B.P. Jeevan Reddy, C.J. - (1.) The Income-tax Appellate Tribunal has stated the following question under Section 256(1) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is legally justified in holding that the assessee produces iron and steel (metal) and, therefore, it was entitled for a higher development rebate as provided under Section 33(1)(b) of the Act ?"
(2.) The assessee is a private limited company engaged in manufacture and sale of mild-steel rods (M. S. rods). (The record before us does not set out or clarify the actual process of manufacturing the said article. All that it shows is that the company manufactures M. S. Rods). For the assessment year 1973-74, the assessee claimed development rebate at 25% on extension or addition of plant and machinery made in the previous year relevant to the said assessment year, under Section 33(1)(b)(B)(i)(b) of the Income-tax Act. The Income-tax Officer did not accept the said claim and allowed development rebate at the ordinary rate of 15% as provided in Section 33(1)(b)(B)(iv)(b). The Income-tax Officer was of the view that the assessee was manufacturing M. S. rods, and not "iron and steel (metal)". On appeal however, the Appellate Assistant Commissioner agreed with the assessee and allowed development rebate at 25%. The matter was carried by the Department in further appeal to the Tribunal which agreed with the Appellate Assistant Commissioner. The question is whether the assessee is entitled to the rebate at the higher rate, as claimed by it, or at the ordinary rate allowed by the Income-tax Officer.
(3.) Section 33 of the Act provides for development rebate. Clause (a) of Sub-section (1) provides that in respect of new machinery or plant owned by the assessee and wholly used for the purposes of the business carried on by him, he shall be allowed a deduction in respect of the previous year in which the machinery or plant was installed, a sum specified in Clause (b) by way of development rebate. Clause (b) prescribes different rates of rebate in different situations. Clause (b) has again two Sub-clauses (A) and (B). We are concerned herein only with Sub-clause (B). Sub-clause (B) has again four sub-divisions (i), (ii), (iii) and (iv). It would be appropriate to set out sub-division (i) and sub-division (iv) of Sub-clause (B) of Clause (b) of Sub-section (1) of Section 33 : "(b) The sum, referred to in Clause (a) shall be ... (B) in the case of machinery or plant,- (i) where the machinery or plant is installed for the purpose of business of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule,- (a) thirty-five per cent. of the actual cost of the machinery or plant to the assessee, where it is installed before the 1st day of April, 1970, and (b) twenty-five per cent. of such cost, where it is installed after the 31st day of March, 1970 .... (iv) in any other case,- (a) twenty per cent. of the actual cost of the machinery or plant to the assessee, where it is installed before the 1st day of April 1970, and (b) fifteen per cent of such cost, where it is installed after the 31st day of March, 1970.";