9911796707
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Issues:
1. Interpretation of provisions under s. 280 ZB and s. 280 ZE of the Income Tax Act, 1961 regarding tax credit certificates. 2. Validity of the ITO's orders under para. 8 of the Tax Credit Certificate (Corporation Tax) Scheme, 1966. 3. Determination of whether the income excluded by the ITO was attributable to the manufacture or production of articles listed in the First Schedule to the Industries (Development and Regulation) Act, 1951. Detailed Analysis: 1. The judgment dealt with the interpretation of provisions under s. 280 ZB and s. 280 ZE of the Income Tax Act, 1961, concerning tax credit certificates for companies engaged in the manufacture or production of specific articles. The court examined the Tax Credit Certificate (Corporation Tax) Scheme, 1966, particularly focusing on para. 8(1) which allowed the Income Tax Officer (ITO) to amend orders if a mistake apparent from the record was identified. 2. The validity of the ITO's orders under para. 8 of the Scheme was challenged by the petitioners, a public limited company, who were granted tax credit certificates for certain assessment years. The ITO issued notices to exclude specific items from their business income, leading to modifications of earlier orders. The petitioners objected, and although they appealed to the Commissioner, the appeals were rejected on the basis that they were not maintainable. However, the court found it unnecessary to delve into the validity of the appeal orders. 3. The central issue revolved around whether the income excluded by the ITO through the impugned orders was genuinely attributable to the manufacture or production of articles listed in the First Schedule to the Industries (Development and Regulation) Act, 1951. The petitioners argued that the ITO's exclusion of certain income was not a mistake apparent from the record, citing legal precedents emphasizing the need for obvious and patent mistakes for rectification. The respondents, on the other hand, highlighted the distinction between "engaged in the manufacture or production" in s. 280 ZB and "business" in other provisions, asserting a narrower scope for s. 280 ZB. 4. The court analyzed the scope and interpretation of the terms used in the relevant provisions, emphasizing that the excluded income, including miscellaneous receipts and surplus on asset sales, was not directly linked to the manufacture or production of specified articles. It was concluded that the income in question did not fall under the category of being attributable to the manufacturing process as required by the law. Consequently, the court held that the ITO was not justified in excluding such income and that the petitioners' challenge was valid. 5. Notably, the court clarified that the challenge did not extend to questioning the validity of para. 8 of the Scheme itself. Ultimately, the petition was successful, and the court granted the relief sought by the petitioners, ordering in their favor with costs.
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