TMI Blog1982 (6) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... m it and the entire scrap was magnetised to scrap out the iron contents. In the case of copper scrap it was heated to remove oil. Scrap so processed was passed through a separation plant in order to segregate foreign materials. The metal so obtained was melted in a furnace to remove the impurities and to bring the product to the required specifications. The final product was either in the form of ingots or it was cast into required shapes and sold in the market. Part of the final product was processed in the company's own factory and then after being heated in the furnace, rolled into sheets/circles by passing it through a high speed rolling mill, and then sold in the market. The other activity of the company consisted of purchasing ingo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 1964-65 in connection with the assessment under the I.T. Act, 1961, in which he had taken the view that the assessee was manufacturing only alloys and not metals and, following that decision, he dismissed the appeals. The assessee took the matter to the Appellate Tribunal in appeal. In the meantime, the appeal against the order of the AAC for the assessment year 1964-65 arising out of the assessment proceedings under the I.T. Act and appeals for subsequent years were also pending before the Tribunal. The Tribunal heard all the four surtax appeals along with the income-tax appeals. In the income-tax appeals for the assessment years 1964-65 and 1966-67, the Tribunal held that the business of the assessee consisted of two activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich consists in extracting aluminium, copper, lead and zinc, out of the scraps of those metals purchased by the assessee constituted business of manufacture or production of 'aluminium, copper, lead and zinc (metals)' as that expression is defined in item (2) of para. 2 of Third Schedule to the Companies (Profits) Surtax, Act, 1964, and item (2) of the Fifth Schedule of the Income-tax Act, 1961 ?" Assessment years 1966-67 1967-68: Question No. 2 " Whether, on the facts and in the circumstances of the case, that part Of the business of the assessee as consists in extracting aluminium, copper, lead and zinc, out of scraps of these metals Purchased by it constituted business of manufacturing or production of 'aluminium, copper lead and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m (2) of the Fifth Schedule of the Income-tax Act, 1961, and as such entitled the assessee to get deduction under section 80E of the Income-tax Act, 1961, in respect of the profits and gains attributable to the said business and consequently for computing its chargeable profits under the First Schedule to the Companies (Profits) Surtax Act 1964 ? So far as questions Nos. 3 and 4 are concerned, which have been referred at the instance of the assessee but on an application filed by the Department, in View of the decision of the Supreme Court in CIT v. V. Damodaran [1980] 121 ITR 572 the reference of these two questions must be considered to be void and we, therefore, need not answer these questions. In so far as question No. 1 is concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture or production of any one or more of the articles or things specified in the list in the Fifth Schedule ", the development rebate shall be according to what is specified in cls. (a) and (b). The only question which is, therefore, required to be decided is whether when the assessee extracts aluminium, copper, lead and zinc (metals) out of aluminium, copper, lead and zinc scrap, does that amount to the manufacture or production of aluminium, copper, lead and zinc (metals). Apart from the question as to whether the process described earlier is manufacturing process or not, it is difficult to appreciate the argument on behalf of the Revenue that the process dots not lead to production of aluminium, copper, lead and zinc (metals). It is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board at the instance of the Bharat Chamber of Commerce, Calcutta, and the Board took the view that for the purpose of allowing higher rate of development rebate for the two items, item (2) of the Fifth Schedule would include the manufacture of aluminium (metal) both from bauxite as well as from aluminium scrap. A reference to this is to be found in a decision of the Punjab High Court in CIT v. Krishna Copper and Steel Rolling Mills [1979] 119 ITR 256, where referring to the decision of the Board, the Punjab High Court held that rebate at 35% will be available to the assessee, who manufactures, produces or constructs iron and steel (metal) either from the original ore or from the scraps, under s. 33(1)(b)(B)(i) read with item (1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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