vil Appeal No 1314 NT of 1976
From the Judgment and Order dated 15111975 of the Gujarat High Court in Income Tax Reference No 160 of 1974
Dr V Gauri Shankar Manoj Arora and Ms A Subhashini for the Appellant
J Vellapaly Ms AK Verma and JB Dadachanji for the Respondent
The Judgment of the Court was delivered by OJHA J
This appeal has been preferred on the basis of a certificate granted by the High Court of Gujarat under Section 261 of the Income Tax Act 1961 hereinafter re ferred to as the Act
The judgment appealed against is reported in Cellulose Products of India Ltd vs Commissioner of Income Tax Gujarat 1977 110 ITR page 15 1
The respondent is a public limited company incorporated on April 14 1989 mainly for the purpose of carrying on business of manufacturing chemical products
The Memorandum of Associa tion of the respondent company as is apparent from the order of the Appellate Assistant Commissioner of Income Tax inter alia contains the following clause to carry on the business of manufacture of and dealer and importers and exporters in chemical products of any nature and kind whatsoever and particulary of Carboxy Methyl Cellulose CMC Cellulose Pulps and other chemical products
 The respondent was granted an industrial licence by the Central Government for the manufacture of Sodium Carboxy Methyl Cellulose for short CMC
In pursuance of the said licence the respondent installed a Cellulose plant in which was manufactured Cellulose pulp which in its turn was meant to be used as a raw material for manufacture of CMC
This fact does not appear to have been in dispute that the re spondent began production of Cellulose pulp from March 18 1961 in the said plant while the production of CMC was started from June 151961 891 In the assessment year in question namely 1966 67 the previous year of account being the financial year 1965 66 ending on March 31 1966 the respondent claimed relief contemplated by Section 84 of the Act as it stood prior to its being deleted with effect from April 1 1968 by Finance No The Income Tax Officer took the view that since the respondent had started production of Cellu lose pulp from March 18 1961 it had begun to manufacture or produce finished articles or goods in the year ending on March 31 1961 and consequently the assessment year 1961 62 was the first year in which the assessee was entitled to relief under Section 84
According to him the relief con templated by Section
84 being available only for five years namely the assessment year 1961 62 and the four assessment years immediately succeeding as contemplated by Sub section 7 of Section 84 of the Act the respondent was not enti tled to the relief claimed in the assessment year 1966 67 which fell beyond the aforesaid period
This finding of the Income Tax Officer was affirmed in appeal by the Appellate Assistant Commissioner
The matter was taken by the respond ent in further appeal before the Income Tax Appellate Tribu nal
The respondent s contention that the production of Cellulose pulp during the month of March 1961 was a trial production was repelled by the Tribunal and a categorical finding was recorded by it that Cellulose pulp manufactured by the respondent during the month of March 1961 was a finished product which was a marketable commodity
On this view the Tribunal held that the respondent having begun production or manufacture of finished product which was capable of being sold in the market in the year of account relevant to the assessment year 1961 62 the last year in which the respondent was entitled to get relief under sec tion 84 of the Act was the assessment year 1965 66 and the claim made by it for the said relief in the assessment year in question namely 1966 67 was not maintainable
The Tribu nal however on an application made in this behalf by the respondent referred the following question to the High Court of Gujarat for its opinion Whether on the facts and in the circumstances of the case the Tribunal was right in reject ing the assessee s claim for relief under section 84 of the Act for the assessment year 1966 67 The High Court by the judgment under appeal answered the question aforesaid in the negative that is in favour of the assessee and against the revenue
It held that even though the word article used in Subsection 7 of section 84 of the Act was undoubtedly an ordinary word employed by the legislature but in the context in which it was used and 892 looking to the object with which it was enacted it was obvious that it could only refer to the end product of the industrial undertaking as a whole where there was no phased programme of installation and construction
On this view the High Court found that the mere fact that the respondent started the production of Cellulose pulp which was an in termediate product on March 18 1961 did not mean that the company had begun to produce or manufacture articles in the assessment year 1961 62
It has been urged by learned counsel for the appellant that the finding recorded by the Tribunal referred to above was essentially a finding of fact based on appraisal of evidence and it was not open to the High Court in its advi sory jurisdiction to take a contrary view
