Law: Income Tax Act, 1961

Section: 33,33(1)(b)(B)(i);Sched.V,

Income-tax---Development rebate---Textile machinery---Machinery used for production of textiles "including those otherwise processed"---Machinery used at any stage of production eligible for higher rebate ---Assessee purchasing cloth and processing it by embroidering or dyeing it---Machinery used for such processing eligible for higher rebate---Indian Income Tax Act, 1961, S.33(1)(b)(B)(i); Sched. V, Item No. 32---[C.I.T. v. Veena Textiles (P:) Ltd. (1985) 155 ITR 794' reversed]. ' The appellant purchased cloth and on that cloth embroidery work was done with the aid of imported machines. In some cases, the cloth was thereafter dyed again to obtain a uniform colour. On the question whether the appellant was entitled to the higher development rebate under section 33(1)(b)(B)(i) of the Income Tax Act, 1961, in respect of the machinery used in its business, the High Court held that the cloth which would be covered by the expression "textile" had already been manufactured or produced by someone else, it was merely purchased by the appellant and that the operation done by the assessee on the cloth did not bring into existence a commercially different arid distinct commodity. On appeal to the Supreme Court: Held, allowing the appeal, that when the provisions of section 33(1) (b)(B)(i) and Item No. 32 of the Fifth Schedule to the Act are read together the result is that where the machinery or plant is installed for the purposes of the business of production of textiles, including those dyed, printed or otherwise processed, made wholly or mainly out of cotton, the assessee was entitled to the deduction of the development rebate thereunder. What is important is that this development rebate is available if the machinery or plant is installed for the purposes of the business of the production of textiles, including those "otherwise processed". If the machinery or plant is required to be utilised in the production of such textiles, at whatever stage, the assessee is entitled to the benefit of this development rebate. It made no difference that in this particular case the assessee bought the cloth and then processed it, using the machinery, by embroidering it and, in some…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492