TMI Blog1981 (5) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) profits derived from the manufacture and sale of limestone on its own quarries; (ii) profits derived from the manufacture of lime on its own; and (iii) profits derived from the manufacture of lime and limestone through Sanderson Co. and Dewan Lime Co As the assessee ran a priority industry as covered by item 3 of Sch. VI to the I.T. Act, 1961, the ITO granted to the assessee relief under s. 80-I on the profits from the manufacture of limestone. He, however, did not extend this relief or concession to two other items. The AAC approved the reasoning and conclusion of the ITO on appeal. He was of the opinion that at best the profits from the manufacture of limestone alone were entitled to concession under s. 80-I. The profits derived by the assessee from the manufacture of lime, either quicklime or slaked lime, were not covered by item 3 of Sch. VI or, for that matter, by any other item in that Schedule. The AAC was, therefore, of the opinion that relief unders. 80-I could not be extended to such profits. He was also of the opinion that the profits on the sale of limestone and lime manufactured or sold for the assessee were not eligible for the concession under s. 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be apposite for our purpose..." Thereafter the Tribunal referred to certain decisions of the Calcutta and Bombay High Courts and directed the ITO to grant relief under s. 80-1 to the assessee on the profits derived from the sale of lime manufactured by it. In the premises, under s. 256(1) of the I.T. Act, the following question has been referred to us : I " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the manufacture of lime by the assessee out of limestone produced in its quarries was a priority industry within the meaning of section 80B(7) of the Income-tax Act, 1961, read with item 3 of the Sixth Schedule to the said Act and in that view holding that the assessee was entitled to relief under section 80-1 of the said Act in respect of the profits and gains derived from such manufacture of lime " In order to appreciate this question it would be necessary to refer to s. 80B(7) of the I.T. Act, 1961, which was omitted by the Finance Act, 1972, with effect from April 1, 1973, but which at the relevant time was as follows (7)` Priority industry' means the business of generation or distribution of electricity or any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e production of lime and the production of limestone are " integrated composite parts of one productive activity of the assessee. 130th of them form part and parcel of the assessee's integrated business ". There are cases where an assessee in particular case might produce, or manufacture limestone and not manufacture any lime. But in this case, the assessee did and the Tribunal has found as a fact that the assessee did that by an integrated process. This is a finding Of fact that it was done by an integrated process and that finding of fact has not been challenged is being perverse or based on no evidence. It, therefore, automatically follows that if that is so, then the, profits earned from sale of lime even though it might not have been derived from production or manufacture of limestone would certainly be said to be attributable to their being part of an integrated process as has been found by the Tribunal. The expression attributable to " has certainly much wider import than the expression derived from " as was explained by the Supreme Court in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84, where at p. 93, the Supreme Court reiterated that Ls r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be understood to mean that any income received from sources other than the actual conduct of the business of the priority industry would qualify for the relief, however remote the connection of such income may be. This passage has to be understood in the sense that it would envisage the relief being granted in all cases where there is some direct nexus between the income and the priority industry. The nature of the source would be immaterial. For instance, in the present case, even if the income from the lease of the factory had been assessed under the head Other sources the above passage could support the view that it is eligible for the concession. It need not emanate from the actual running of the factory by the assessee. It is in that sense that the last sentence of the Supreme Court's judgment has to be understood." In so far as the learned judge emphasised that the passage had to be understood in the sense that it would envisage the relief being granted in all cases, where there was some direct nexus between the income and the priority industry, we are in respectful agreement. We are also in agreement that the passage must mean that the income received from sources othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not necessary for us to mention. These are soft, for, calcite is the most abundant mineral constituent, and are white to cream-coloured unless stained yellow. In Shorter Oxford Dictionary (3rd Edn.) at p. 1215, one of the meanings of " lime " is given as usually coupled with stone, mortar or cement used in building ; then alkaline earth which is the chief constituent of mortar ; calcium oxide. It is obtained by calcining limestone (carbonate of lime), the heat driving off the carbonic acid and leaving brittle white solid which is pure lime (or quicklime); it is powerfully caustic, and combines readily with water, evolving great heat in the process, and forming hydrate of lime (slaked lime); the CALX of metals; any alkaline earth. Similarly, limestone is said to be a rock which consist chiefly of carbonate of lime and yields lime when burnt. Learned advocate for the Revenue drew our attention to the dictionary meaning of " limestone " and " lime " in Webster's Third New International Dictionary (1966 Edn., p. 1312, vol. 2), to Rogers Industrial Chemistry (6th Edn.), vol. 1, p. 865, and to College Course of Inorganic Chemistry by J. R. Partington, p. 49, and contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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