1992 (11) TMI 84

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....duction " of textiles within the meaning of this entry. This issue arises in the context of the quantum of development rebate that the assessee is entitled to in respect of new machinery installed by it, namely, whether it should be 25 per cent. or 15 per cent. This, in turn, depends upon the interpretation of the provisions of section 33(1)(b)(B)(i) of the Income-tax Act, 1961, read with item No. (32) of the Fifth Schedule thereto. The assessee's business consists of bleaching, dyeing and finishing grey cotton cloth purchased by it and thereafter doing embroidery on such finished cloth. The point at issue is whether this would bring it within the ambit of item No. (32) of the Fifth Schedule to the Act, which reads as under : Textiles....

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....acture or production of textiles, it would be entitled to a tax credit certificate. The assessee-company was engaged in dyeing, scouring, singeing, milling and finishing of various types of woollen, silken and cotton fabrics. The question arose whether the processes of dyeing, finishing, scouring and the like would fall within the ambit of " manufacture or production " of textiles as envisaged by entry 23 of Schedule I to the Industries (Development and Regulation) Act, 1951. This entry reads thus : "Textiles (including those dyed, printed or otherwise processed): (1) made wholly or in part of cotton, including cotton yarn, hosiery and rope. . . . (3) made wholly or in part of wool, including wool tops, woollen yarn, hosiery, carpe....

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....Cotton Manufacturing Co. Pvt. Ltd.'s case [1972] 30 STC 489 (P & H), came up before the Supreme Court in Assessing Authority v. East India Cotton Mfg. Co. Ltd. [1981] 48 STC 239, the view of the Division Bench that sizing, bleaching and dyeing of grey cloth did amount to processing as it had the effect of converting grey cloth into a commercially different marketable commodity and it, therefore, amounted also to manufacture of a commercially new product and the user of the goods in sizing, bleaching and dyeing grey cloth was consequently within the terms of section 8(3)(b) read with the certificate of registration under the Central Sales Tax, was not challenged by the Revenue and was, thus, impliedly affirmed by the Supreme Court. The ju....