this Section is available
only when such undertakings or enterprises are established in particular
States, Sikkim, Himachal Pradesh, Uttaranchal or any of the
North-Eastern States. Therefore, definition of ‘initial assessment year’
mentioned in Section 80-IB could not have been the basis of finding out
the definition of ‘initial assessment year’ which is different from the
definition contained in Section 80-IB. Further, Sub-section (3) of Section
80-IC mentions about the deduction that is permissible, namely, 100%
14
deduction of the profits and gains for first five years and 25% (or 30%
where the assessee is a company) for the next five years. This
sub-section, in any case, does not deal with the ‘initial assessment
year’.
13.Learned counsel appearing for the assessees pointed out before us that
clause (v) of sub-section (8) of Section 80-IC is the concerned provision
which provides definition of ‘initial assessment year’, for the purpose of
this very Section, i.e., Section 80-IC, which was not noticed while
pronouncing the judgment in Commissioner of Income Tax vs. M/s.
Classic Binding Industries case. We find substance in this
submission of the assessees. We have no hesitation to accept this
mistake which occurred in the aforesaid judgment. The Court
specifically dealt with ‘initial assessment year’ and came into conclusion
that there cannot be two initial assessment years within a span of 10
years which is the maximum period for allowing deduction as per
sub-section (6) of Section 80-IC. As the issue directly concerned with
initial assessment year, its definition contained in that very Section was
missed out. To that extent, there is an error in the judgment dated 20th
August, 2018 in Classic Binding Industries case.
14.In the aforesaid conspectus, the focus has to be on the question as to
whether definition of ‘initial assessment year’ contained in clause (v) of
sub-section (8) of Section 80-IC makes any difference? We would like to
15
reproduce the said definition once again, hereunder, for the purpose of
continuity of thought process.
"S. 80-IC : xxx xxx xxx
(8) xxx xxx xxx
(v) ―Initial assessment year means the assessment year ‖
relevant to the previous year in which the undertaking or the
enterprise begins to manufacture or produce articles or things, or
commences operation or completes substantial expansion”

15.On the basis of this definition, counsel for the assessees before us have
argued that there can be more than one ‘initial assessment year’ which
can be triggered by the contingency provided therein.
16.As per this definition, there can be ‘initial assessment year’, relevant to
previous year, in any of the following contingencies:
(i) The previous year in which the undertaking or the enterprise
begins to manufacture or produce article or things; or
(ii) Commences operation; or
(iii) Completes substantial expansion
First two events are relatable to new units whereas third incident
would occur in respect of existing units. The benefit of Seciton 80-IC is,
thus, admissible not only when an undertaking or enterprise sets up new
unit and starts manufacturing or producing article or things. The
advantage of this provisions is also accrued to those existing units, if
they carry out “substantial expansion” of their units by investing required
capital, in the assessment year relevant to the previous year.
16
“Substantial expansion” is defined in clause (ix) of sub-section (8) of
Section 80-IC and it reads as under:
"(ix) “Substantial expansion” means increase in the investment in
the plant and machinery by at least fifty per cent of the book value
of plant and machinery (before taking depreciation in any year),
as on the first day of the previous year in which the substantial
expansion is undertaken;
17.As per the aforesaid definition, an existing unit would be treated as
having carried out substantial expansion when there is increase in the
investment in the plant and machinery by at least 50% of the book value
of the plant and machinery (before taking depreciation in any year). As
already noted above, in all these cases at hand, the assessees had
initially set up new industry in the State of Himachal Pradesh of the
nature specified under Section 80-IC of the Act. As a result, they
became entitled to avail the concession provided in the said provision. It
is also an admitted fact that after five years and before the expiry of 10
years, the assessees had carried substantial expansion of their units in
terms of the aforesaid definition. When we consider the definition of
‘initial assessment year’, keeping in view these factors, we find
substance in the submissions made by the learned counsel for the
assessees and are inclined to accept that there can be another ‘initial
assessment year’ on the fulfillment of the condition mentioned in the
said definition, namely, completion of substantial expansion of the
existing unit.
