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TMI Blog1990 (4) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... as not entitled to relief u/s. 80-I and 80-HH. The assessee went in appeal and filed an additional ground before the CIT(A) on 12-3-1984. In the said additional ground, the appellant relied on the language of section 80J(4)(iii). It argued that in terms of this clause the period of 33 years begins next following the first day of April 1948 i.e., with effect from 2-4-1948 and the said period of 33 years completes on the first day of April 1981 including the first day of April, 1981. Therefore, according to the appellant, the new industrial undertaking, which had been commissioned on 1-4-1981, was eligible for benefits under section 80J. The CIT(Appeals) had dealt with this issue in para 22 of his order. The CIT(A) held that what is contemplated under section 80J(4)(iii) is granting of relief for a period of 33 years starting from 1-4-1948. He, therefore, did not accept the contention of the assessee that the period of 33 years ended on 1-4-1981 and, therefore, relief u/s. 80J was available in respect of this Unit for the assessment year 1982-83. It is in respect of this finding of the CIT(A) that several submissions were made by Shri Dastur, the learned counsel for the assessee, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was a fundamental change in the language introduced from Finance No. 2 Act of 1967 when the expression "next following the first April 1948" was used for the first time. 8. Shri B.G. Agarwal, the learned Departmental Representative, relied on the departmental circular No. 281 dated 22-9-1980. He argued that item 26 of the Eleventh Schedule dealing with pigments, colours, paints, enamels, varnishes, etc., was omitted from 1-4-1982 and, therefore, the period of limitation was 31 years as per the third proviso to section 80J(4). Shri Agarwal argued that the legislative history of the section would be an important consideration and should be taken into account as a guiding principle for interpreting the words "next following". Section 15C of the IT Act 1922 refers to an industrial undertaking which had begun to manufacture or produce articles in India at any time after 31-3-1948. If the language of this section dealing with extension of period of relief was considered, such language indicated that the relief was to be computed with reference to a period of time which could be measured in terms of financial years. Shri Agarwal referred to the observations of the learned author Sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, Shri Dastur referred to the Board's circular No. 281 relied upon by the Departmental representative and pointed out that the Board was not clear or consistent while issuing circular No. 281 dealing with the scope of the new section 80-I. As an illustration of what he meant by lack of clarity or consistency in what the Board wanted to say, he referred para 19.3 of this circular (pages 2712-2713 of Vol. III of Sampat Iyengar's Law of Income-tax, 7th Edition). In this para, the Board has stated that the existing tax holiday provisions will apply to new industrial undertakings which go into production before 1-4-1981 or approved hotels which start functioning before that date or new ships which are brought into use on or before that date. This indicated that even the Board felt that the existing tax holiday provisions, namely provisions of section 80J, could be made applicable to new ships which are brought into use on 1-4-1981. This gave reason for a doubt that the same interpretation could well be put in respect of an industrial undertaking which commenced production on 1-4-1981. Shri Dastur argued that if there was a doubt regarding the language of the section, such doubt should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day. Shri Dastur, therefore, argued that the appellant was entitled to 80-J relief in respect of its Krilo Unit which started functioning on 1-4-1981 which date was within the period of 33 years if his interpretation of the expression "next following" used in section 80-J(4)(iii) was accepted. 10. We have carefully considered the submissions made on behalf of the appellant and the revenue. We have also gone through the various cases cited. Since considerable stress was laid in the course of the hearing on the history of this section as well as what was described as the legislative intent, it would not be out of place to refer briefly to the relevant provisions as they stood in the earlier years. Section 15C was first introduced in the form of an Ordinance 1949 and came into force from 31-3-1949. Clause (ii) of section 15C(2) as it then stood refers to an industrial undertaking which has begun or begins to manufacture or produce articles in any province of India at any time after the 31st day of March 1948. Later on, the Taxation Laws (Extension of Merged States and Amendment) Act, 1949 indicated that the expression used in clause (ii) under this Act was "within a period of three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 31-3-1971. The expression "next following first day of April 1948 " was first used in Finance Bill (No. 2) of 1967 in the context of cold storage plants when section 80J(4)(iii) was amended. The Memo explaining Finance Bill (No. 2) of 1967 stated as under :-- "Undertakings operating a cold storage plant and Indian companies deriving profits from a ship (......... ) will also be eligible for the tax holiday. This provision is proposed to be made effective from the commencement of the IT Act, 1961, i.e., from 1-4-1962". The period of 23 years was extended to 28 years by Finance Bill (No. 2) of 1969 and the Memo explaining the Finance Bill 1969 read as under : "The effect of the proposed amendment is that the "tax-holiday" concession under section 80J............ will be available to industrial undertakings which commence production or operation........... at any time up to 31st March 1976. Under the existing provisions.............. is available in case of industrial undertakings which commence................ at any time up to 31st March 1971 only" The period was extended to 33 years by the Finance Bill of 1975. The notes on clauses of this Bill read as under : "The effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 1st April, 1981." While elaborating on this, the same authors at pages 2154-2155 have observed that the provisions of section 80J have application only to such undertakings which fulfil the conditions prescribed for eligibility in section 80J(4), (5) and (6). One of the conditions specified in terms of the language used by the learned authors reads as under : "I. In the case of an industrial undertaking,-- (i) (ii) (iii) it manufactures or produces any articles (not necessarily priority industries), or operates one or more cold storage plant or plants, in any part of India, and has begun or begins to manufacture or produce such articles, or to operate such plant or plants, at any time between April 1, 1948, and March 31, 1981, or any period extended by the Central Government;" These authoritative comments only support the stand that the period of 33 years has to be counted from 1-4-1948 and the expression "next following 1st April 1948" has to be given an interpretation which will be consistent with the interpretation that has been given to this section in the past. In this context, reference may be made to a decision of Calcutta High Court in the case of Century Enk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by Shri Dastur, it may be stated that those decisions were given in the context of different Acts, such as Land Clauses Act, or the expression used in the cover note of insurance policy. These decisions were given primarily to decide the question of limitation. In all these cases, the expression used was "from" and " within" certain period of days. In the present case, we have to interpret the expression "next following 1st April 1948" in the context of what was stated about the period for which such exemption was available in the earlier years. In the cases cited by Shri Dastur, the Courts were not required to consider any such prior legislative history. These cases were decided on the specific Acts like Land Clauses Act or Motor Vehicles Tax Act where the principal issue was to decide the question of how to calculate specific period of time for determining the liability of the person involved. 12. We have gone through the other authorities cited by Shri Dastur, such as Madurai Mills Co. Ltd. 's case as well as the observations of Rowlatt J. in Ajax Products Ltd.'s case at page 747. We are still not convinced that these authorities in any way support the interpretation ado ..... X X X X Extracts X X X X X X X X Extracts X X X X
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