Summary
The respondent is a Public Limited Company incorporat- ed on April 14, 1989 for carrying on business of manufac- turing chemical products particularly of Carboxy Methyl Cellulose (CMC) and Cellulose Pulps. The respondent was also granted an industrial licence by the Central Government for the manufacture of Carboxy Methyl Cellulose. The respondent had installed a cellulose plant in which cellulose pulp, the raw material for Carboxy Methyl Cellulose was manufactured.
The plant had begun production from March 1961 while the production of Carboxy Methyl Cellulose was started from June 15, 1961.The respondent claimed relief under section 84 of Income Tax Act as it stood prior to its being deleted with effect from April 1, 1968 by Finance Act (2) 1967, for the assessment year 1966-67, the previous year of accounting being the financial year 1965-66.The Income Tax Officer took the view that since the respondent had started production of cellulose pulp from March, 18 1961, it had begun to manufacture or produce finished articles or goods in the year ending March 31, 1961 and consequently the assessment year 1961-62 was the first year in which the assessee was entitled to relief under section 84 Sub-section (7) of the Income Tax Act under which the relief contemplated was to be available only for live assessment years. So the respondent was not entitled to relief in the assessment year 1966-67 which fell beyond the aforesaid period.The above view the Income Tax Officer was affirmed in appeal by the Appellate Assistant Commissioner. Even the Income Tax Appellate Tribunal held that the respondent having begun production or manufacture of finished product which was capable of being sold in the market in the year of accounting relevant to the assessment year 1961-62 the last year in which the respondent was entitled to get relief under section 84 of the Act was the assessment year 1965-66 and the claim for 889the relief in the assessment year 1966-67 was not maintain- able. The High Court on reference, held that the mere fact that the respondent started production of Cellulose Pulp which was an intermediate product on March 18, 1961 did not mean that the company had begun to produce or manufacture"articles" in the assessment year 1961-62 because the word"articles" used in Sub-section (7) of section 84 in the context, could be only the end product of the industrial undertaking as a whole where there was no phased programme of installation and construction.Allowing the appeal of the Revenue with costs, the Court,HELD: The High Court on the facts and circumstances of the instant case committed an error in interfering with the conclusion of the Tribunal. It is settled law that a High Court while hearing a reference under the Act does not exercise any appellate or revisional or supervisory juris- diction over the Tribunal and it acts purely in an advisory capacity. Further in the instant case the finding of the Tribunal did not suffer from any infirmities such as not being supported by any evidence or being perverse or patent- ly unreasonable. The production of Cellulose Pulp during the month of March, 1961 was a finished product which was a marketable commodity. It is true that Cellulose Pulp also constitutes raw material for manufacture of Carboxy Methyl Cellulose and the circumstances that the industrial licence granted to the respondent was for the manufacture of Carboxy Methyl Cellulose which also included the manufacture of Cellulose Pulp which was intermediate product to be used in its turn as a raw material for the manufacture of Carboxy Methyl Cellulose. The relevent clause of the Memorandum of Association of the respondent company is obviously wide in its amplitude and as such comtemplates "manufacture of chemical products of any nature and kind whatsoever and particularly of Carboxy Methyl Cellulose, Cellulose Pulp and other chemical products." So the High Court obviously com- mitted an error in holding that the manufacture of Cellulose Pulp during March 1961 was of no consequence and that the first year of production would be the assessment year 1962- 63 when Carboxy Methyl Cellulose was actually manufactured.The provisions of section 84 of the Act could be coustrued liberally only, when there is any genuine doubt about the interpretation. [892H-893G, 894B]In the instant case, a plain reading of Sub-section (7) of the section 84 of the Act makes it clear without any doubt that the period of assessment year relevant to the previous year in which the undertaking began to manufacture or produce "articles" was 1961-62. The question as to the assessment year in which the undertaking begins to manufac- ture or 890produce articles is essentially a question to be decided on the facts of each case and on the basis of evidence placed on record. [894C-D]See the full content of this document
Extract
Commissioner Of Income Tax, Gujarat VS. Cellulose Products Of India Ltd.
PETITIONER: COMMISSIONER OF INCOME TAX, GUJARAT Vs.RESPONDENT: CELLULOSE PRODUCTS OF INDIA LTD.DATE OF JUDGMENT04/09/1991BENCH: OJHA, N.D. (J)BENCH: OJHA, N.D. (J)RANGNATHAN, S.RAMASWAMI, V. (J) IICITATION: 1991 AIR 2285 1991 SCR (3) 888 1991 SCC (4) 467 JT 1991 (3) 599 1991 SCALE (2)466ACT: Income Tax Act 1961: Sections 84 and 261--New Indus- trial Undertaking--Exemption--Commencement of period----When arises.JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1314 (NT) of 1976.From the Judgment and Order dated 15.11.1975 of the Gujarat High Court in Income Tax Reference No. 160 of...
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