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- Eligibility for Tax Credit Certificate under s. 280 ZB of the Act - Determination of profits and gains attributable to manufacture or production of specific items - Interpretation of the expression "attributable to" in s. 280 ZB(1) of the Act Eligibility for Tax Credit Certificate under s. 280 ZB of the Act: The petitioner, a public limited company engaged in the manufacture of ferro manganese, applied for Tax Credit Certificates for the assessment years 1967-68 and 1970-71 under s. 280 ZB of the Act. The applications were rejected by the ITO, holding that the production of ferro manganese did not fall under the relevant category in the First Schedule to the Industries (Development and Regulation) Act, 1951. The Commissioner of Income-tax upheld this decision, concluding that the profits from the sale of import entitlements were not specifically attributable to the manufacture of ferro manganese, resulting in a loss when deducted. The petitioner challenged this decision in court, arguing that the sale of import entitlements was indeed attributable to their manufacturing business. Determination of profits and gains attributable to manufacture or production of specific items: The court analyzed the meaning of the expression "attributable to" in s. 280 ZB(1) of the Act, citing the Supreme Court's decision in Cambay Electric Supply Industrial Co. Ltd. v. CIT. The Supreme Court had emphasized that the term "attributable to" has a wider import than "derived from," indicating that receipts from sources other than the actual conduct of the business could still be considered attributable. Applying this interpretation, the court found that the profits and gains from the sale of import entitlements by the petitioner were directly related to the manufacture of ferro manganese, making them attributable to the production activity. The court disagreed with the conclusions of the tax authorities and held that the petitioner was entitled to the Tax Credit Certificate. Interpretation of the expression "attributable to" in s. 280 ZB(1) of the Act: The court referenced decisions from other High Courts that aligned with the Supreme Court's interpretation of the term "attributable to." It also noted a previous decision by the Division Bench of the same court that considered the value of import entitlements as profits of the business. The court emphasized that the profits from the sale of import incentives were directly linked to the manufacturing business of the petitioner. Consequently, the court ruled in favor of the petitioner, directing the authorities to grant the necessary Tax Credit Certificate for the relevant assessment years. In conclusion, the court found that the profits from the sale of import entitlements were attributable to the manufacture of ferro manganese, overturning the decisions of the tax authorities and granting the petitioner the Tax Credit Certificate for the assessment years in question.
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