For the respond ent on the other hand in support of the judgment appealed against it was urged by its learned counsel that inasmuch as section 84 of the Act contemplated grant of relief to a new undertaking it should be construed liberally so as to effectuate the object thereof
He maintained that since the undertaking established by the respondent was to manufacture CMC and the industrial licence had also been granted to it for the said purpose exemption under section 84 of the Act could be claimed by it only in the year during which CMC was actually manufactured and since it was so done during the assessment year 1962 63 exemption could not be claimed in the assessment year 1961 62 notwithstanding the fact that Cellulose pulp for captive consumption was manufactured in that year
According to him therefore the period of five years contemplated by sub section 7 of section 84 of the Act would represent the assessment year 1962 63 and the four assessment years immediately succeeding and in this view of the matter the High Court was right in allowing the relief claimed by the respondent during the assessment year in question namely 1966 67
In the alternative he submitted that if ultimately the view of the Tribunal prevailed that the production had started in the assessment year 1961 62 then the disallowance of the relief in the 5th year namely in the assessment year in question should be restricted to the investment of the pulp factory and the respondent should not be denied the relief in respect of the investment exclu sively related to the CMC plant
Having given our anxious consideration to the respective submissions made by the learned counsel for the parties we are inclined to agree with the contention of the learned counsel for the appellant that the High Court on the facts and in the circumstances of the instant case committed an error in interfering with the conclusion of the tribunal
It 893 is settled law that a High Court hearing a reference under the Act does not exercise any appellate or revisional or supervisory jurisdiction over the Tribunal and that it acts purely in an advisory capacity
If the Tribunal after con sidering the evidence produced before it on a question of fact records its finding it cannot be interfered with in a reference by the High Court unless of course such finding was not supported by any evidence was perverse or patently unreasonable
In our opinion the finding of the Tribunal in the instant case did not suffer from any of these infirmi ties
The finding that the production of Cellulose pulp during the month of March 1961 was not a trial production and that Cellulose pulp as manufactured by the respondent was a finished product which was a marketable commodity was essentially a finding of fact based on appraisal of evi dence
It is true that Cellulose pulp constitutes raw material for manufacture of CMC but it has not been disputed before us by the learned counsel for the respondent that it was even by itself a finished marketable commodity
The circumstance that the industrial licence granted to the respondent was for the manufacture of CMC and not of Cellu lose pulp is in our opinion keeping in view the nature of the two articles not of much significance
In the same manner as a licence for instance for the manufacture of cloth includes the manufacture of cotton yarn an intermedi ate product necessary for manufacturing cloth the licence granted to the respondent for the manufacture of CMC includ ed the manufacture of Cellulose pulp which was an intermedi ate product to be used in its turn as a raw material for the manufacture of CMC
The relevant clause of the Memorandum of Association of the respondent company already quoted above is obviously wide in its amplitude It contemplates manufac ture of chemical products of any nature and kind whatsoever and particularly of CMC Cellulose pulp and other chemical products
Manufacture of Cellulose pulp was thus indeed one of the objects of the company
The question involved had to be considered in this background and the Tribunal having done so and recorded the finding of fact referred to above the High Court obviously committed an error in holding that manufacture of Cellulose pulps during March 1961 was of no consequence and that the first year of production would be the assessment year 1962 63 when CMC was actually manufac tured
The decision of the Madras High Court relied on by the learned counsel for the respondent reported in Madras Machine Tools Manufacturers Ltd vs Commissioner of Income Tax Madras  in view of what has been observed above on the facts of the instant case does not advance the case of the respondent any further than the reasons recorded in the judgment under appeal
894 As regards the alternative submission made by the learned counsel for the respondent suffice it to say that the case on the basis of which this alternative submission is sought to be made was not set up before the Tribunal nor any such question was sought to be referred on the basis of which this alternative submission could be made
