LexCOMMISSIONER OF INCOME TAX, AMRITSAR versus STRAW BOARD MANUFACTURING CO. LTD.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
a
COMMISSIONER OF INCOME TAX, AMRITSAR
v.
STRAW BOARD MANUFACTURING CO. LTD.
APRIL 28, 1989
[R.S. PATHAK, CJ AND M.H. KANIA, J.]
Income Tax Act, 1961: Sections 33 and 80-E-Schedule 5, Item
16-Assessee-Manufacturer of strawboard-Whether entitled to con-
cessional rate of income-tax, development rebate and deduction-
Strawboard industry-Whether part of paper and pulp industry-
Strawboard-Whether covered by expression 'paper and pulp'.
The assessee, manufacturer of strawboard, claimed concessional
rates of income tax, development rebate at higher rate under s. 33 and
deduction under s. 80-E of the Income Tax Act, 1961, for the assess-
ment years 1965-66, 1966-67 and 1967-68, on the ground that the
p manufacture of strawboard was a priority industry. The claim was
rejected by the Income Tax Officer on the ground that the assessee
could not be described as a priority industry and that the manufacture
of strawboard was not covered by the words 'paper and pulp' in the
relevant SCbedules pertaining to the assessment years 1966-67 · and
f
1967-68.
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The assessee's appeals were dismissed by the Appellate Assistant
Commissioner. In second appeals, the Appellate Tribunal accepted the
assessee's plea that the manufacture of strawboard was a priority
industry and held that the assessee was entitled to the statutory rebates
claimed by it.
On a reference made at the instance of the Revenue, the High
Court held that the strawboard industry was covered within the
expression 'paper and pulp' appearing in the relevant Schedules of the
Income Tax Act.
Dismissing the appeals by the Revenue, this Court,
HELD: When provision is made in the context of a law pro-
viding for concessional rates of tax for the purpose of encouraging an
industrial activity, a .liberal construction should be put upon the
H language of the statute. [775E-F]
J
C.I.T. v. STRAW BOARD MFG. CO. (PATIIAK, CJI
773
'
The provisfon for rebate has been made for the purpose of
encouraging the setting up of new industries, and the industries are
those described in the Schedules relevant to the respective assessment
years. When the Schedules refer to 'paper and pulp', they, in fact,
'-
intend to refer to the paper and pulp industry. The expression has been
used comprehensively. [7750-E]
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{'' ·,
The expression 'paper and pulp' in the Industries (Development
-~nd Regulatioh) Act, 1951 includes paperboard and str&wboard. News-
print, paperboard and strawboard have been specifically mentioned in
the relevant e11try in. order to make it clear that they are included within
the meaning of the word 'paper'. The process of manufacturing strawboard
is identical with the process of manufacturing paper. [77SG-H; 776A]
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. ·- . - -
A
B
c
In the circumstances, there is no doubt that the strawboard
industry is part of the paper and pulp industry and the assessee,
whose undertaking was registered in terms of s. 10 of the Industries
(Development and Regulation), 1951 is entitled to the rebates claimed
by it. [77SE]
. . .
D
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 519-
521of1975.
From the Judgment and Order dated 9.5.1974 of the Punjab and
Haryana High Court in l.T. Reference Nos. 30 to 32 of 1973.
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G.C. Sharma, Ms. A. Subhashini and K.C. Dua for the
Appellant.
Dr. Y.S. Chitale, R.K. Jain, Rakesh Khanna and Ms. Abba Jain
for the Respondent.
The Judgment of the Court was delivered by
PATHAK, C:J. These appeals by special leave are _directed
against a judgment ofihe High Court of Pllnjilb and Haryana dispos-
ing of an Income-tax Reference in favour ofthe respondent-assessee.
The assessee manufactures strawboard. For the assessment years
1965c66, 1966-67 and 1967-68 (the relevant previous years being the
respective calendar years 1964, 1965 and 1966), the assessee claimed
concessional rates of income tax, development rebate at higher rate
F
G
and deductiop un<le_r s. 80-E of the Income Tax Act, 1961 on. the
H
774
SUPREME COURT REPORTS
[1989] 2 S.C.R.
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ground that the manufacture of strawboard was a priority industry.
For the assessment year 1965-66 the total income assessed was
Rs.17,71,334 and against the basic rate of 80 per cent the assessee
claimed rebate at.the rate of 35 per cent up to Rs.10,00,000 and on the
balance at 26 per .cent. Tb,e Income Tax Officer allowed the rebate at
30 per cent up to Rs. 10,00,000 and at 20 per cent on the balance. For
the assessment year 1966-67 the assessee claimed deExcerpt shown. Read the full judgment & AI analysis in Lexace.