Madhya Pradesh High Court
Commissioner Of Income-Tax vs Ratlam Straw-Board Mills P. Ltd. on 19 March, 1981
JUDGMENT S.S. Sharma, J.
1. At the instance of the Commissioner of Income-tax, M. P., Bhopal, the Appellate Tribunal, Indore Bench, Indore, under Section 256(1) of the I.T. Act (hereinafter referred to as " the Act"), has referred the following question for our opinion :
"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the business in the manufacture of ' straw-board ' is a priority industry under item No, 16 of the Vth Schedule to the Income-tax Act, 1961 and hence the assessee is entitled to the necessary rebates as admissible under the Act to the priority industry in respect of the assessment years 1965-66 and 1966-67 ? "
2. The assessee, a private limited company, was dealing in the manufacture of straw-board during the years in question. During the assessment proceedings for the assessment years 1965-66 and 1966-67, the assessee claimed that the manufacture of straw-board is a priority industry under item No. 16 of the Vth Schedule of the I.T. Act, 1961, which was inserted by the Finance Act, 1965. That item No. 16 as it now stands reads as " paper and pulp including newsprint ". It was, therefore, contended that this industry was entitled to all the benefits admissible under the I.T. Act. The ITO rejected the assessee's contention by holding that straw-board was not covered by the term " paper and pulp ". The asses-see went in appeal before the AAC, but he also did not accept the assessee's contention. The assessee, therefore, raised this question in the second appeal before the Appellate Tribunal.
3. The Tribunal, following the decision of the Punjab and Haryana High Court in CIT v. Straw-Board Mfg. Co. Ltd. [1975] 98 ITR 78, held that the business of manufacture of straw-board by the assessee is a priority industry as mentioned under item No. 16 of the Vth Schedule to the Act of 1961, and hence the assessee is entitled to the necessary rebates as admissible, under the Act, to the priority industry in respect of the assessment years 1965-66 and 1966-67.
4. Item No. 16, which has been referred to above, initially was " paper and pulp". This was amended by the Finance Act, 1966, and the words " including newsprint " was added after the word "pulp". Where we are dealing with an inclusive definition it would be inappropriate to put a restrictive interpretation upon terms of wider denotation. (See State of Bombay v. Hospital Mazdoor Sabha, AIR 1960 SC 610, 614). The addition of the words " including newsprint " cannot be held to give a limited meaning to the word " paper ".
5. The word " paper " has not been defined in the Act. It being a taxing statute, the meaning of this is not to be understood in any technical sense but as in common parlance. The addition of the words " including newsprint" in item No. 16 cannot be taken to mean that without this inclusion " newsprint " was not included within the meaning of the word " paper ". In the context, it cannot be held that by the user of the words " including newsprint", the other types of paper which were included get excluded. The Tribunal in its order accepted the assessee's contention that the process of manufacture of straw-board is identical to the process of manufacture of paper. In Straw-Board Manufacturing Co. Ltd.'s case [1975] 98 ITR 78 (P & H), their Lordships have also dealt with the process of manufacture of the straw-board and the paper. What has been observed is that " the only difference is that the straw-board machine runs at a slow speed on account of the thickness of the end product whereas the paper machines are fast running. The manufactured paper is ordinarily thin and fine whereas the straw-board is thick and rough. "
6. In view of the decision in Straw-Board Mfg. Co. Ltd.'s case [1975] 98 ITR 78 (P & H), with which we respectfully agree, we do not find it necessary to go further on this question, and would answer the question as follows :
On the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the business of the manufacture of " straw-board " is a priority industry under item No. 16 of the Vth Schedule to the I.T. Act, 1961, and, hence, the assessee is entitled to the necessary rebates as admissible under the Act to the priority industry in respect of the assessment years 1965-66/66-67.
7. There shall be no order as to the costs which shall be borne by the parties as incurred.