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TMI Blog1981 (9) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... er rate of development rebate prescribed under section 33(1)(iii)(c)(A)(a) of the Income-tax Act, 1961, for the assessment years 1966-67 and 1967-68 ? " Assessment years 1968-69 and 1969-70: " (1) Whether, on the facts and in the circumstances of the case, and having regard to the nature of the electrical accessories manufactured by the assessee-company, the Tribunal was justified in law in holding that the assessee-company was entitled to deduction under section 80-1 for the assessment years 1968-69 and 1969-70 ? (2) Whether, on the facts and in the circumstances of the case, and having regard to the nature of the electrical accessories manufactured by the assessee-company, the Tribunal was justified in law in holding that the assessee-company was entitled to the higher rate of development rebate, prescribed under section 33(1)(b)(B)(i)(a), for the assessment years 1968-69 and 1969-70 ? " The assessee-company is engaged in the manufacture of electrical accessories such as switches, sockets, bell pushes, lamp holders, appliances, connectors, ceiling roses, pin plug tops, pin holder adapters, etc., under the licence issued to it by the Government. For the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r item No. 7 of Sch. V. The Commissioner, as well as the Additional Commissioner, however, did not accept the said contention of the assessee. According to them, in short, the articles manufactured by the assessee did not fall within the class of articles described in item No. 7 of Sch. V.; viz., equipment for the generation and transmission of electricity including transformers, cables and transmission towers, to entitle it to get the benefit under s. 80E or s. 80-I or a higher rebate under the relevant part of s. 33. Therefore, the Commissioner by his order dated October 22, 1969, for the assessment year 1966-67, and by his order dated January 21, 1970 for the assessment year 1967-68, and the Additional Commissioner by his order dated Jane 3, 1970, for the assessment year 1968-69, held that the orders of the ITO were erroneous and prejudicial to the interest of the Revenue and directed the ITO to amend the assessment order by withdrawing the said benefit and recompute the total income and the taxes of the assessee. In the appeal to the Tribunal by the assessee against the said, orders of the Commissioner and the Additional Commissioner, the representative of the assessee raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D (sic) (as it stood at, the relevant time, being replaced by s. 80B by the Finance (No. 2) Act with effect from April 1, 1968) as: " ' Priority industry ' means the business of generation or distribution of electricity or any other form of Power or of construction' manufacture or .Production of any one or more of the articles or things specified in the list in the Fifth Schedule or ........ (Underlining supplied). (The said definition of " priority 'industry " has been omitted by Finance Act, 1972, with effect from 1-4-73). So also ss. 33(1)(b)(B)(i)(a) or 33(1)(iii)(c)(A)(a) in respect of the relevant assessment years provided for certain higher development rebate in cases of machinery or plant installed for the purpose of business of construction, manufacture or production of any one or more of the articles or thing specified in the list in the Fifth Schedule. We are concerned here with item No. 7 of the said Sch. V which is " Equipment for generation and transmission of electricity including transformers, cables and transmission towers meant for transmission of electricity." The question is whether the articles manufactured by the assessee could be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for transmission of electricity " so as to fall within item No. 7 of Sch. V. The Tribunal held that the articles manufactured by the assessee-company were clearly used for regulation of transmission of electricity. While conceding that in the absence of those accessories electrical power could still be transmitted, the Tribunal reasoned that this would lead to certain hazards and for the prevention of those hazards it was necessary to regulate the flow of electricity from one point to another. This reasoning of the Tribunal, particularly the consideration of hazards, was quite irrelevant for determining the nature of the articles manufactured by the assessee as being equipment for the transmission of electricity. If, however, according to the Tribunal, the articles manufactured by the assessee-company were accessories meant to regulate the flow or transmission of electricity, it is difficult to see then how could they be considered as " equipment for transmission of electricity ". It is, therefore, difficult to sustain the view taken by the Tribunal. We may now refer to two decisions relied upon by the learned counsel for the assessee in support of his contention. The first ..... X X X X Extracts X X X X X X X X Extracts X X X X
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