Cotton yarn manufacture qualified as a priority industry, securing the higher development rebate rate.

Cotton yarn manufacture fell within item 32 of the Fifth Schedule because textiles made wholly or mainly of cotton included cotton yarn. On the Tribunal's factual finding that the assessee's undertaking manufactured cotton yarn, the statutory description of a priority industry was satisfied, so the cotton waste plant qualified for the higher development rebate rate. The Revenue's contrary view could not displace that finding, and the assessee was entitled to development rebate at 35 per cent.

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Issues: Whether the assessee's cotton waste plant, engaged in the manufacture of cotton yarn, fell within item No. 32 of the Fifth Schedule to the Income-tax Act, 1961, so as to qualify as a priority industry and attract development rebate at the higher rate of 35 per cent.

Analysis: The higher rate of development rebate depended on whether the undertaking answered the description of a priority industry under item No. 32 of the Fifth Schedule. That entry covered textiles made wholly or mainly of cotton, including cotton yarn. The Tribunal had found, as the final fact-finding authority, that the assessee was engaged in the manufacture of cotton yarn. On that finding, the statutory entry was attracted, and the cotton waste plant could not be excluded from the beneficial classification merely because of the Revenue's contrary view.

Conclusion: The assessee was entitled to the higher development rebate at 35 per cent, and the Tribunal's view was legally correct.

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