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TMI Blog1983 (1) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee installed new machinery of the value of Rs. 7,80,646. The assessee claimed development rebate at the rate of 25 per cent under section 33 of the Income-tax Act, 1961 ('the Act'). The ITO, however, allowed the development rebate at 15 per cent with the general observation that it was clear that section 33(1)(b) and Schedules under the Act did not permit development rebate to the assessee at the rate of 25 per cent. 3 to 5. [These paras are not reproduced here as they involve minor issues.] 6. The AAC did not accept the claim of the assessee that it was entitled to development rebate at the rate of 25 per cent. He supported the ITO as according to him, the assessee had not given any cogent verifiable basis or evidence to support t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in the manufacture of textiles wholly or mainly of cotton and any assessee who is manufacturing cotton yarn and hosiery and rope is entitled to development rebate at 25 per cent. It was emphasised that the Legislature in its wisdom has placed 'comma' after the words 'wholly or mainly of cotton', which indicates that the items subsequently mentioned are to be considered as independent of the first item, i.e., textiles. In other words, it was argued that hosiery, whether of cotton or wool, is entitled to development rebate at 25 per cent. It was further emphasised that hosiery is separate from the textiles in this context. Therefore, it is not warranted to deny the assessee development rebate at the rate of 25 per cent. Shri Gupta emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear in the spinning unit, yet the business of the assessee is a composite one and spinning is only involved in one of the processes of manufacture of hosiery. It is, therefore, to be seen whether on these facts, the assessee is entitled to development rebate in view of the provisions of section 33(1)(b)(B)(i)(b) read with item 32 of the Fifth Schedule to the Act. Item 32 of the Fifth Schedule is as under : " Textiles (including those dyed, printed or otherwise processed) made wholly or mainly of cotton, including cotton yarn, hosiery and rope. " 15. A careful reading of item 32 shows that textiles if made wholly or mainly of cotton including those dyed, printed or otherwise processed, will by entitled to development rebate at 25 per cent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of hosiery out of woollen goods to entitle it to development rebate at the rate of 25 per cent. This is the case of the assessee and, therefore, it has to be allowed. 17. There is a well settled principle of law now and for this no authority need be cited that for a fiscal statute if there are two reasonable views possible in its construction, the one that favours the subject has to be adopted. If it may be said that with the arguments raised on behalf of the revenue, a doubt can be created in the interpretation of item 32 as above, even then the other reasonable view has to be adopted which favours the assessee. On this ground also, the appeal of the assessee on this issue has to be allowed. 18. In the result, the appeal of the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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