TMI Blog2013 (12) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - Dated:- 9-8-2012 - Hon'ble Devi Prasad Singh And Hon'ble Vishnu Chandra Gupta,JJ. For the Petitioner : D.D. Chopra For the Respondent : R. A. Shankhdhar ORDER (Delivered by Hon'ble Justice Devi Prasad Singh) 1.Instant appeal under Section 260 A of the Income Tax Act 1961 (in short hereinafter referred as the Act) has been preferred against the judgement and order dated 14.12.2003 passed by Income Tax Appellate Tribunal, Lucknow Bench, Lucknow (in short hereinafter referred as Tribunal) in income tax appeal for the assessment year 1991-92. 2.We have heard Shri D.D.Chopra, learned counsel for the appellant and Shri Sanjeev Shankhdhar, learned counsel for the respondents. Appeal was admitted by a Division Bench of this Court on the following substantial question of law:- "Whether the Learned Income tax appellate Tribunal was, in law, justified in holding that the assessee was eligible for deduction u/s 80 1 of the Income Tax Act, 1961 from 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 Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -. It was claimed by the assessee that distilleries in question were producing industrial alcohol which is not fit for human consumption as wine or alcohol drugs without its further processing. It was further claimed that industrial alcohol is sold to synthetic Rubber and chemical factories as raw material besides to other distilleries for manufacture of wine and alcoholic drink after processing, hence, deduction under Section 80-1 was correctly claimed and allowed. The assessing officer had not accepted the contention and held that item 1 of Schedule 11 where beer, wine and other alocohlic spirits have been specified it also covers industrial alcohlic because of use of word "other alcohlic spirits". This finding was recorded on the ground that beer wine as well as industrial alcoholic is spirit and division is because of its usage. 6. Decision of Assessing Officer dated 17.10.1995 was confirmed by CIT Appeal by an order dated 20.8.1996. However, the tribunal reversed 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 appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court reported in (2002) 4 SCC 506, Maharashtra Distilleries Vs. Municipal Corporation of Aurangabad and another while considering the relevant rule with regard to octroi duty had interpreted the rectified spirit as not fit for human consumption and observed that only after numerous processes in the distillation, it is being converted to consumable spirit i.e. fit for human consumption . Their Lordship of Hon'ble Supreme Court had rejected the plea and turn down the judgement of High Court and held that, rectified spirit is purified or refined liquor as it has to undergo certain process including treatment with chemicals and re-distillation, to quote relevant portion from the judgement of Maharashtra Distilleries (supra):- ".... Rectified Spirit imported by the appellant into octroi limits of the respondent was not fit for human consumption as it was directly at the point. It was only raw material at that stage. No doubt, it is subsequently used in the manufacture of potable 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as being, what it is, a mere presumption, in the absence of other indications of the intention of the legislature. To invoke the application of the "ejusdem generis' rule there must be a distinct genus or category, [Craies on Statute Law (Seventh Edition, para 181, as referred in Manglore Electric Supply Co. V. CIT, (1978) 3 SCC 248, 254, para 9]" 16. According to Maxwell, to quote:- "The general word which follows the particular and specific words of the same nature as itself takes its meaning from them and is presumed to be restricted to the same genus as those words.(Maxwell, op. cit p. 297)" 17. According to Merriam Webster, to quote:- "A rule of construction: general words (as in a statute) that follow specific words in a list must be construed as referring only to the types of things identified by the specific words. (Merriam Webster)" 18. In (1920) 1 KB 773, A.G. Vs. Brown, while considering the principle of ejusdem generis, interpreting word "any other goods" occurring 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' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 989 SC 1019, Siddeshwari Cotton Mills (P) Ltd. Vs. Union of India, while construing the word "any other process" in section 2(f)(v) of the Central Excises and Salt Act, 1944 held that the processes enumerated contemplate processes which import change of a lasting character to the fabric by either the addition of some chemical into the fabric or otherwise and 'any other process' in the section must share one or other of these incidents which constitute manufacture in the extended sense. 24. In one another case reported in AIR 1989 SC 1019, S.C.Mills Pvt. Ltd. Vs. Union of India, while considering the provision of Central Excise and Salt Act, the principle of ejusdem generis has been applied by Hon'ble Supreme Court to interpret the term process. Their Lordships held as under:- "The expression ejusdem generis-'of the same kind or nature'-signifies a principle of construction whereby words in a statute which are otherwise wide but are associated in the text with more limited words are, by implication, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those specified immediately previously, and similarly the phrase 'further and other relief' occurring in section 92(1)(h) of the Code was held by the Privy Council to mean relief of the same nature as specified in clauses (a) to (g) of the same section. The words 'or otherwise invalid', in para 15 of Schedule II to the Code of Civil Procedure, 1908 before enactment of the Arbitration Act, 1940, were construed by the Privy Council as ejusdem generis to the specific grounds of invalidity mentioned in the said para.................(page 478)" 29. Delhi High Court in the case of Sraya Industries(supra) and Andhra Pradesh High Court in the case of M/s. O.R.Distilleries (supra) had applied the principle of ejusdem generis while interpreting item no. 1 of Schedule 11 of the Act and held that it does not include industrial alcohol. 30. The case of Radico khaitan (supra) has been considered by Delhi High Court in Sraya industries (supra) and has been distinguished as under:- The judgment of Allahabad High Court in 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the plant and machinery installed for the manufacture of items mentioned in the Eleventh Schedule." 32. In view of above, no reliance may be placed on Radico Khaitan Ltd.(supra) to resolve the question involved in the present case with regard to inclusion of industrial alcohol under Item no. 1 of the 11 schedule. 33. There is no dispute over the proposition of law raised by the appellant's counsel that taxing statute should be construed strictly and language should be given literal meaning. There appears to be no ambiguity in Item 1 of Schedule 11 of the Act. Language is clear and speaks for beer and wine followed by the words 'other alcoholic spirits'. The latter words indicate the same species i.e. of liquor falling within the category of beer and wine fit for human consumption (emphasis supplied). The spirits itself may be divided into categories i.e. methylated spirit and others. Legislature to their wisdom points out beer and wine and other identical or alcoholic spirits. Industrial alcohol constitute separate class seems to be undisputed fact. Accordingly, the appeal lacks merit. Impugned order passed by tribunal does not suffer from any impropriety or illegal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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