It cannot as such be permitted to be made in the present appeal
The submission that the provisions of section 84 of the Act should be construed liberally so as to effectuate the object thereof need detain us for long
It is only when there is any genuine doubt about the interpretation of a fiscal statute or where two opinions are capable of being formed that the rule of interpretation canvassed by learned counsel for the respondent may be taken to
In the instant case a plain reading of sub section 7 of section 84 of the Act makes it clear without any doubt that the period of five years was to start from the assessment year relevant to the previous year in which the undertaking began to manufacture or produce articles
Since the language of the sub section is plain and admits of no ambiguity there is no scope of applying the aforesaid rule of interpretation
The question as to in which assessment year the undertaking begins to manufacture or produce articles is essentially a question to be decided on the facts of each case and on the basis of the evidence placed on record
In view of the foregoing discussion this appeal suc ceeds and is allowed with costs and the judgment of the High Court under appeal is set aside
SB Appeal allowed


Summary:
In exercise of its power under section 68 D of the the Government of Andhra Pradesh approved a draft scheme framed under section 68 C relating to the route Anantapur to Dharamavaram via Mamillapalli
However exemption was granted to persons holding permit for the routes namely a Kodikonda to Anantapur via Dharmavaram b Bukkapatnam to Anantapur via Dharmavaram c Interstate route Virechal to Dharmavaram via Anantapur d Anantapur to Puttaparti via Dharmavaram and the partial exemption of these routes from the scheme was upheld by the Andhra Pradesh High Court
Thereafter the respondents filed a writ petition in High Court for a direction for exemption from the operation of the scheme and the High Court held that exclusion of the respondents was discriminatory Accordingly it directed the State Govt
to consider the respondent s case and pass appropriate orders to accord exemption from the operation of the scheme
Against the decision of the High Court the Andhra Pradesh State Road Transport Corporation filed an appeal in this Court
It was contended on behalf of the respondents that since the State Government exempted four routes from the operation of the scheme they are entitled to parity and denial offends their right to equality under Article 14 of the Constitution
831 Allowing the appeal and setting aside the order of the High Court this Court
HELD 1
Section 68 C of the  whose constitutional validity can no longer be questioned gives power to the State Transport Undertaking to exclude the private operators completely or partially from an area or route or part thereof in the draft scheme
It gives exclusive power to offer transport service in that area or route or part thereof
833H 834A 2
The statute itself gives power to the State to exercise discretion for formulating a scheme for an area or route or part thereof and necessarily has the effect of excluding the existing or potential private operators from the fields to render transport service in that partially prohibited area etc
while retaining similar private operators in other area route or part thereof
The exclusion completely or partially is allowable under the statute itself and is writ large
The discretion need not necessarily be discriminatory
Section 68 C left the choice to the State Transport Undertaking and so discrimination in that sense is discernible from the section which itself authorises the State Transport Undertaking based on factual matrix eliminate in its choice of a partial exclusion of private operators in an area or route or part thereof
Opportunity has been given to an affected party to file his or their objections and of a right of hearing before the State Govt
approved of the draft scheme and publication thereof in the gazette
The exercise of discretion by the State Transport Undertaking in its selective application of partial prohibition is controlled and regulated by the statute in Ss
68 D and 68 E of the Act
834B D Ram Nath Verma vs State of Rajasthan 1963 2 SCR 152
referred to
Giving primacy to the contention of violation of Article 14 would be fraught with insidious effect of upsetting the very scheme itself since anyone of the existing or potential operators would always contend that he too is similarly situated with that of the exempted operators of other area route or part thereof and unequal treatment has been meted out in the grant of permit to offer transport service offending his right under Article 14
834H 835A 4
It is now settled law that even on a partial overlapping approved 832 scheme private operators have been totally prohibited to have corridor shelters and could no longer enter into the frozen area route or part thereof and obtain permit to render transport service to the travelling public
When that be so the partial exclusion does not offend Article 14 of the Constitution
835 E