Case: M/S. Prakash Tradings Company Vs. Commissioner Of Income Tax,Gujarat

film and paper(4) textiles (including those dyed, printed or otherwise processed) made wholly or in part of jute, including jute twine and rope(5) newsprint(6) pulp - wood pulp, mechanical, chemical including dissolving pulp(7) sugar(8) vegetable oils and vanaspati(9) cement and gypsum products(10) arms and ammunition, and(11) cigarettesrespectively, specified in Items 2, 18, 20, 23(2), 24(2), 24(5), 25, 28, 35, 37 and 38 of the First Schedule to the Industries (Development and Regulation) Act, 1951 (LXV of 1951)." 3. The appellant-assessee is a registered partnership firm engaged in the manufacture of groundnut oil at Veraval. It has a solvent extraction plant at Veraval. It exported, or sold to exporters, de-oiled cakes of the value of Rs 48, 92, 902 and Rs 24, 13, 040 respectively during the accounting years relevant to the Assessment Years 1966-67 and 1967-68 and claimed the additional deduction in respect of the said amounts under the provisions of Section 2(5)(a)(ii) and (iii) of the Finance Act, 1966 and under Section 2(4)(a)(ii) and (iii) of the Finance Act, 1967. The Income Tax Officer rejected the claim with reference to and relying upon clause (c) of Section 2(5) of the Finance Act, 1966 and clause (c) of Section 2(4) of the Finance Act, 1967. On appeal, the Appellate Assistant Commissioner agreed with the assessees contention that clause (c) aforesaid refers to articles as such and not to industries and since de-oiled cake is not mentioned in clause (c), the assessee is entitled to additional deduction. The tribunal affirmed the said view in appeal. At the instance of the Revenue, the tribunal referred the aforesaid two questions under Section 256(1). 4. The only question that arises in these appeals is whether clause (c) refers to articles mentioned therein or whether it refers to industries engaged in the manufacture of those articles. For answering this question, we have to turn to the scheme underlying the provisions aforementioned. Sub-clauses (ii) and (iii), which provide the additional deduction, speak of the articles manufactured in "an industry specified in the First Schedule to the IDR Act", which have been exported out of India by the manufacturer during the relevant accounting year or which have been sold to an exporter who has actually exported them out of India. Clause (c) of Section 2(5) of the 1966 Act [or Section 2(4) of the 1967 Act] is in the nature of an exception to sub-clauses (ii) and (iii) of clause (a). It follows, as it must, the same pattern. Clause (c) opens with the words " (N)othing contained in sub-clause (ii) or sub-clause (iii) of clause (a) shall apply in relation to -". Then it proceeds to mention several articles, at the same time specifying the item numbers in the First Schedule to the IDR Act under which the said articles fall. Just as the First Schedule (to the IDR Act) mentions several articles under various heads, so does clause (c) of Section 2(5) of the Finance Act, 1966 and Section 2(4) of the Finance Act, 1967. The description is identical in both the First Schedule and clause (c). We may illustrate what we say. The pattern in the First Schedule and clause (c). We may illustrate what was say. The pattern in the First Schedule is to mention an article under a heading (item) and then mention several categories thereof under the sub-headings (sub-items). For example, Item 2 in First Schedule reads "2. FUELS(1) Coal, lignite, coke and their derivatives(2) Mineral oil (crude oil), motor and aviation spirit, diesel oil, kerosene oil, fuel oil, diverse hydrocarbon oils and their blends including synthetic fuels, lubricating oils and the like(3) Fuel gases - (coal gas, natural gas and the like)." 5. Now, clause (c) adheres to the said pattern. Where it seeks to refer to the entire item in the First Schedule, it does so and where it seeks to refer only to a particular sub-item of an item in the First Schedule, it says so - and the description is identical. To wit, Item (1) in clause (c) is Fuels, the same as the heading of Item 2 of the First Schedule. Item (2) in clause (c) is Fertilizers, the same as in Item 18 of the First Schedule. Similarly, Item (3) in clause (c) is "photographic raw film and paper", the same as Item 20 in the First Schedule. However, when it comes to Item (4) in clause (c), it covers only a sub-item of Item 23 in the First Schedule. Item 23 of the First Schedule "Textiles (including those dyed, printed or otherwise processed)" has