TaxTMI 
TaxTMI 
1999 (12) TMI 2
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....f yarn would amount to manufacture of textile within the meaning of Entry 21 of the Ninth Schedule and therefore, the assessee is entitled to higher rate of initial depreciation?" 2. This appeal is for the asst. yr. 1976-77. The respondent-assessee is a firm engaged in the business of manufacture of yarn. It claimed higher rate of initial depreciation on the machinery employed in the manufacture of yarn on the ground that its manufacturing product, viz., 'yarn' falls under Item No, 21 of Ninth Schedule to the IT Act, 1961. The view of the assessing authority as supported by the IAC was that the manufacture of cotton yarn did not amount to manufacture of "textile". Yarn was the material or component with which the "textiles" are manufactu....
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.... the Ninth Schedule is reproduced which reads as under : "Textiles (including those dyed, printed or otherwise processed) made wholly or mainly of cotton, including cotton yarn, hosiery and rope." The Ninth Schedule was inserted by the Direct Taxes (Amendment) Act, 1974 w.e.f. 1st April, 1975, but has been omitted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1st April, 1988. It is not disputed by the Revenue that in case the item manufactured by the assessee, namely, yarn', if falls under Item No. 21, namely, "textiles", the assessee would be entitled to a higher rate of depreciation. We find the word "textiles" in it is not used in isolation but is stretched by bringing in more in its company through ....
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....as to be interpreted to subserve to the intended objective of the legislature. It is significant that "textiles" is included under two items. One under Item No. 21 to which we are concerned and also under Item No. 22. This later Item No, 22 includes entirely different goods than what is under Item No. 21. Item No. 22 reads as under : "Textile (including those dyed, printed or otherwise processed) made wholly or mainly of jute, including jute twine and jute rope." This even includes jute twine and jute rope to be "textile". 4. In CIT vs. Shalimar Rope Works (P) Ltd. , the High Court was called upon to interpret Item No. 33 of the Fifth Schedule under the IT Act, 1961. The question was whether the assessee would be entitled to higher....
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....ds "including cotton yarn" superfluous because before cotton can be converted into textile it must first be converted into yarn. It is difficult to conceive of a textile made directly from cotton i.e., without first converting the cotton into yarn. Further, if this interpretation were to be accepted, the same interpretation must also be extended to the words "hosiery and rope" occurring in the said clause. But, then, there can be no textiles made out of hosiery, which is commonly understood as referring to clothes like banians, drawers, etc., or out of rope.' 6. In CIT vs. North Arcot District Co-operative Spinning Mills Ltd. (1984) 148 ITR 406 (Mad) :- TC 28R.413, Entry 32 of the Fifth Schedule was the subject-matter of the writ petitio....