Law:

Section:

Section 33 of the Income-tax Act, 1961 - Development rebate - Assessment years 1967-68 to 1969-70 - Whether manufacture of M.S. Rods and steel sections by assessee-company from mild steel billets and mild steel ingots are 'iron and steel (metal) within meaning of item (1) of Fifth Schedule and, thus, entitled to development rebate at rate of 35 per cent - Held, yes FACTS For the relevant assessment years, the assessee-company, which was manufacturing iron and steel, claimed development rebate at the rate of 35 per cent as provided in section 33(1)(iii)(C)( a)(a). The department, however, contended that the assessee was entitled to such rebate at the rate of 20 per cent only under section 33(1)(iii)(C)( b)(A). The Tribunal allowed the assessee's claim. On reference : HELD It was clear that by a manufacturing process the assessee was producing M.S. rods and steel sections. It was not disputed that M.S. rods and steel sections produced from mild steel billets and mild steel ingots are iron and steel. Iron and steel are metals. The addition of the word 'metal' within brackets after the words 'iron and steel', in item (1) of Schedule V is not intended to limit the scope and ambit of the entry. There is no justification for qualifying item (1) in the Fifth Schedule by insisting that the articles produced or manufactured or constructed for the purpose of the business of the assessee must be those produced, manufactured or constructed from materials which are not iron and steel. The Tribunal was, therefore, justified in allowing the assessee's claim. Note : The case has been decided in favour of the assessee. JUDGMENT Govindan Nair, C.J.-The Income-tax Appellate Tribunal, Cochin Bench, has referred the following question for our opinion: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that what the assessee manufactured or produced is 'iron and steel (metal)' within the meaning of that expression appearing as item (1) in the Fifth Schedule to the Income-tax Act, 1961?" The years of assessment are 1967-68, 1968-69 and 1969-70. It was agreed that the assessee was entitled to the development rebate for all the three…

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