COMMISSIONER OF INCOME-TAX Vs. CALTEX INDIA LIMITED

JUDGEMENT

(1.) This is a reference under section 256(1) of the Income-tax Act, 1961, and it is made at the instance of the Revenue. It raises the following question:

(2.) The reference concerns the assessment years 1967-68 to 1972-73. The main business of the assessee was the distribution of petroleum products, it was also engaged in the blending of various grades of lubricating oil. In regard to the activity of blending, the assessee claimed that it was priority industry and was covered by the provisions of sections 80E and 80-I and section 33(1)(b)(B)(i) of the Income-tax Act, 1961. The Income-tax Appellate Tribunal, however, upheld the assessee's contention in further appeal.

(3.) Section 33(1)(b)(B) is relevant in the context to development rebate and is applicable where machinery or plant is installed for the purposes of the business of, inter alia, the manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule to Act. Section 80E, which was relevant for the assessment year 1967-68, provides for a higher rate of deduction when the assessee's total income includes any profits or gains attributable to the business of manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule. Section 80-I, which is relevant for the other assessment years, gives such deduction when the gross total income of the assessee includes any profits or gains attributable to any priority industry. Section 80B(7) defines a priority industry to be, inter alia, the business of manufacture or production of any or more of the articles or things specified in the list in the Sixth Schedule. Item (3) of the lists in the Fifth and Sixth Schedules (which were applicable at different times) read, identically, thus: "Coal, lignite, iron ore, bauxite, manganese ore, dolomite, limestone, mangiest and mineral oil".