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Issues Involved:
1. Whether the assessee is a priority industry under item No. (17) of the Fifth and Sixth Schedules to the Income-tax Act, 1961, and thus entitled to deductions under section 80-I. 2. Whether the assessee is entitled to a higher rate of development rebate based on being a priority industry under item No. (17) of the Fifth and Sixth Schedules to the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Priority Industry Status and Entitlement to Deductions under Section 80-I: The primary question was whether the assessee-company qualified as a priority industry under item No. (17) of the Fifth and Sixth Schedules to the Income-tax Act, 1961, and thus was entitled to deductions under section 80-I. The Commissioner of Income-tax had ruled against the assessee-company, interpreting the relevant entry in the Schedule and considering the material presented by the assessee. The Commissioner concluded that the term "electronic equipment" was followed by "namely," indicating that only the enumerated items fell within its scope. The basic components referred to in item No. (17) were deemed to be components of the specified electronic equipment. The Tribunal reversed the Commissioner's decision without addressing the underlying reasoning, relying instead on the fact that the assessee's products were sold to reputed companies like Philips India Ltd., Bajaj Electronics, and Greaves Cotton, which manufacture sophisticated electronic goods. This approach was criticized as irrelevant since the nature of the assessee's products, not the buyers, was the pertinent factor. The Tribunal failed to interpret item No. (17) and examine the material on record, leading to an unsatisfactory judgment. The court emphasized that the correct interpretation of item No. (17) was crucial. The term "electronic equipment" was intended to cover specific items enumerated in the Schedule, and the basic components mentioned were those of the specified electronic equipment. The court rejected the argument for an elastic interpretation, stating that tax relief should be granted strictly as per legislative intent. 2. Entitlement to Higher Rate of Development Rebate: The second issue was whether the assessee was entitled to a higher rate of development rebate based on being a priority industry under item No. (17). The Tribunal's failure to interpret item No. (17) and examine the material on record rendered its judgment unsatisfactory. The court noted that the interpretation of item No. (17) by the Commissioner was justified and that the list of priority industries in the Income-tax Act should not be conflated with the list in the Import Trade Control Policy (Red Book), which served different purposes. The court concluded that the Tribunal had not addressed whether the assessee's products fell within the scope of item No. (17) and had not considered the material on record. Consequently, the matter was remitted to the Tribunal for a fresh decision in accordance with the court's interpretation of item No. (17) and the material presented by the assessee. Conclusion: The court declined to answer the referred questions and remitted the matter to the Tribunal for a fresh decision based on the interpretation of item No. (17) and the material on record. The Tribunal was instructed to determine whether the assessee's products qualified as basic components under item No. (17) and thus entitled to the benefits under section 80-I and the higher rate of development rebate. There was no order as to costs.
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