TMI Blog1990 (7) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, come by way of a reference before us under section 256(1) of the Income-tax Act, 1961, in Income-tax Reference No. 127 of 1977. In Income-tax Reference No. 587 of 1976, which pertains to the assessment year 1971-72, the claim of the assessee for the benefit under section 80-1 in relation to the profits earned by it from manufacture and sale of heavy duty cranes has been disallowed by the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal. Hence, the assesseecompany has come before us by way of reference under section 256(1) of the Income-tax Act, 1961. The question which remains for consideration in both these references is : "Whether, on the facts and in the circumstances of the case, the assessee-company's activity of manufacture of heavy duty cranes is priority industry within the Sixth Schedule to the Income-tax Act, 1961, entitling it to deduction under section 80-I of the Income-tax Act, 1961 ?" This is the question in Income-tax Reference No. 587 of 1976. The same question, though differently worded, is raised in Income-tax Reference No. 127 of 1977. It is necessary to refer to the relevant provisions of the Income-tax Act, as then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing heavy duty cranes is a priority industry because the cranes of the kind manufactured by it are specialised equipment used in industries specified in item No. 8A of the First Schedule to the Industries (Development and Regulation) Act, 1951. It is the case of the assessee that it does not manufacture cranes of the kind generally used in a number of industries. The assessee has pleaded a specific case before the income-tax authorities which has been accepted by the appellate tax authorities for the assessment year 1972-73. According to the assessee-company, it manufactures cranes as per orders and specifications received from various clients who are manufacturers or users of sugar, chemical, textile or cement machinery or other machinery of industries in item No. 8A. The assessee-company contends that all these industries are covered by item No. 4 in the Sixth Schedule to the Incometax, Act read with item No. 8A of the First Schedule to the Industries (Development and Regulation) Act, 1951. The cranes are designed to suit the requirements of each purchaser. The assessee-company has pointed out, for instance, that it manufactures grab cranes with grab buckets which au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of these findings of facts, we have to consider whether such specially designed cranes which are used in industries specified under item No. 8A of the First Schedule to the Industries (Development and Regulation) Act, can be considered as falling under item No. 8A of that Schedule. If they fall under item No. 8A, the assesseecompany would be entitled to the benefit of section 80-I of the Income-tax Act, 1961. Item No. 8A of the First Schedule to the Industries (Development and Regulation) Act, deals with "major items of specialised equipment used in specific industries." For any item of equipment to fall under item No. 8A, it is, therefore, necessary : (a) that it should be a major item of equipment; (b) that it should be a specialised equipment ; and (c) that it should be used in "specific industry", that is to say, an industry specified in sub-items (1) to (11) of item No. 8A. In contradistinction to item No. 8A, item No. 8B deals with general items of machinery used in several industries. One of the general items of machinery under item No. 8B is conveying equipment which includes cranes. This Would indicate that, ordinarily, items of machinery such as cranes whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that a crane cannot be considered as forming a part of textile machinery or jute machinery, etc. This argument cannot be accepted. Special cranes of this type do form an integral part of the industrial machinery in question. Also, the operative words of item No. 8A are "Major items of specialised equipment used in specific industries". These govern the sub-headings, namely, textile machinery, jute machinery, etc. Therefore, if a textile plant uses machinery of which a specialised crane forms an integral part, such a crane would be covered by the phrase "textile machinery". In our view, the cranes of the kind manufactured by the assessee are an integral part of the plants of such specific industries. Mr. Jetley relied upon a decision of the Supreme Court in the case of Hindustan Wire Products Ltd. v. CIT [1986] 161 ITR 749. The Supreme Court, in that case, was required to construe item No. 7 of the Sixth Schedule. Item No. 7 of the Sixth Schedule is totally different from the item with which we are concerned in the present case. The Supreme Court's interpretation of whether "wires" manufactured by the assessee in that case would be covered by the word "cables" used in item No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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