COMMISSIONER OF INCOME TAX Vs. STANDARD BATTERIES LIMITED

JUDGEMENT

(1.) BY this reference under section 256(1) of the Income -tax Act, 1961 ('the Act'), made at the instance of the Revenue, the Income -tax Appellate Tribunal has referred the following question of law to this court for opinion : 'Where, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that mining safety lamps were mining machinery within the meaning of item No. (4) of the Sixth Schedule to the Income -tax Act, 1961, and allowing the assessee -company relief under section 80 -I of the said Act in respect of its income arising from the manufacture of miner's cap lamp ?'

(2.) THE assessee is a public limited company. The business of the assessee is to manufacture automobile ancillaries, equipments for generation of electricity, etc. The relevant assessment year is 1972 -73. The controversy relates to disallowance of a part of claim of the assessee under section 80 -I of the Act. In its original return, the assessee claimed relief under section 80 -I to the extent of Rs. 15,396 which was subsequently revised to Rs. 10,467. The relief was claimed in respect of 3 items, namely, (i) equipment from generation of electricity and components thereof; (ii) equipment for earth moving and tractors; and (iii) manufacture of miner's safety cap lamps, spare -, mining batteries and components. The Income -tax Officer allowed the claim in respect of the first two items but disallowed the claim in respect of the third item as, in his opinion, this item was not covered by any of the items of the Sixth Schedule to the Act. The claim under this head was Rs. 2,153 only.

(3.) FOR a proper appreciation of the controversy before us, it may be expedient to refer to the relevant provisions of section 80 -I and the Sixth Schedule to the Act. Section 80 -I deals with deduction in respect of profits and gains from priority industries in the case of certain companies. Sub -section (i) thereof, which is relevant for the present purpose, provides : '(1) In the case of a company to which this section applies, where the gross total income included any profits and gains attributable to any priority industry, there shall be allowed, in accordance with the subject to the provisions of this section a deduction from such profits and gains of an amount equal to five per cent. thereof, in computing the total income of the company.'