TaxTMI 
TaxTMI 
1981 (6) TMI 6
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....pecial steels. The contention has been accepted by the Income-tax Appellate Tribunal. Thereupon at the instance of the Revenue the following question has been referred to us under s. 256(1) of the I.T. Act, 1961 : " Whether, the Income-tax Appellate Tribunal was right in law in holding that the assessee was entitled to the higher rate of development rebate of 25% under section (1)(b)(B)(i) of the Income-tax Act, 1961, though it did not produce the prescribed articles or things for the first time but processed such articles or things ? " The facts found by the Income-tax Appellate Tribunal which has upheld the contention of the assessee as incorporated in para. 12 of its decision dated August 8, 1977, as per annex. 'C', are as under. " The facts as they have come out before us are that the assessee was buying billets of special steel and was manufacturing different articles of special steel after a process of heating and drawing of wires. Admittedly, the assessee was not the person who produced for the first time the special steels. However, following, with respect, the decision of the Kerala High Courtin [1977] 108 ITR 207 (CIT v. Mittal Steel Re-Rolling and Allied, Indust....
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....oncession. When the manufacture of special steel is accorded a concessional treatment by way of allowing a development rebate at a higher rate, the concession would be available only when that particular article is produced. In other words, the article manufactured must be special steel and not an article manufactured from special steel. An illustration may be helpful in considering this question. Supposing the production of milk is accorded a concessional treatment in order to increase the production of milk, can a manufacturer of an ice-cream from the milk purchased from the market contend that he is producing milk? He manufactures " ice-cream " from the milk. He does not produce " milk ". So also the assessee manufactures wire from the special steel. Special steel admittedly is purchased by him from outside. Somebody else manufactured the special steel. If what the assessee has purchased from the market in order to manufacture his end-product is itself special steel, it is obvious that the end-product is not special steel. Of course, it is an article manufactured " from " special steel or an article " made of " special steel. That, however, is not the article which is listed in ....
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....en a different view in the context of the entry which has been construed in favour of the assessee by the Kerala High Court in Indian Steel and Wire Products Ltd. v. CIT [1977] 108 ITR 802 (Cal). It would show that merely because the iron and steel can be treated up to a certain stage as raw material which can take many shapes, it cannot be said that an article manufactured after further processing would also fall under the said description. The view has been taken that item No. 1 " Iron and steel (metal)" is required to be considered separately as a thing or an article as contradistinguished from an article made or produced from such a thing or an article. This decision buttresses the reasoning which has commended itself to us. Incidentally it may be stated that reliance was placed by the Kerala High Court on a decision of the Supreme Court in the course of the discussion. The Kerala High Court construed the said decision in support of the proposition canvassed by the assessee which found favour with it. The Calcutta High Court adverted to this very decision, viz., State of M.P. v. Hiralal [1966] 17 STC 313, and has rightly pointed out the point of distinction in the following pas....
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....; as high carbon/high tensile rectangular & trapezoidal sections steel. oil hardened and tempered valve spring steel wire alloyed and unalloyed, cold rolled spring steel ....