18.The Court is supposed to give effect to the provisions of Section 80-IC
17
by reading various provisions conjointly. For the purpose of these
cases, relevant provisions are sub-section (2)(a)(ii), sub-section 3(ii),
sub-section (6) and sub-section (8)(v) and (ix). Clause (ii) of sub-section
(2) provides that in case an undertaking or enterprise sets up a unit of
the nature specified therein in the State of Himachal Pradesh or the
State of Uttaranchal between the 7th January, 2003 and 1st April, 2015,
such an undertaking or enterprise shall become eligible for the
deductions from such profits and gains, as specified in sub-section (3).
In respect of State of Himachal Pradesh (in respect of which these
cases pertain to) sub-section (3) enumerates the extent of deduction. It
is 100% of profits and gains for first five initial assessment years
commencing with the initial assessment year and thereafter 25% (or
30% where the assessee is a company) of the profits and gains. The
deduction @ 25% for the neat five years in on the assumption that the
new unit remains static insofar as expansion thereof is concerned.
However, the moment substantial expansion takes place, another ‘initial
assessment year’ gets triggered. This new event entitles that unit to
start getting deduction @ 100% of the profits and gains. At the same
time, new period of 10 years does not start. It is because of the reason
that total period for which deduction can be allowed is capped at 10
years, inasmuch as sub-section (6) in no uncertain terms stipulates that
deduction shall be not allowed for a period exceeding 10 assessment
18
years. In fact, this period of 10 years relates not only in respect of
deduction under Section 80-IC but under the second proviso to
sub-section (4) of Section 80-IB as well. It would mean that total
deduction under Section 80-IB as well as 80-IC is for a period of 10
years.
19.Having examined the scheme in the aforesaid manner, we arrive at the
conclusion that the definition of ‘initial assessment year’ contained in
clause (v) of sub-section (8) of Section 80-IC can lead to a situation
where there can be more than one “initial assessment year” within the
said period of 10 years. As per sub-section (6), cap is on the 10
assessment years. It is not on quantum. We have also to keep in mind
the purpose for which Section 80-IC was enacted. The purpose was to
establish the business of the nature specified in the said provision in the
specified States. This provision was, thus, aimed at encouraging the
undertakings or enterprises to establish and set up such units in the
aforesaid States to make them industrially advanced States as well.
Undoubtedly, these are difficult States as most of these States fall in hilly
areas. Therefore, cost of production and transportation may also go up.
20.When we keep in mind these objectives for which Section 80-IC was
enacted, an irresistible conclusion would be to grant 100% deduction of
the profits and gains even from the year when there is substantial
expansion in the existing unit. After all, this substantial expansion
19
involves great deal of investment which has to be, at least 50% in the
plant and machinery, of the book value thereof before taking
depreciation in any year. With an expansion of such a nature not only
there would be increase in production but generation of more
employment as well, which would benefit the local populace. It is for this
reason, carrying out substantial expansion by itself is treated as ‘initial
assessment year’. It would mean that even when an old unit completes
substantial expansion, such a unit also becomes entitled to avail the
benefit of Section 80-IC. If that is the purpose of the legislature, we see
no reason as to why 100% deduction of the profits and gains be not
allowed to even those units who had availed this deduction on setting up
of a new unit and have now invested huge amount with substantial
expansion of those units. We would like to reproduce following
discussions from the Constitution Bench judgment in Commissioner of
Customs (Import), Mumbai vs. Dilip Kumar and Company and
Others1
 :
"20. It is well accepted that a statute must be construed according
to the intention of the legislature and the courts should act upon
the true intention of the legislation while applying law and while
interpreting law. If a statutory provision is open to more than one
meaning, the Court has to choose the interpretation which
represents the intention of the legislature. In this connection, the
following observations made by this Court in District Mining
Officer v. TISCO [District Mining Officer v. TISCO, (2001) 7 SCC
358] , may be noticed: (SCC pp. 382-83, para 18)
1 (2018) 9 SCC 1
20
“18. … A statute is an edict of the legislature and in
construing a statute, it is necessary, to seek the intention of
its maker. A statute has to be construed according to the
intent of them that make it and the duty of the court is to act
upon the true intention of the legislature. If a statutory
provision is open to more than one interpretation the court
has to choose that interpretation which represents the true
intention of the legislature. This task very often raises
difficulties because of various reasons, inasmuch as the
words used may not be scientific symbols having any
precise or definite meaning and the language may be an
imperfect medium to convey one's thought or that the
assembly of legislatures consisting of persons of various
shades of opinion purport to convey a meaning which may
be obscure. It is impossible even for the most imaginative
legislature to forestall exhaustively situations and
circumstances that may emerge after enacting a statute
where its application may be called for. Nonetheless, the
function of the courts is only to expound and not to legislate.
