Law:

Section:

I. Section 33, read with item 32 of schedule V to Income-tax Act, 1961 - Development rebate - Whether assessee would not be entitled to higher rate of development rebate in respect of machinery installed for manufacture of staple fibre yarn - Held, yes FACTS-I The assessee was engaged in manufacture of staple fibre yarn. It claimed development rebate at the rate of 25 per cent in respect of new machinery installed in the mill. The ITO held that the assessee would be entitled to development rebate only at the rate of 15 per cent. The Tribunal upheld the order of the ITO. On reference: HELD-I Per Padamanabhan, J. An analysis of the description of item 32 discloses that it takes in the first instance textiles (including those dyed, printed or otherwise processed) made wholly or mainly of cotton. If a textile is made wholly of cotton, undoubtedly it will fall within item 32. The words "textiles made mainly of cotton" do not present any difficulty in understanding their scope. It only means textiles in which the principal or most part of the content is cotton. It is, therefore, clear that to fall within the meaning of textiles in the second limb of the first part of item 32, the content of the textile manufactured must be principally or for the most part cotton. It, therefore, follows that the staple fibre yarn which is not made wholly or mainly of cotton does not fall within the meaning of the first part of the description of textiles in item 32. A combined reading of items 32 and 33 would clearly show that Parliament kept in mind a clear distinction between textiles made wholly or mainly of cotton, including cotton yarn, and textiles made wholly or mainly of jute including jute twine. The very wording of item 32 clearly shows that the expression textiles made wholly or mainly of cotton is meant to be exhaustive and not expansive. The words "cotton yarn" found in item 32 have to be read in a restrictive sense and cannot be applied to any yarn made out of material other than cotton such as staple fibre. Therefore, the assessee was not entitled to the development rebate at the rate of 25 per cent. Per Balasubramanyan, J. Ordinary rules of statutory construction…

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