Commercial construction of scheduled-industry entry upheld; rectification failed because the disputed issue was not an error apparent on record.

Cellulose film was construed broadly, in its commercial and contextual setting, as falling within item 24(4) of the First Schedule to the Industries (Development and Regulation) Act, 1951, so the company remained entitled to a tax credit certificate under section 280ZB. The HC also held that withdrawal under rule 8(1) of the Tax Credit Certificates (Corporation Tax) Scheme, 1966 could not stand because the alleged mistake was not an error apparent on the record; a debatable question of law is outside rectificatory power. The withdrawal was therefore invalid and the original tax credit entitlement was restored.

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Issues: (i) Whether cellulose film fell within item 24(4) of the First Schedule to the Industries (Development and Regulation) Act, 1951, so as to qualify the company for a tax credit certificate under section 280ZB of the Income-tax Act, 1961. (ii) Whether the withdrawal of the tax credit under rule 8(1) of the Tax Credit Certificates (Corporation Tax) Scheme, 1966 was valid when the alleged mistake was not apparent from the record.

Issue (i): Whether cellulose film fell within item 24(4) of the First Schedule to the Industries (Development and Regulation) Act, 1951, so as to qualify the company for a tax credit certificate under section 280ZB of the Income-tax Act, 1961.

Analysis: The expression in item 24(4) was read in its setting, having regard to the heading of item 24, the width of the language used, and the object of the scheduled-industry scheme. The Court applied the principle that ordinary words in a fiscal or regulatory statute are ordinarily construed in their popular and commercial sense, but their meaning may expand where the subject and context so require. Cellulose film, though not paper in the narrow ordinary sense, was treated as a paper product used for packaging and as capable of being covered by the wider expression in the item.

Conclusion: The issue was answered in favour of the assessee. Cellulose film was held to fall within item 24(4), and the assessee remained entitled to the tax credit certificate.

Issue (ii): Whether the withdrawal of the tax credit under rule 8(1) of the Tax Credit Certificates (Corporation Tax) Scheme, 1966 was valid when the alleged mistake was not apparent from the record.

Analysis: Rule 8(1) was treated as a rectificatory provision confined to patent mistakes. A matter requiring detailed reasoning or admitting more than one view could not be characterised as an error apparent from the record. Since the applicability of item 24(4) was at least debatable and not self-evident, the foundation for rectification failed.

Conclusion: The withdrawal order was held invalid and ultra vires. The assessee succeeded on this issue as well.

Final Conclusion: The impugned withdrawal of the tax credit was set aside, and the original tax credit entitlement stood restored.

Ratio Decidendi: Where the meaning of a scheduled-industry entry depends on context and commercial understanding, a broader construction may be adopted; a rectification power cannot be used to revisit a debatable question of law because such a question is not an error apparent on the face of the record.

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