1975 (12) TMI 66 - HC - Income Tax

High Court allows rebate claim for polythene bag manufacturer under Finance Acts -1965

The High Court of Madras ruled in favor of the firm engaged in manufacturing polythene bags, allowing their rebate claim under section 2(5)(a)(iii) of the ... - Issues:1. Claim of rebate under section 2(5)(a)(iii) of the Finance Acts, 1964 and 1965 for exporting polythene bags.2. Interpretation of section 2(5)(a)(iii) of the Finance Acts, 1964 and 1965.3. Eligibility criteria for relief under section 2(5)(a)(iii) of the Finance Acts, 1964 and 1965.4. Calculation of extra shift allowance.Analysis:The judgment by the High Court of Madras dealt with the case of a registered firm engaged in manufacturing polythene bags, seeking a rebate under section 2(5)(a)(iii) of the Finance Acts, 1964 and 1965, for exporting the bags. The Income-tax Officer initially denied the rebate, citing that the industry was not listed under the Industries (Development and Regulation) Act, 1951. However, the Appellate Assistant Commissioner recognized the firm as part of the 'plastic industry' under the Act and allowed the rebate after verifying sales figures to exporters for the relevant years.The revenue appealed to the Tribunal, where it was acknowledged that the firm's industry fell within the scope of the Industries (Development and Regulation) Act. The Tribunal focused on the interpretation of section 2(5)(a)(iii) and found clear evidence that the exported polythene bags were used by exporters for their exports, leading to the allowance of the relief under the Finance Acts.The relevant provision of the Finance Act aimed to incentivize exports, with different incentives based on the manner of export. Clause (iii) of section 2(5)(a) specifically addressed cases where an assessee sold articles to another person in India who then exported them, entitling the assessee to a deduction based on the sale proceeds. The Court found that the firm satisfied the conditions of clause (iii) as the polythene bags were exported as they were without losing their identity, leading to the firm being eligible for the allowance.Regarding the extra shift allowance calculation, the revenue did not press for an answer, and the Court left the question unanswered. As the assessee substantially succeeded in the reference, they were awarded costs, including counsel fees.In conclusion, the Court upheld the Tribunal's decision, ruling in favor of the assessee's eligibility for the relief under section 2(5)(a)(iii) of the Finance Acts, 1964 and 1965, based on the export of polythene bags meeting the prescribed conditions.