Legislation in a modern State is actuated with some policy to
curb some public evil or to effectuate some public benefit.
The legislation is primarily directed to the problems before
the legislature based on information derived from past and
present experience. It may also be designed by use of
general words to cover similar problems arising in future.
But, from the very nature of things, it is impossible to
anticipate fully the varied situations arising in future in which
the application of the legislation in hand may be called for,
and, words chosen to communicate such indefinite referents
are bound to be in many cases lacking in clarity and
precision and thus giving rise to controversial questions of
construction. The process of construction combines both
literal and purposive approaches. In other words, the
legislative intention i.e. the true or legal meaning of an
enactment is derived by considering the meaning of the
words used in the enactment in the light of any discernible
purpose or object which comprehends the mischief and its
remedy to which the enactment is directed.”
"28. The decision of this Court in Punjab Land Development and
Reclamation Corpn. Ltd. v. Labour Court [Punjab Land
Development and Reclamation Corpn. Ltd.v. Labour Court, (1990)
3 SCC 682 : 1991 SCC (L&S) 71] , made the said distinction, and
explained the literal rule: (SCC p. 715, para 67)
“67. The literal rules of construction require the wording of
the Act to be construed according to its literal and
grammatical meaning, whatever the result may be. Unless
21
otherwise provided, the same word must normally be
construed throughout the Act in the same sense, and in the
case of old statutes regard must be had to its contemporary
meaning if there has been no change with the passage of
time.”
That strict interpretation does not encompass strict literalism into
its fold. It may be relevant to note that simply juxtaposing “strict
interpretation” with “literal rule” would result in ignoring an
important aspect that is “apparent legislative intent”. We are alive
to the fact that there may be overlapping in some cases between
the aforesaid two rules. With certainty, we can observe that, “strict
interpretation” does not encompass such literalism, which lead to
absurdity and go against the legislative intent. As noted above, if
literalism is at the far end of the spectrum, wherein it accepts no
implications or inferences, then “strict interpretation” can be
implied to accept some form of essential inferences which literal
rule may not accept.
29. We are not suggesting that literal rule dehors the strict
interpretation nor one should ignore to ascertain the interplay
between “strict interpretation” and “literal interpretation”. We may
reiterate at the cost of repetition that strict interpretation of a
statute certainly involves literal or plain meaning test. The other
tools of interpretation, namely, contextual or purposive
interpretation cannot be applied nor any resort be made to look to
other supporting material, especially in taxation statutes. Indeed, it
is well settled that in a taxation statute, there is no room for any
intendment; that regard must be had to the clear meaning of the
words and that the matter should be governed wholly by the
language of the notification. Equity has no place in interpretation
of a tax statute. Strictly one has to look to the language used;
there is no room for searching intendment nor drawing any
presumption. Furthermore, nothing has to be read into nor should
anything be implied other than essential inferences while
considering a taxation statute.
