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Issues: Interpretation of provisions of section 33(1)(b)(B)(i) for development rebate entitlement
Analysis: The judgment involves a question of law referred by the Income-tax Appellate Tribunal regarding the entitlement of the assessee to development rebate under section 33(1)(b)(B)(i) of the Income-tax Act, 1961. The primary issue is the interpretation of the provisions of this section, specifically in relation to the manufacturing activities of the assessee involving iron rods and girder production from scrap metal. The critical aspect for determination is whether the assessee qualifies for the development rebate at the rate of 35% as per the Fifth Schedule of the Act. The relevant provision under section 33(1)(b)(B)(i) states that if machinery or plant is installed for the business of construction, manufacture, or production of articles specified in the Fifth Schedule, the assessee is entitled to a rebate of 35% of the actual cost of the machinery. The Fifth Schedule includes items such as iron and steel (metal) among others. The interpretation of this provision is crucial in deciding the eligibility of the assessee for the development rebate. The judgment also refers to a communication from the Central Board of Direct Taxes regarding the interpretation of the Fifth Schedule, specifically item (2) related to metals like aluminum, copper, lead, and zinc. The Board clarified that the manufacture of aluminum (metal) from aluminum scrap would also qualify for the higher rate of development rebate at 35%. This clarification is significant as it directly impacts the eligibility of the assessee, who manufactures iron bars and girders from scraps, for the rebate. Based on the interpretation provided by the Central Board of Direct Taxes and the provisions of the Fifth Schedule, the judgment concludes that the assessee, engaged in manufacturing iron bars and girders from scrap metal, is indeed entitled to the development rebate at the rate of 35%. The decision aligns with the Board's interpretation and ensures that the assessee can avail the rebate for their manufacturing activities. The judgment rules in favor of the assessee, emphasizing the inclusive interpretation of the Fifth Schedule for rebate eligibility. The judges concur on the decision, and no costs are awarded in this matter.
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