COMMISSIONER OF INCOME TAX Vs. KEL COMPONENTS LIMITED

JUDGEMENT

(1.) AS the above tax cases raise a same point, they were heard together.

(2.) IN TC Nos.33 to 36 of 1982, the Tribunal has stated a case and referred the following question of law in pursuance of the directions of this Court in TC Nos. 42 to 45 and 92 to 95 of 1979 under s. 256(2) of the IT Act, 1961 (hereinafter to be referred to as 'the Act') for the opinion of this Court :

(3.) THE case of the Revenue which is based on the audit report is that the assessee was engaged in the business of manufacture of volume controls and the product manufactured by the assessee was distributed to the large scale manufacturers of radios in India, such as National, Ecko, Murphy, GEC and others. THErefore, the assessee was a manufacturer of a component of radio receiver and the radio receiver is included in the category 'telecommunication' and not under the head, 'electronic equipment', under the provisions of the Industries (Development and Regulation) Act, 1951 (hereinafter referred to as 'the Industries Regulation Act'). THErefore, the radio receivers are not included in the 'electronic equipment' and the manufacturer of the component cannot be considered as a priority industry. THE view of the Revenue is that the telecommunication equipment such as radio would not fall under the electronic equipment and though the product manufactured may be resistor within the meaning of Item-17 of the Sixth Schedule of the Act, the resistor manufactured by the assessee cannot be regarded as the basic component of the main equipment mentioned in the said list. THErefore, the radio resistor is not an article falling under Item-17 of the Sixth Schedule on the basis that it is not a component of the 'electronic equipment', and the assessee cannot be treated as a priority industry. THE AAC, on appeal, held that the product manufactured 'resistor' was covered by Item 17 of the Sixth Schedule and the relief under s. 80-I should be granted to the assessee. THE Tribunal, on appeal, went into the matter in great detail. THE Tribunal noticed the plea of the assessee that the resistor was manufactured by the assessee for the use of electronic equipments other than radio also and, therefore, the exemption should be granted. THE Tribunal noticed a book, 'Understanding Electronic Components' by Farl. J. Waters. THE Tribunal noticed a copy of the circular issued by the CBDT in F. No. 169/8/73-IT(A. I), dt. 18th June, 1973, wherein the Board has referred to the provisions of the Industries Development Act and stated that the electronic equipment is different from the telecommunication equipment. THE Board was of the view that the radio receivers and public address systems cannot be regarded as electronic equipments. THE Board has observed that it had consultations with the Department of Electronics on the question of manufacture of radio receivers and after consultations with the Department of Electronics, the Board came to the conclusion that the radio receivers cannot be regarded as electronic equipments. THE Tribunal noticed that the resistors are referred to as rheostats or potentiometers.