five sub-items. It reads. "23. TEXTILES (INCLUDING THOSE DYED, PRINTED OR OTHERWISE PROCESSED)(1) made wholly or in part of cotton, including cotton yarn, hosiery and rope;(2) made wholly or in part of jute, including jute, twine and rope;(3) made wholly or in part of wool, including wool tops, woollen yarn, hosiery, carpets and druggets;(4) made wholly or in part of silk, including silk yarn and hosiery;(5) made wholly or in part of synthetic, artificial (man-made) fibres, including yarn and hosiery of such fibres." * 6. Item (4) in clause (c), however, refers only to sub-item (2) of Item 23 in the First Schedule but not to other sub-items. Item (4) in clause (c) reads : "Textiles (including those dyed, printed or otherwise processed) made wholly or in part of jute including jute, twine and rope." Similarly, Item (5) in clause (c) refers to sub-item (2) of Item 24 of the First Schedule and Item (6) in clause (c) refers to sub-item (5) of Item 24. In all cases, however, the description of articles is identical. To repeat, both clause (ii) and (iii) of clause (a) and clause (c) refer to articles only, as does the First Schedule to the IDR Act. If so, all of them must carry the same meaning and purport. Moreover, clause (c) being an exception to sub-clauses (ii) and (iii) must follow the same pattern as in the said sub-clauses. It is reasonable to presume so.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]For answering this question, we have to turn to the scheme underlying the provisions aforementioned. Sub-clauses (ii) and (iii), which provide the additional deduction, speak of the articles manufactured in "an industry specified in the First Schedule to the IDR Act", which have been exported out of India by the manufacturer during the relevant accounting year or which have been sold to an exporter who has actually exported them out of India. Clause (c) of Section 2(5) of the 1966 Act [or Section 2(4) of the 1967 Act] is in the nature of an exception to sub-clauses (ii) and (iii) of clause (a). It follows, as it must, the same pattern. Clause (c) opens with the words " (N)othing contained in sub-clause (ii) or sub-clause (iii) of clause (a) shall apply in relation to -". Then it proceeds to mention several articles, at the same time specifying the item numbers in the First Schedule to the IDR Act under which the said articles fall. Just as the First Schedule (to the IDR Act) mentions several articles under various heads, so does clause (c) of Section 2(5) of the Finance Act, 1966 and Section 2(4) of the Finance Act, 1967. The description is identical in both the First Schedule and clause (c). We may illustrate what we say. The pattern in the First Schedule and clause (c). We may illustrate what was say. The pattern in the First Schedule is to mention an article under a heading (item) and then mention several categories thereof under the sub-headings (sub-items).Now, clause (c) adheres to the said pattern. Where it seeks to refer to the entire item in the First Schedule, it does so and where it seeks to refer only to a particular sub-item of an item in the First Schedule, it says so - and the description is identical. To wit, Item (1) in clause (c) is Fuels, the same as the heading of Item 2 of the First Schedule. Item (2) in clause (c) is Fertilizers, the same as in Item 18 of the First Schedule. Similarly, Item (3) in clause (c) is "photographic raw film and paper", the same as Item 20 in the First Schedule. However, when it comes to Item (4) in clause (c), it covers only a sub-item of Item 23 in the First Schedule. Item 23 of the First Schedule "Textiles (including those dyed, printed or otherwise processed)" has five sub-items.Item (4) in clause (c), however, refers only to sub-item (2) of Item 23 in the First Schedule but not to other sub-items. Item (4) in clause (c) reads : "Textiles (including those dyed, printed or otherwise processed) made wholly or in part of jute including jute, twine and rope." Similarly, Item (5) in clause (c) refers to sub-item (2) of Item 24 of the First Schedule and Item (6) in clause (c) refers to sub-item (5) of Item 24. In all cases, however, the description of articles is identical. To repeat, both clause (ii) and (iii) of clause (a) and clause (c) refer to articles only, as does the First Schedule to the IDR Act. If so, all of them must carry the same meaning and purport. Moreover, clause (c) being an exception to sub-clauses (ii) and (iii) must follow the same pattern as in the said sub-clauses. It is reasonable to presume