LexTHE COMMISSIONER OF INCOME TAX, MADRAS versus M/S SUNDARAM SPINNING MILLS
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THE COMMISSIONER OF INCOME TAX, MADRAS
A
v.
M/S SUNDARAM SPINNING MILLS
DECEMBER 15, 1999
[D.P. WADHWA AND A .. P. MISRA, JJ.]
B
Income Tax Act, 1961 : /Xth Schedule, Entry ){)(/-Manufacture of
'Yarn '-Assessee 's claim of higher rate of initial depreciation on machinery-
Manufacturing of yarn <claimed to be amounting to manufacture of textile
within the meaning of Entry XXl-Assessing Authority disagreed- C
Commissioner (Appeals) reversed the order of the Assessing Authority-
Appellate Tribunal upheld the finding of the Commissioner-On Reference,
High Court also upheld the respondent's contention-On appeal, Held: Assesee
entitled to higher rate of initial depreciation-Manufacture of yarn would
fall within the meaning of textile-Legislature has deliberately widened the D
sphere of textile by extending it to include even cotton yarn-Legislature
intended to give higher rate of initial depreciation-Entry XX/ has to be
interpreted to subserve intended objective of the Legislature.
Interpretation of Statutes-Existing statute giving certain benefit to a
class of persons-Subsequent amendment extended the said benefit to another E
class of persons also-Held-Statute should be interpreted in the light of the
intention of legislature as amended from time to time.
The respondent firm, engaged in the business of manufacture of yarn,
claimed higher rate of initial depreciation on the machinery employed by it
for the manufacture of yarn. It contended that its manufacturing product i.e., F
'yarn' falls under Item No. 21 of IXth Schedule to the Income Tax Act, 1961,
and therefore, manufacture of cotton yarn amounted to manufacture of
"textile". The Assessing Authority, however, disagreed with the said view of
the respondent. On appeal, the Commissioner (Appeals) reversed the order
of the Assessing Authority. On further appeals, Income Tax Appellate Tribunal G
upheld the order passed by the Commissioner (Appeals). On reference High
Court upheld the respondent's contention. Hence the present appeal.
The appellant contended that manufacture of cotton yam does not amount
to manufacture of 'textiles' since yarn was a material or component with
which "textiles" were manufactured and therefore, it would not fall under H
365
366
SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.
A Item No. 21.
..
Dismissing the appeal, this Court
HELD: 1.1. The word "textiles" used in Item 21, IXth Schedule to the
Income Tax Act, 1961 is not used in isolation but is stretched by bringing
B in more in its company through the following words "including those dyed,
printed or otherwise processed made wholly or mainly of cotton including
cotton yarn, hosiery.and rope". Thus "textiles" as is understood in common
parlance or as is understood in its natural sense which is limited, is not
indicated here. The legislature has deliberately widened its sphere for a
c purpose to give larger benefits to other items inclulled in it by extending it
to include even cotton yarn, hosiery and rope to be understood as "textiles".
It is always ·open for a legislature to stretch or shrink or to give an ~rtificial
projection or slicing to any word including one used for 'goods', to make it
more meaningful to subserve to the objectives it intends to achieve. That is
.,.,_
why this inclusive clause brings in more goods, which may not strictly come
.D within the field of such goods. This is in order to give them similar benefit
or to make them equally treated. Similarly, "hosiery" and "rope" could not,
but for their inclusion under this item have been classified as "textiles".
Similarly may be "cotton yarn". [368-B, C, D, E, F]
E
1.2. It is true that manufacture of cotton yarn is a stage_ earlier than
manufacture of"textiles" as understood commonly. In fact, cotton is the first
stage, next comes 'cotton yarn' which finally produces "textiles". But here
legislature intended to give higher rate of initial depreciation even to the
manufacture of goods which commonly as understood could not have been
included as "textiles". So, Entry 21 has to be interpreted to subserve to the
F intended objective of the legislature. [368-F, G]
Commissioner of Income-Tax, West Bengal-V v. Shalimar Rope Works
Pvt. Ltd, (1980) 125 ITR 331 (Cal.); Commissioner of Income Tax, A.P.-llv.
Vijaya Spinning Mills ltd, (1983) 143 ITR (A.P.) and Commissioner of Income
G
Tax, Tamil Nadu-IJI v. North Arcot District Co-operative Spinning Mills ltd,
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