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TMI Blog1982 (2) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to development rebate only at the rate of 15% in respect of the machinery installed in B mills during the relevant accounting year. He, therefore, allowed only a sum of Rs. 39,231 by way of development rebate. As regards the sum of Rs. 16,526, the ITO held that the commission paid to the brokers for bringing about the sale of the machinery could not be deducted in computing the profits chargeable under s. 41(2) of the Act. He, accordingly, added back Rs. 16,526, while computing the profits. In the result, he determined the total taxable income as Rs. 23,42,990. The assessee carried the matter to the AAC in I.T.A. No. 261-C/73-74. The AAC found that the assessee was entitled to deduct the sum of Rs. 16,526 paid as commission to the brokers for bringing about the sale of the machinery in computing the total income. The AAC also found that inasmuch as the assessee was engaged in the manufacture of cotton yarn, it would be entitled to development rebate at the rate of 25% under item 32 of the Fifth Schedule to the Act. The Revenue then preferred an appeal before the Income-tax Appellate Tribunal. The Tribunal following its order dated May 18, 1973, held that the sum of Rs. 16,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of a new ship or new machinery or plant (other than office appliances or road transport vehicles) which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section and of section 34, be allowed a deduction, in respect of the previous year in which the ship was acquired or the machinery or plant was installed or, if the ship, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, a sum by way of development rebate as specified in clause (b). (b) The sum referred to in clause (a) shall be (A) omitted (B) in the case of machinery or plant (i) where the machinery or plant is installed for the purposes of business of construction, manufacture or production of any one or more of the articles or things specified in the list in the First Schedule, (a) omitted (b) twenty-five per cent. of such cost, where it is installed after the 31st day of March, 1970. " In the instant case, it is common ground that the machinery in the B mills is owned by the assessee and wholly used for the business carried on by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat to fall within the meaning of textiles in the second limb of the first part of item 32, the content of the textile manufactured must be principally or for the most part cotton. It, therefore, follows that staple fibre yarn which is not made wholly or mainly of cotton does not fall within the meaning of the first part of the description of textiles in item 32. Mr. Swaminathan, however, contended that in view of the fact item 32 contains the words " textiles (including those dyed, printed or otherwise processed) made wholly or mainly of cotton, including cotton yarn, hosiery and rope ", the words " cotton yarn " must be given an extended meaning. If so done, cotton yarn would also take in staple fibre yarn (which is artificial yarn) manufactured in the B mills. The argument of Mr. Swaminathan is that item 32 consists of four independent items, viz., (1) textiles wholly or mainly made of cotton, (2) cotton yarn, (3) hosiery, (4) rope. According to the learned counsel, since item 32 does not exclude artificial yarn but only includes cotton yarn, all other kinds of yarn must fall within the ambit of item 32. In this connection, the learned counsel referred to the following decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Rajasthan Sales Tax Act and s. 2(c) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The decision turned on the true construction of the said two items. In CIT v. Straw Board Mfg. Co. Ltd. [1975] 98 ITR 78, the Punjab and Haryana High Court had to opine whether strawboard fell within item 16 of the Fifth Schedule to the I.T. Act which read: "Paper and pulp including newsprint ". The word paper had not been defined in the Act. The learned judges, therefore, went into the question how the word paper was understood by the people who are conversant with and dealing with such goods. An argument was advanced before the learned judges that in view of the addition of the words "newsprint" to item l6 of the Finance Act of 1956, other types of papers had been excluded. This was not accepted by the learned judges. This decision also, in our opinion, does not help the learned counsel for the assessee. The decision of the Allahabad High Court in R.S.G. Conduits & Tubes (P.) Ltd. v. CIT [1981] 127 ITR 83, turned on the question whether conduit pipes which were being used for holding cables through which electricity passed could be construed to be an equipment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but also those things which the statute declares that they shall include. In other words, the word in respect of which " includes " is used bears both the extended statutory meaning and its ordinary popular and natural meaning. It is unnecessary so far as this case is concerned, to consider the interpretation to be given to a section of a statute which merely contains an inclusive definition. Item 32 of the Fifth Schedule has to be understood, in our opinion, as saying, " textiles means textiles made wholly or mainly of cotton including cotton yarn, hosiery and rope ". It is not possible to effect a division of item 32 into four categories as contended by Mr. Swaminathan. If we separate the word " textiles " from " made wholly or mainly of cotton ", the rest of the words in the item would have no meaning. In our opinion, item 32 states that cotton yarn should be included in the category of textiles made wholly or mainly of cotton to obviate any doubt which might arise as to whether cotton yarn would fall within the category of textiles made wholly or mainly of cotton. Viewed in this light, there cannot be any difficulty in understanding the scope and ambit of item 32. In this conn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch as found in the headnote is as follows: "When the court is called upon to construe the terms of any provision found in a statute, the court should not confine its attention only to the particular provision which calls for consideration but the court should also consider other parts of the statute which throw light on the intention of the legislature and which serve to show that the particular provision ought not to be construed as if it stood alone and apart from the rest of the statute. Every clause of a statute should be construed with reference to the context and other clauses of the statute so as, as far as possible, to make a consistent enactment of the whole statute." We are unable to understand how the above principle can be made use of by the learned counsel for the purpose of this case. Our attention has been particularly drawn to items 7, 13 and 18 in the Fifth Schedule. We have carefully considered not only the description of the said items, but the description found in the other items as well. We are unable to find any set pattern in the description of the various items to enable us to conclude that the word "cotton Yarn " found in item 32 must take in artificial y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh capital. The existing machinery which was with the assessee was its capital and it was only converted into liquid resources, namely, cash, and for this some expenditure had to be incurred. Thus no new capital asset of enduring benefit was brought into by the expenditure of the said amount of commission incurred in respect of the sale of existing machinery. After extracting the relevant passage from the decision of the Supreme Court in India Cements v. CIT [1966] 60 ITR 52 (SC), the Tribunal has further observed, " it is thus clear that expenditure on modernisation of machinery can qualify for being deducted on the ground that it would be an expenditure for the purpose of business in appropriate circumstances ". We are in full agreement with the conclusions arrived at by the Tribunal on the basis of the finding of fact that the outmoded machinery had been sold by the assessee to accommodate the new machinery. We, therefore, answer the second question in the affirmative and against the Revenue. In view of the mixed results in the reference, we make no order as to costs. BALASUBRAHMANYAN J.-My learned brother has written the judgment of the court in this reference. I concur so ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a list, only as many articles and things as fall within the contemplation of s. 33 as are specified in the Schedule. Nothing is to be read in. Nothing is to be read out. The Schedule has the usual format. It carries entries under serial numbers. Under each serial number, more than one article or thing is set out. But, in my opinion, no idea of classification, or grouping of articles and things, can be attributed to the framers of the list. Section 33 does not contemplate groups of things or classes of articles. The section applies only to articles and things which are listed and specified. In some of the items in the Schedule, we find expressions like " that is to say ", " namely " and " including ". These expressions may have some special purpose or other in other statutory writings and contexts. Having regard to the language of s. 33 and the function of the Fifth Schedule, these expressions can have no evocative function. They can neither enlarge, nor cut down, the meanings of articles or things specifically named in the list. Entry 32, like its companion entries in the Schedule, is a hodge-podge and makes no pretence at analytical writing. It starts by mentioning " textiles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd them as referring to one and the same article. An argument was addressed, somewhat broadly, based on the juxtaposition of three different entries in the Schedule, namely, item 32, item 33 and item 18. Item 32 specifies cotton yarn. Item 33 specifies jute yarn. Item 18 specifies petrochemicals which, judicially considered, were held to include many man-made fibres with a petrochemical base. It was suggested that in this general scheme of these three articles, a strict construction of entry 32 would leave out of account only one kind of yarn, namely, staple fibre yarn. Is it imaginable, we were asked, that staple fibre yarn should fall between three stools, as it were? Is it possible, we were asked, that Parliament was either unalive to the existence of staple fibre yarn or, being aware of its existence, nevertheless wished to discriminate against machinery producing that kind of yarn, that plant and machinery producing all other kinds of yarn were given a benevolent treatment ? This line of argument attributes to the preparation of the Fifth Schedule a mastery of design and a measure of comprehensiveness for which can see no basis. Its composition, on the contrary, is such that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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