COMMISSIONER OF INCOME-TAX, HARYANA ETC. ETC. versus KRISHNA COPPER STEEL ROLLING MILLS JAGADHRI ETC. ETC.

Citation: [1991] SUPP. 2 S.C.R. 187 · Decided: 12-11-1991 · Supreme Court of India · Bench: S. RANGANATHAN · Disposal: Dismissed

Judgment (excerpt)

COMMISSIONER OF INCOME-TAX, HARYANA ETC. ETC. 
A 
v. 
KRISHNA COPPER STEEL ROLLING MILLS 
JAGADHRI ETC. ETC. 
NOVEMBER 12, 1991 
[S.RAJilGANATHAN, V.RAMASWAMI AND N.D.OJHA, JJ.] 
Income-tax Act, 1961-Sections 33(1)(b)(B)(i)(a), 80-I 
-ConstrUction-Historical background-Relevance of----Legislative inten-
tion. 
Income-tax, Act, 1961-Sections 33(1)(b)(B)(i)(a). 80-I, Fifth Sched-
ule, item 1-Manufacture of mild steel rods, bars or rounJs-Whether 
entitled to a higher rate of development rebate and relief under-"Semi-
finished Steel" and "Finished Steel"-Constrnction "Forging and cast-
, ings" whether articles made of iron and steel. 
B 
c 
The respondents-assessees were engaged in the manufacture of D 
~ild steel rods, bars or rounds. They claimed that as the articles 
manufactured by them fell under item 1 of the list set out in the· 
Fifth Schedule, they were entitled to a higher rate of development 
rebate specified in section 33(1) (b) (B) (i) (a) and to relief under 
section 80-I of the Income-Tax Act, 1961. 
The Income-Tax Officer rejected the claim of the assessees, 
whereas the Appellate Assistant Commissioner, the Tribunal and 
High Court accepted their claim. Hence the Revenue filed appeals 
before this Court. 
E 
Th~ contentions of the appellant-Revenue were that iron and F 
steel ceased to be a metal when it came out of the furnace in the 
primary steel mills in the form of ingots. In the next stage the ingots 
became semi-finished products in the shape of billets, blooms and 
slabs. It was said to be the stage where the raw mater,ials were 
converted into a different form or shape; that the expression "iron 
and steel (metal)" meant the iron and steel as it emerged in the G 
form of billets, blooms and slabs from the steel mill and that all 
subsequent products whether in the form of rails, rods (including 
wire rods), bars, angles, channels, tees, sees, pipes, tubes, sheets, 
strips, plates and coils would constitute articles made of iron and 
steel, and that rolling mills making bars and rods were not covered 
by item 1 of the Fifth Schedule. 
H 
187 
188 
SUPREME COURT REPORTS 
(1991) SUPP. 2 S.C.R. 
A 
On the other hand, the respondents-assessees contended that in 
the steel industry the manufacture of ingots, billets, blooms, etc. 
represented only an intermediate stage at which the iron and steel 
metal became semi-finished steel. When the semi-finished steel was 
converted into plates, bars or rods, they became finished steel. The 
bars, rods and rounds, which were continued to be iron and steel in 
B 
a finished form, were used to manufacture the products of iron and 
steel by various processes, sucl1 as, rolling, cutting, shearing, forg-
ing, hammering, etc. and that the products of iron and steel were 
different from that of iron and steel (metal). 
c 
D 
E 
F 
G 
H 
Disl,Jlissing the appeals filed by the Revenue, this court, 
HELD: 1. In interpreting the provisions in S.33(1)(b)(B)(i)(a), 
S.80-1 of the Income-Tax Act, 1961, the Court would do well to keep 
in mind the background in which concessions to certain basic indus-
tries were introduced in the Income-Tax Act. The historical back-
ground reflects the intention of the legislature to grant progres-
sively certain exemptions, reliefs and concessions for certain types 
of industries, which were considered important for national devel-
opment. The industry in iron and steel and other metals figured in 
all the lists. (199 C, 200 BJ 
2. The incentive concession or relief granted under the provi-
sions bas to be construed in a broad and comprehensive manner so 
as to cover all manufacturing activities legitimately pertaining to 
the specified core industry with no limitation save what may be 
called for by the wording of a particular entry. So far as items 1 
and 2 are concerned, the wording points to a distinction between the 
metal which is used as the base and other articles manufactured 
therefrom. Pig iron and iron scrap are fed into furnaces to produce 
ingots, billets and blooms. But both are fron and steel in different 
forms, the latter being referred t'1> as "semi-finished steel". Like-
wise, the bars, rods, rounds; wire rods and the like constitute the 
second stage in . which one gets only "finished" forms of iron and 
steel. Having regard to tb(nattif~1;•na· ·weight of the metal, it has to 
be "finished·" to assume the'ie'forms before manufacturers of iron 
and steel· at(ieles can take o~er and proceed to manufacture articles 
from

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