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of <h1>Strawboard classed as 'paper and pulp' for concessional tax; liberal construction allows claimed deductions, appeals dismissed</h1> <h3>Commissioner of Income-Tax, Amritsar Versus Strawboard Manufacturing Co. Limited</h3> SC affirmed that strawboard falls within 'paper and pulp' for concessional tax provisions and that a liberal construction applies to encourage industry. ... Priority Industry - deduction under section 80E - expression 'paper and pulp' - claimed development rebate under section 33 on the value of the machinery installed after 1st April, 1965 - Whether, the Appellate Tribunal was right in law in holding that 'strawboard' is covered by the term 'paper and pulp' appearing in Paragraph F of Part I read with Part III of the First Schedule to the Finance Act, 1965 ? - HELD THAT:- It is necessary to remember that when a provision is made in the context of a law providing for concessional rates of tax for the purpose of encouraging an industrial activity, a liberal construction should be put upon the language of the statute. From the material before us, which we have carefully considered, that is the only reasonable conclusion to be reached in this case. The High Court has referred to the licence dated May 31, 1954, issued to the assessee that the undertaking of the assessee was registered in terms of section 10 of the Industries (Development and Regulation) Act, 1951, and the details given in the licence declare that it relates to a Schedule industry which includes newsprint, paperboard and strawboard. The High Court has also referred to the circumstance that the process of manufacturing strawboard is, identical with that of manufacturing paper. The expression 'paper and pulp' in the Industries (Development and Regulation) Act includes paperboard and strawboard. Our attention has been drawn to the entry relevant to the assessment year l964-65 which speaks of 'paper and pulp including paper products' and, it is said, strawboard is evidently not within the natural meaning of the word 'paper'. We do not think that the submission merits serious consideration. Newsprint, paperboard and strawboard have been specifically mentioned in the entry in order to make it clear that they are included within the meaning of the word 'paper'. In our judgement, the High Court is right in taking the view which it has, and therefore, the appeals must be dismissed. Issues:Interpretation of 'paper and pulp' industry for income tax benefits.Analysis:The case involved appeals against a High Court judgment in favor of the respondent-assessee regarding income tax benefits for manufacturing strawboard. The assessee claimed concessional rates of income tax, development rebate, and deduction under section 80E of the Income-tax Act, 1961, arguing that strawboard manufacturing was a priority industry. The Income-tax Officer rejected the claims, leading to appeals. The Appellate Tribunal ruled in favor of the assessee, stating that strawboard fell under the 'paper and pulp' industry. The High Court upheld the Tribunal's decision, stating that the strawboard industry was covered by the expression 'paper and pulp' in the relevant schedules. The Supreme Court analyzed the significance and scope of the schedules, emphasizing the need for a liberal construction of the statute to encourage industrial activities. The Court concluded that strawboard manufacturing was part of the paper and pulp industry, supported by the licensing details and manufacturing process similarities with paper. The Court affirmed the High Court's decision, dismissing the appeals and upholding the assessee's entitlement to the benefits.This case primarily revolved around interpreting whether the strawboard industry falls within the definition of the 'paper and pulp' industry for income tax benefits. The Court examined the legislative intent behind providing rebates to encourage specific industries and concluded that a liberal construction of the statute was necessary. The Court emphasized the comprehensive use of the term 'paper and pulp' and found that the strawboard industry was a part of it. The Court considered licensing details, manufacturing processes, and statutory provisions to support its conclusion, ultimately affirming the High Court's decision in favor of the assessee.In conclusion, the Supreme Court dismissed the appeals and upheld the High Court's judgment, ruling that the strawboard industry was covered within the 'paper and pulp' industry for income tax benefits. The Court's analysis focused on the legislative intent, statutory provisions, and industry characteristics to determine the eligibility of the assessee for the claimed benefits. The decision highlighted the importance of interpreting tax laws liberally to promote industrial growth and incentivize priority industries like strawboard manufacturing.
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