COMMISSIONER OF INCOME TAX, AMRITSAR vs. STRAW BOARD MANUFACTURING CO. LTD.

CIVIL APPEAL No. 519/1975Supreme Court[1989] 2 S.C.R. 77228 April 1989Bench: 2 JudgesAuthor: R.S. PATHAK, M.H. KANIA COMMISSIONER OF5 pages
AI SummaryDismissed

What were the facts?

The assessee, Straw Board Manufacturing Co. Ltd., is a manufacturer of strawboard. For assessment years 1965-66, 1966-67, and 1967-68, the assessee claimed concessional income tax rates, higher development rebate under Section 33, and deduction under Section 80-E, asserting that strawboard manufacturing was a priority industry. The Income Tax Officer rejected these claims, stating strawboard manufacturing was not a priority industry and not covered by 'paper and pulp' in the relevant schedules for 1966-67 and 1967-68. The Appellate Assistant Commissioner dismissed the assessee's appeals. The Appellate Tribunal, however, accepted the assessee's contention and allowed the rebates. The Revenue referred questions to the High Court, which ruled in favour of the assessee. The Revenue then appealed to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that the strawboard industry is part of the paper and pulp industry and the assessee is entitled to the rebates claimed. The Court reasoned that provisions for tax concessions to encourage industrial activity should be interpreted liberally. The expression 'paper and pulp' in the relevant schedules was intended to refer comprehensively to the paper and pulp industry. The Industries (Development and Regulation) Act, 1951, includes paperboard and strawboard within the scope of 'paper'. The manufacturing process of strawboard is identical to that of paper. The High Court's reference to the assessee's registration under the Industries (Development and Regulation) Act, 1951, which listed newsprint, paperboard, and strawboard, further supported this inclusive interpretation. The Court dismissed the Revenue's appeals, affirming the High Court's decision.

What were the issues?

1. Whether, on the facts and in the circumstances, the Appellate Tribunal was right in law in holding that 'strawboard' is covered by the term 'paper and pulp' appearing in paragraph F of Part I read with Part III of the First Schedule to the Finance Act, 1965, for the assessment year 1965-66? (Mixed question of law and fact, concerning Schedule of Finance Act, 1965) 2. Whether, on the facts and in the circumstances, the Appellate Tribunal was right in law in holding that 'strawboard' is covered by the term 'paper and pulp' appearing at item 16 of the Fifth Schedule to the Income Tax Act, 1961, and in allowing the assessee's claim under Section 80-E of the Act for assessment years 1966-67 and 1967-68? (Mixed question of law and fact, concerning Section 80-E and Fifth Schedule of Income Tax Act, 1961) Assessee's Contentions: The manufacture of strawboard is a priority industry and thus entitled to the claimed concessional rates, development rebate, and deduction. The term 'paper and pulp' in the relevant schedules should be interpreted liberally to include strawboard. Revenue's Contentions: The manufacture of strawboard is not a priority industry and is not covered by the expression 'paper and pulp' in the relevant schedules. The judgment does not record specific arguments from the Revenue regarding the interpretation of 'paper and pulp' beyond this general assertion.

Which sections of the Income-tax Act were involved?

Section 33,Section 80-E

AI-generated summary — verify with the full judgment below

a COMMISSIONER OF INCOME TAX, AMRITSAR v. STRAW BOARD MANUFACTURING CO. LTD. APRIL 28, 1989 [R.S. PATHAK, CJ AND M.H. KANIA, J.] Income Tax Act, 1961: Sections 33 and 80-E-Schedule 5, Item 16-Assessee-Manufacturer of strawboard-Whether entitled to con- cessional rate of income-tax, development rebate and deduction- Strawboard industry-Whether part of paper and pulp industry- Strawboard-Whether covered by expression 'paper and pulp'.

The assessee, manufacturer of strawboard, claimed concessional rates of income tax, development rebate at higher rate under s. 33 and deduction under s. 80-E of the Income Tax Act, 1961, for the assess- ment years 1965-66, 1966-67 and 1967-68, on the ground that the p manufacture of strawboard was a priority industry. The claim was rejected by the Income Tax Officer on the ground that the assessee could not be described as a priority industry and that the manufacture of strawboard was not covered by the words 'paper and pulp' in the relevant SCbedules pertaining to the assessment years 1966-67 · and f 1967-68. - The assessee's appeals were dismissed by the Appellate Assistant Commissioner. In second appeals, the Appellate Tribunal acc

The order continues below.

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