30. Justice G.P. Singh, in his treatise Principles of Statutory
Interpretation (14th Edn. 2016 p. 879) after referring
to Micklethwait, In re [Micklethwait, In re, (1855) LR 11 Ex 452 :
156 ER 908] ; Partington v. Attorney
General [Partington v. Attorney General, (1869) LR 4 HL
100] , Rajasthan Rajya Sahakari Spg. & Ginning Mills Federation
Ltd. v. CIT [Rajasthan Rajya Sahakari Spg. & Ginning Mills
Federation Ltd. v. CIT, (2014) 11 SCC 672] , State Bank of
Travancore v. CIT [State Bank of Travancore v. CIT, (1986) 2 SCC
11 : 1986 SCC (Tax) 289] and Cape Brandy
22
Syndicate v. IRC [Cape Brandy Syndicate v. IRC, (1921) 1 KB
64] , summed up the law in the following manner:
“A taxing statute is to be strictly construed. The
well-established rule in the familiar words of Lord
Wensleydale, reaffirmed by Lord Halsbury
[Ed.: Tennant v. Smith, 1892 AC 150 at p. 154] and Lord
Simonds [Ed.: St Aubyn v. Attorney General, 1952 AC 15 at
p. 32 (HL)] , means:
‘“The subject is not to be taxed without clear words for that
purpose; and also that every Act of Parliament must be read
according to the natural construction of its words.”’
In a classic passage Lord Cairns stated the principle thus:
‘If the person sought to be taxed comes within the letter of
the law he must be taxed, however great the hardship may
appear to the judicial mind to be. On the other hand, if the
Crown seeking to recover the tax, cannot bring the subject
within the letter of the law, the subject is free, however
apparently within the spirit of law the case might otherwise
appear to be. In other words, if there be admissible in any
statute, what is called an equitable construction, certainly,
such a construction is not admissible in a taxing statute
where you can simply adhere to the words of the statute.’
Viscount Simon quoted [Ed.: Canadian Eagle Oil Co.
Ltd. v. Selection Trust Ltd., 1946 AC 119 at p. 140 (HL)] with
approval a passage [Cape Brandy Syndicate v. IRC, (1921) 1 KB
64] from Rowlatt, J. expressing the principle in the following
words: (Cape Brandy case [Cape Brandy Syndicate v. IRC, (1921)
1 KB 64] , KB p. 71)
‘… in a taxing Act one has to look merely at 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.’”
21.The High Court has interpreted these provisions in the following manner:
"80-IC(3)(ii) [for Himachal Pradesh] stipulates that deduction shall
be @ 100% for five years commencing with “initial assessment
year” and thereafter @ 25%. “Initial assessment year”, as per
23
Section 80-IC (8)(v) means, year in which the unit
begins/commences to manufacture/produce or completes
“substantial expansion” [As per Section 80-IC(8)(ix)].
46. The moment “substantial expansion” is completed as per
Section 80-IC(8)(ix), the statutory definition of “initial assessment
year” [Section 80-IC(8)(v)] comes into play. And consequently,
Section 80-IC(3)(ii) entitles the unit to 100% deduction for five
years commencing with completion of “substantial expansion”,
subject to maximum of ten years as per Section 80-IC(6).
47. A unit that started operating/existed before 7.1.2003 was
entitled to 100% deduction for first five years under Section
80-IB(4). If this unit completes substantial expansion during the
window period (7.1.2003 to 31.3.2012), it would be eligible for
100% deduction again for another five years under Section
80-IC(3)(ii), subject to ceiling of ten years as stipulated under
Section 80-IC(6).”
We are inclined to agree with the aforesaid interpretation.
22.It would be pertinent to point out that in Para 20 of the judgment in
Classic Binding Industries, this Court observed that if deduction @
100% for the entire period of 10 years, it would be doing violence to the
language of sub-section (6) of Section 80-IC. However, this observation
came without noticing the definition of ‘initial assessment year’ contained
in the same very provision.
23.Having examined the matter in the aforesaid perspective, judgment in
the case of Mahabir Industries v. Principal Commissioner of Income
Tax2
 would, in fact, help the assessee. The fine distinction pointed out
in Classic Binding Industries elopes thereby. To recapitulate, in
Mahabir Industries, it was held that if an assessee get 100%
2 Civil Appeal Nos. 4765-4766 of 2018 decided on May 18, 2018
24
exemption under Section 80-IB of the Act for five years and thereafter
carries out the substantial expansion because of which said assessee
becomes entitled to exemption under the new provision i.e. Section
80-IC of the Act, the assessee would be entitled to deduction @ 100%
even after five years. This ruling was predicated on the ground that
there can be two initial assessment years, one for the purpose of
Section 80-IB and other for the purposes of Section 80-IC of the Act.
