Strict construction of exemption notifications confined mineral oil surtax relief to direct participation agreements, excluding service contracts.

An exemption notification under Section 24AA of the Companies (Profits) Surtax Act had to be read strictly by its plain language. The provision created two distinct categories of foreign companies: clause (a) covered agreements for direct association or participation in mineral oil business, while clause (b) covered companies providing services or facilities in connection with that business. Because the notification expressly extended relief only to the clause (a) category and did not include clause (b), its scope could not be enlarged by relying on legislative intent. The exemption therefore remained confined to direct participation agreements, and service contracts falling within clause (b) were outside the notified benefit.

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Issues: Whether the exemption notification issued under Section 24AA of the Companies (Profits) Surtax Act, 1964 covered only foreign companies entering into agreements for direct association or participation in the business of prospecting, extraction or production of mineral oils, or also extended to foreign companies providing services, facilities, ships, aircraft, machinery or plant in connection with such business.

Analysis: Section 24AA vested a two-fold power in the Central Government: one under clause (a) for foreign companies with whom agreements were entered into for direct association or participation in mineral oil business, and another under clause (b) for foreign companies providing services or facilities in connection with such business. The notification, however, expressly granted exemption only to the category covered by clause (a) and omitted the category covered by clause (b). In a taxing matter, an exemption notification must be construed strictly according to its plain language, and a person claiming exemption must bring himself clearly within its terms. The legislative intent behind the provision could not be used to enlarge the scope of the notification beyond the class actually specified in it.

Conclusion: The notification did not extend to service contracts falling within clause (b); the exemption was confined to the class covered by clause (a), and the assessee was not entitled to the claimed benefit.

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