TMI Blog1997 (10) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... . 400, 401 and 402 of 1978 dated October 15, 1979 under section 256(2) of the Act, for our opinion : "1. Whether the volume controls manufactured by the assessee would fall within the expression, 'electronic equipment' appearing under entry No. (17) of the Fifth and Sixth Schedules to the Income-tax Act, 1961 ? 2. Whether, the Tribunal was justified in not dealing with the question regarding the reopening of the assessment under section 147(b) of the Income-tax Act, 1961 ?" The assessment years involved in the Tax Cases Nos. 33 to 36 of 1982 are 1968-69 to 1971-72. The assessment years involved in Tax Cases Nos. 1386 to 1388 of 1980 are 1970-71, 1973-74 and 1974-75. As already stated, the point involved in both batch of tax cases is the same and the point is whether the volume controls manufactured by the respective assessees would fall within the expression, "electronic equipment occurring in entry No. (17) of the Fifth and Sixth Schedules to the Act. There is no difference between the words found in entry No. (17) of the Fifth Schedule and entry No. (17) of the Sixth Schedule to the Act, and the entry reads as under : "Electronic equipment, namely, radar equipment, comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , such as National, Ecco, Murphy, G.E.C. 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 manufacture 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 electronic equipment and though the product manufactured may be resistor within the meaning of item No. (17) of the Sixth Schedule to 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 No. (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 Appellate Assistant Commissioner, on appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he potentiometers or the resistors which the assessee manufactured are the basic components for the electronic communication equipment falling within item No. (17) of the Sixth Schedule. The Tribunal noticed the contention of the Revenue that the radio did not fall within the meaning of electronic equipment because it falls under "telecommunication" in the Industries Regulation Act. The Tribunal held that if such a contention is accepted, the telecommunication equipment would not include electronic equipment, nor the wireless communication apparatus as they all fall under item No. 6 of the First Schedule to the Industries Regulation Act. The Tribunal noticed that in spite of several opportunities granted to the Revenue, the opinion of the Department of Electronics was not made available to the Tribunal. The Tribunal also noticed that the Revenue has not placed any other material in this regard to prove that the radio receivers cannot be regarded as electronic equipment. The Tribunal noticed a letter of one K. V. Shastri and on the basis of the information available, the Tribunal came to the conclusion that the resistors manufactured by the assessee should be regarded as electronic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee were used by the manufacturers of radios would not render the assessee ineligible to claim itself as a priority industry. For that purpose, he relied upon a decision of this court in the case of CIT v. Chitram and Co. P. Ltd. [1991] 191 ITR 96. He also placed reliance on a decision of the Bombay High Court in the case of CIT v. Telelink Products (P.) Ltd. [1989] 177 ITR 291 wherein the Bombay High Court held that it is not permissible to have recourse to the provisions of the Industries Regulation Act for the purpose of interpreting item No. (17) of the Sixth Schedule to the Income-tax Act. We have carefully considered the submissions of learned counsel for the Revenue as well as learned counsel for the assessee. The fact remains that the assessee manufactured resistors and the resistor is one of the items mentioned in item No. (17) of the Sixth Schedule to the Act. The Tribunal noticed the relevant provisions of the Industries Regulation Act and found that the term "electronic equipment" includes telecommunication equipment which in turn includes radio receiver and television. The Revenue has not placed any material before the Tribunal to establish that the radio cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Furthermore, the view of the Income-tax Officer that radio receivers can be regarded as electronic communication equipment is based on the reading of the relevant entries in the First Schedule to the Industries Regulation Act. It is necessary to notice the legislative history behind the item No. 5. When the Industries Regulation Act was enacted in the year 1951, there were only two Schedules, namely, First Schedule and Second Schedule. There was an amendment to the said Act and the relevant entries in so far as they are applicable to the present assessment years are concerned read as under : "5. Electrical equipment : 1. Equipment for generation, transmission and distribution of electricity including transformers ; 2. Electrical motors ; 3. Electrical fans ; 4. Electrical lamps ; 5. Electrical furnaces ; 6. Electrical cables and wires ; 7. X-ray equipment ; 8. Electronic equipment ; 9. Household appliances such as electric irons, heaters and the like. 10. Storage batteries ; 11. Dry cells. 6. Telecommunications ; 1. Telephones ; 2. Telegraph equipments ; 3. Wireless communication apparatus ; 4. Radio receivers, including amplifying and public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... electronic communication equipment. In our view, the Tribunal has considered the entire question in detail and has come to the correct conclusion in holding that the assessee is a manufacturer of potentiometer and it is a basic component of electronic equipment and the assessee is entitled to be treated as a priority industry under item No. (17) of the Sixth Schedule as well as item No. (17) of the Fifth Schedule to the Act. In so far as Tax Cases Nos. 1386 to 1388 of 1980 are concerned, the second question raised by the Revenue deals with the question of reassessment. Since we have upheld the order of the Appellate Tribunal on merits of the case, it is not necessary for us to render any answer to the second question of law referred to us in T. C. Nos. 1386 to 1388 of 1980. In fine, we answer the questions of law referred to us as under: In T. C. No. 33 to 36 of 1982, the question of law referred to us is answered in the affirmative and against the Revenue. In T. C. Nos. 1386 to 1388 of 1980, the first question of law referred to us is answered in the affirmative and against the Revenue and the second question of law is not necessary to answer that question in view of the ans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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