Once we find that there can be two initial assessment years, even as per
the definition thereof in Section 80-IC itself, the legal position comes at
par with the one which was discussed in Mahabir Industries.
24.The aforesaid discussion leads us to the following conclusions:
(a) Judgment dated 20th August, 2018 in Classic Binding
Industries case omitted to take note of the definition ‘initial
assessment year’ contained in Section 80-IC itself and instead based
its conclusion on the definition contained in Section 80-IB, which does
not apply in these cases. The definitions of ‘initial assessment year’
in the two sections, viz. Sections 80-IB and 80-IC are materially
different. The definition of ‘initial assessment year’ under Section
80-IC has made all the difference. Therefore, we are of the opinion
that the aforesaid judgment does not lay down the correct law.
(b) An undertaking or an enterprise which had set up a new unit
between 7th January, 2003 and 1st April, 2012 in State of Himachal
25
Pradesh of the nature mentioned in clause (ii) of sub-section (2) of
Section 80-IC, would be entitled to deduction at the rate of 100% of
the profits and gains for five assessment years commencing with the
‘initial assessment year’. For the next five years, the admissible
deduction would be 25% (or 30% where the assessee is a company)
of the profits and gains.
(c) However, in case substantial expansion is carried out as
defined in clause (ix) of sub-section (8) of Section 80-IC by such an
undertaking or enterprise, within the aforesaid period of 10 years, the
said previous year in which the substantial expansion is undertaken
would become ‘initial assessment year’, and from that assessment
year the assessee shall been entitled to 100% deductions of the
profits and gains.
(d) Such deduction, however, would be for a total period of 10
years, as provided in sub-section (6). For example, if the expansion
is carried out immediately, on the completion of first five years, the
assessee would be entitled to 100% deduction again for the next five
years. On the other hand, if substantial expansion is undertaken,
say, in 8th year by an assessee such an assessee would be entitled to
100% deduction for the first five years, deduction @ 25% of the
profits and gains for the next two years and @ 100% again from 8th
year as this year becomes ‘initial assessment year’ once again.
26
However, this 100% deduction would be for remaining three years,
i.e., 8th, 9th and 10th assessment years.
25.In view of the aforesaid, we affirm the judgment of the High Court on this
issue and dismiss all these appeals of the Revenue. Likewise, appeals
filed by the assessees are hereby allowed.
.............................................J.
(A.K. SIKRI)
.............................................J.
(A. ABDUL NAZEER)
.............................................J.
(M. R. SHAH)
NEW DELHI;
February 20, 2019.

the professional mis-conduct of IO Puran Singh Mehra (since retired from service), it is most respectfully submitted that even though he filed the charge sheet against the actual culprits, he did not carry out investigation with professional rigour, as brought out in para 9 supra. In view of the above, this Hon'ble Court may be pleased to issue directions to the Govt. of Uttar Pradesh/Director General of Police, (U.P.) to initiate departmental action against him.

Hon'ble Mr. Justice S. Abdul Nazeer
1
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL ORIGINAL JURISDICTION
WRIT PETITION (CRIMINAL) NO. 188 OF 2015
SMT. SUNITA DEVI AND ANR. ….. PETITIONERS
VERSUS
UNION OF INDIA AND ORS. ….. RESPONDENTS
J U D G M E N T
S.ABDUL NAZEER, J.
1. Smt. Seema Garg, daughter-in-law of petitioner No.1, and her
two children were murdered on 24.07.2001. FIR No.221 of 2001 to
this effect was lodged in Police Station Pilakhwa, District Ghaziabad,
U.P. under Sections 302/394 of the Indian Penal Code, 1860 (for short
‘the IPC’). After investigation, the police filed a final report on
17.08.2001 against Nitin Garg, husband of Seema Garg, Manveer @
Mintoo and Mukesh for the offences punishable under Sections 302,
109, read with Section 34 IPC. During the course of trial, accused
Nitin Garg was also murdered.
