HINDUSTAN WIRES PRODUCTS LIMITED versus COMMISSIONER OF INCOME-TAX, PATIALA

Citation: [1986] 3 S.C.R. 478 · Decided: 07-08-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Judgment (excerpt)

A 
HINDUSTAN WIRES PRODUCTS LIMITED 
~-
v. 
COMMISSIONER OF INCOME-TAX, PATIALA 
B 
AUGUST 7, 1986 
[R.S. PATHAK AND SABYASACHI MUKHARil, JJ.] 
:#--
Income Tax Act, 1961, ss 33(i)(iii)(C)(A),33(l)(b)(B)(i), BOE, 
c 
80-I and items 7, 17 and 24 of the Fifth Schedule-Manufacture of 
'f 
insulated copper wires-Grant of development rebate & deduction in 
respect of profits and gains-Permissibility of 
-
Section 33 of the Income Tax Act, 1961 provides for the grant of 
development rebate. The appellant-assessee, who carried on the busi-
D 
ness of manufacture and sale of insulated copper wires, claimed for the 
assessment years 1966-67 to 1971-72 that it was entitled to the benefits 
conferred by ss. 33(i)(iii) (c)(A) and SOE read with items 7, 17 and 24 of 
the Fifth Schedule and ss. 33(i)(b)(B)(i) and 80-I read with items 7, 17 
and 24 of the Fifth or the Sixth Schedule, as the case may be, for the 
aforesaid assessment years as a "priority industry". It contended be-
E 
fore the Income Tax Officer that lite wires manufactured by it were 
covered by the word "cables" employed in the articles and things 
specified in items 7, 17 and 24 of the Fifth Schedule for the assessment 
years 1966-67, 1967-68 and 1968-69 and items 7, 17 and 24 of the Sixth 
Schedule of the Income Tax Act for the assessment years 1969-70 to 
1971-72. The Income Tax Officer rejected the claim made by the appel- -
F 
lant. The matter ultimately went before the High Court in a reference. 
) 
The High Court answered the question in favour of the Revenue and 
against the appellant-assessee on the ground that the wires were not 
meant for the generation and transmission of electricity and they would 
:..(-
fall within item 7 only if they were meant solely for that purpose and not 
otherwise. 
G 
Dismissing the appeal, 
HELD: 1. Item 7 of the Fifth Schedule speaks of equipment for 
the generation and transmission of electricity and such equipment in-
~ 
eludes transformers, cables and transmission towers. To appreciate 
H 
what is comprehended in item 7, it is permissible to refer to a related 
478 
HINDUSTAN WIRE PRODUCTS v. C.I.T. (PATHAK. J.] 
479 
-} 
entry, item 24, which refers to component parts of the articles men-
A 
tioned, inter alia in item 7. When item 24 is read in its entirety. it is 
apparent that the component parts mentioned therein are component 
parts of what can be described as machinery. Then reading item 7 in 
conjnnction with item 24, the conclusion is inescapable that when item 7 
speaks of equipment, reference is intended to machinery needed tor the 
B 
generation and transmission of electricity. The item envisages complete 
~ 
self-contained units of equipment, units which, on being put together or 
connected together, constitute the apparatus for the generation and 
~ 
transmission of electricity. Viewed in that context, the reference in item 
7 to cables mnst mean cables identifiable as a complete sett-contained 
-
unit in themselves as a distinct unit of equipment when employed in the 
generation and transmission of electricity. A cable does not fall within 
c 
item 7 if it is merely a component, or part of a component, of a unit of 
)r 
equipment or machineiy. [485F-H; 486A-C) 
Commissioner of Income Tax, Tamil Nadu-V v. Dhandayuthapani 
Foundry (Private) Ltd., [1980) 123ITR 709, inapplicable. 
D 
In the instant case, the sales accounts of the asessee showed that 
the assessee had sold winding wires used in the manufacture of different 
types of electricity. These are winding wires, employed in coils, winding 
of armatures, etc. and cannot be identified at all as cables in the sense in 
which item 7 conceives of cables. [486D-EJ 
E 
CIV~L APPELLATE JURISDICTION: Civil Appeal Nos. 597-
_.. 
599 (NT) of 1985 
f 
From the Judgment and Order dated 3.5.1983 of the Punjab & 
Haryana High Court in Income Tax Reference Nos. 61, 63 and 64 of 
F 
-:y 
1977. 
Dr. Devi Pal, V.S. Desai, O.C. Mathur, Ms. A.K. Verma, Ms. 
Meera Verma and S. Sukumaran for the Appellant. 
S.C. Manchanda and Ms. A. Subhashini for the Respondent. 
G 
;... 
The Judgment.of the Court was delivered by 
PATHAK, J. These appeals by special leave are directed against 
the judgment of the High Court of Punjab and Haryana holding that 
the sale of insulated copper wires manufactured by the appellant-
H 
A 
B 
c 
D 
E 
F 
G 
H 
480 
SUPREME COURT REPORTS 
[1986) 3 S.C.R. 
assessee does not entitle it to the benefits conferred by ss. 33( !)(iii) 
(c)(A) and SOE of the I

Excerpt shown. Read the full judgment & AI analysis in Lexace.