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TMI Blog2013 (12) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... rom its profit in respect of its Majhola & Anoop Shahar Distilleries, even though the Industrial alcohol, it was manufacturing was covered by the list of articles or things prohibited under the Schedule XI of the Income Tax Act, 1961 and as such deduction u/s 801 was not available in view of provision of 801 (2) (iii) of the Income Tax Act, 1961." 3. The aforesaid substantial question of law, on which the appeal was admitted, co-relate with the interpretation of Entry-1 of the Schedule 11 of the Act. Under Section 80 I of the Act deduction is permissible in respect of profits and gains from industrial undertaking after certain dates. While computing the total income of the assessee under Section 80 1 of the Act deduction is permissible from the profits and gains to the extent of 20 percent thereof. Admittedly, the assessee was entitled for deduction subject to rider imposed by Sub-section 2 of Section 80 I. Clause 3 sub-section 2 of Section 80 -I required condition which are to be fulfilled by the industry and one of them is contained in Clause 3 which provides that in case, industry manufactures or produces any article or thing, not being any article or thing specified in the lis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the finding holding that industrial alcohol does not fall within the species of beer and wine hence, the revenue preferred the instant appeal. 7. While assailing the impugned award, learned counsel for the appellant has submitted that there should be strict construction of taxing law and nothing to be read and nothing to be implied. A plain meaning should be given to the language used in the Act or schedule. He also submits that the principle "ejusdem generis" shall not be applicable while construing Item 1 of the Schedule 11 of the Act. He relied upon a judgement reported in 274 ITR 354 CIT Vs. Radico Khaitan Ltd. and would submit that industrial alcohol shall be covered by Item 1 schedule 11 of the Act. 8. On the other hand, Shri Sanjeev Shankhdhar, learned counsel for the respondents would submit that beer, wine as species are different than industrial alcohol, hence, under doctrine of 'ejusdem generis' the industrial alcohol shall not be covered under Item 1 of Schedule 11. He would submit that under the word beer, wine the other beverages like whisky, rum, country liquor etc. may be covered but in any case the industrial alcohol shall not be covered by Item 1 of schedule 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquor but the octroi duty is leviable on the material imported into octroi limits at that stage only, which aspect is not correctly appreciated by the High Court. The Rectified Spirit undergoes numerous processes in the distillery of the appellant after importing it on payment of octroi duty before being converted into potable liquor. Class I of the Schedule speaks of "articles used for food or drink by men ...........". It would only mean that the articles which were used directly on the import within the local area of the respondent and not articles coming into being after further processing because the octroi duty is leviable on goods actually brought into the local area at that point for use directly. The High Court was also not right in saying that the Rectified Spirit is purified or refined liquor as it has to undergo certain processes including treatment with chemicals and redistillation to remove impurities before it can be treated as pure spirit. It may be stated that even the pure spirit has strength of about 90% v/v and in this form also it is not fit for human consumption." 13. Denatured spirit is prepared by addition of Methyl alcohol CH3OH (Methanol) used as fuel, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Section 43 of the Customs (Consolidation) Act, 1876 Act, 1876 which empowered His Majesty by order in Council to prohibit the importation of "arms, ammunition, or gun powder or nay other goods' were construed as referring to goods similar to 'arms, ammunition or gun powder.' 19. AIR 1928 R. 31, Mirch Vs. Russell, it has been held that by the application of the maxim 'ejusdem generis', which is only an illustration or specific application of the broader maxim noscuntur a sociis, general and specific words which are capable of an analogous, meaning being, associated together, take colour from each other, so that the general words are restricted to a sense, analogous, to the less general. 20. In AIR 1960 SC 610 (V 47 C 95), The State of Bombay and others, Vs. The Hospital Mazdoor Sabha and others, while considering the doctrine of noscuntur a sociis, their Lordship of Hon'ble Supreme Court held that it is merely a rule of construction and it cannot prevail in cases where it is clear that wider words have been deliberately used in order to make the scope of the defined word correspondingly wider. However, in case under doctrine the word use is for the same kind of nature then it m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given a restricted operation and are limited to matters of the same class or genus as preceding them. It a list or string or family of genus-describing terms are followed by wider or residuary or sweeping-up words, then the verbal context and the linguistic implications of the preceding words limit the scope of such words." Their Lordships further observed in paragraph 8: "The preceding words in the statutory provision which, under this particular rule of construction, control and limit the meaning of the subsequent words must represent a genus or a family which admits of a number of species or members. if there is only one species it cannot supply the idea of a genus." 25. In 2002 (4) SCC 219,Municipal Corporation of Greater Bombay Vs. Bharat Petroleum Corporation Ltd. while reiterating the aforesaid principle with regard to doctrine of 'ejusdem generis' their Lordship held that the rule normally envisages words of general nature following specific and particular words to be construed as limited to things which are of the same nature as those specified. 26. In 2002 (141) ELT 593 (SC), Grasim Industries Ltd. C.C. Hon'ble Supreme Court held that ejusdem generis applies only whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner of Income Tax and Anr. v. Radico Khaitan Ltd. [2005] 274 ITR 354 would not be of any assistance to the revenue. No doubt, the facts of that case suggest that the assessee was engaged in manufacturing of industrial alcohol, IMFL, country liquor, fertilizers etc. and the High Court held that the investment allowance was not admissible in respect of the plant and machinery installed for the purpose of manufacture of any of the items mentioned in 11th Schedule. However, at the same time, it suggests that it was limited to the distillery unit which was dealing with the manufacturing of IMFL and country liquor only. The question with which we are concerned in the present case did not arise for consideration and, therefore, was not addressed at all namely; if the same machinery is used both for the purpose of manufacturing of industrial alcohol as well as for manufacture of IMFL and country liquor etc., whether on such plant or machinery, the investment allowance would be admissible. When such a situation arises, Sub-section (2A) of Section 32A of the Act would be the governing provision. 31. Reliance placed by appellant's counsel on the case of Radico Khaitan (supra) s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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