2
2. The Trial Court by its judgment dated 16.10.2004 acquitted the
accused persons, namely, Manveer @ Mintoo and Mukesh. In the
course of judgment the Trial Court observed that the investigation has
not been carried on properly.
3. The case of murder of Nitin Garg was also investigated by the
State Police and a chargesheet was filed against certain persons.
Those persons were acquitted by the Sessions Court. The High Court
confirmed the said judgment. Special Leave Petition filed challenging
the said judgment of the High Court was dismissed by this Court.
4. Several other proceedings were initiated by the petitioners herein
before the High Court and before this Court in relation to the aforesaid
cases and it is not necessary at this stage to refer to all those
proceeding.
5. The petitioners filed the above writ petition for constitution of a
Court-monitored investigation/SIT to re-investigate the aforesaid cases
pertaining to FIR Nos. 221 of 2001 and 228 of 2002 registered at
Police Station Pilakhwa, Uttar Pradesh. This Court by Order dated
8.2.2018 rejected the prayer for re-investigation of the case pertaining
to FIR No. 228 of 2002. This Court directed constitution of a SIT for
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re-investigation of FIR No.221 of 2001. The relevant portion of the
order is as under:
"9. As noted above, in the judgment passed by
the sessions court in Criminal Case No.221 of
2001, the court has categorically observed that
the investigation has not been conducted fairly. It
is evident that the real culprits responsible for
murder for petitioners’ family have not been
subjected to trial. It is clear that the
investigating agency showed lackadaisical
approach in carrying/proceeding with the
investigation. We are of the view that it is
necessary to have a fair, honest and complete
investigation.
10. Having examined the entire materials placed
on record, we deem it proper to constitute a
Special Investigating Team (SIT) to re-investigate
FIR No.221 of 2001 titled “State v. Manvir
Singh and Anr.” registered at Police Station
Pilakhua, District Ghaziabad, U.P. Shri M.L.
Sharma, IPS (retired), former Special Director,
CBI, is appointed as the Chairman of the SIT.
Shri M.L. Sharma is permitted to take assistance
of two officers of his choice of the CBI as its
members. We direct the SIT to proceed as
regards further investigation in respect of FIR
No.221 of 2001 and to submit its report within a
period of three months from today. Needless to
say that appropriate secretarial assistance and
logistic support shall be made available to the SIT
by the Government of Uttar Pradesh. The
Government of Uttar Pradesh is also directed to
provide to the Chairman and the members of the
SIT all travelling, boarding and lodging expenses
while discharging their responsibility entrusted to
them. "
6. Accordingly, SIT was constituted to re-investigate FIR No.221 of
4
2001. The SIT filed its report dated 8th February, 2018 before this
Court. The findings and recommendations of the SIT are at para 11
which are as under:
"FINDINGS AND RECOMMENDATIONS
11.1 On a thorough re-investigation in the
case and taking into consideration the evidence
on record, the SIT is of the opinion that accused
Manveer and Mukesh were involved in the
murder of Seema and her two children Bhavya
and Pratyaksh at the behest of Nitin Garg in
pursuance of a criminal conspiracy hatched
between them. It bears repetition that as per
statements of Sanjay Sharma and Sonu Tomar
(who is no more), recorded by IO Mehra, CBI and
SIT, Manveer was last seen at the house of
deceased Seema by him and his employee Sonu
Tomar between 4:30 to 5:00 p.m. on 24.07.2001,
just before these gruesome murders. Further,
Manveer's post-crime conduct by way of
disappearing from Pilkhua from 24th to 30th July,
2001, before his arrest by the police also points
towards his involvement in the crime. Co-accused
Mukesh left village Shyamli and was not seen at
Pilkhua after the incident and was picked up
from village Pachak, Moradabad, by the police on
the night intervening 29th, 30th July, 2001. More
importantly, the disclosure statements made by
Manveer and Mukesh before the police leading to
the recovery of weapons of offence and their blood
stained clothes link them with the crime. All
these recoveries were admitted by them during
the trial. These articles were found to have
human blood on them by FSL, Agra. In addition
to the above, as per the Report of CFSL, New
Delhi, accused Manveer gave deceptive responses
in the Polygraph Test on all critical
questions/issues relating to this incident. The
expert has further opined that in Forensic
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Psychological Assessment and Forensic
Statement Analysis, he had been found to be
deceptive in his statements about his knowledge
and involvement in this gruesome crime. As
regards accused Mukesh, he could not be
subjected to Polygraph Test because of his
medical condition but he was subjected to
Forensic Psychological Assessment and Forensic
Statement Analysis and as per the expert
opinion, he was found to be deceptive in his
statements about his knowledge and involvement
in these murders. It is pertinent to mention here
that Manveer was a long time employee of Nitin
Garg and he had no personal enmity with
deceased Seema Garg and her two children.
Manveer's disclosure to the police that Nitin had
tasked him to eliminate Seema as he suspected
her fidelity finds resonance in the letter dated
08.07.2001 of Sunil Bansal to Seema's
father-in-law Rajendra Prasad, wherein he (Sunil
Bansal) mentioned that Nitin and his family were
suspecting Seema's character, while Seema
suspected Nitin's involvement with a girl of Delhi
and Seema's apprehension of danger to her life
for these reasons. This letter was delivered by
Irshad Malik to Rajendra Prasad personally at the
behest of Sunil Bansal.
11.2 All these facts and circumstances
establish that Nitin had reasons to perpetuate
the crime in question and he hatched a criminal
conspiracy with his confidante Manveer, who, in
turn, tied up with Mukesh, for the aforesaid
purpose. The theory propounded by the
petitioner's side is not supported by evidence on
record.
11.3 It is most respectfully submitted that
the findings of the SIT are consistent with the
charge sheet filed by the local police for the
reasons discussed in the preceding paras of this
report. A young lady and her two innocent
children were brutally murdered in cold blood
but nobody has been held accountable for this
diabolical crime. This report is being most
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respectfully submitted before this Hon'ble Court
for such directions as deemed fit in the interest of
justice.
11.4 As regards the professional
mis-conduct of IO Puran Singh Mehra (since
retired from service), it is most respectfully
submitted that even though he filed the charge
sheet against the actual culprits, he did not carry
out investigation with professional rigour, as
brought out in para 9 supra. In view of the
above, this Hon'ble Court may be pleased to issue
directions to the Govt. of Uttar Pradesh/Director
General of Police, (U.P.) to initiate departmental
action against him.
11.5 Further, as regards the allegations
against the CBI investigation team briefly
discussed in para 10 above, this Hon'ble Court
may be pleased to direct Director, CBI, to cause
an enquiry into the matter at his end for
appropriate action."

7. Ms. Kamini Jaiswal, learned counsel appearing for the
petitioners, in the course of her arguments and in the written
submissions, mainly raised the following contentions:
"i. The SIT strangely has not investigated the
truth and falsity of the statement made by
Head Constable, Chander Pal;
ii. Not even an endeavor to investigate the facts
mentioned by the Petitioner himself was
ever undertaken by the SIT. The SIT report
discloses a pre-disposed state of mind and
complete negation of the confidence reposed
in them by this Hon'ble Court;
iii. The SIT however at page 61 of its report
refers to murder of Nitin Garg which seems
to be a case of contract killing and killers
have gone unpunished. The SIT, therefore
suggests investigation of the FIR No.228 of
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2002 and same needs to be followed up."
8. Having heard the learned counsel for the petitioners and having
perused the report of the SIT and the objections filed by the petitioners
to the said report, we are of the view that the CBI has to look into the
report of the SIT and take a decision in the matter. We order
accordingly.
9. The writ petition is disposed of in the aforesaid terms.

 …..……………………..…J.
 (A.K. SIKRI)
 ….…………………………J.
 (S. ABDUL NAZEER)
New Delhi;
February 20, 2019.