2006 (11) TMI 197

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....cumstances of the case, the Tribunal was right in law in allowing investment allowance on the cost of machinery installed/purchased for the manufacture of soap which as per item No. 4 of the Eleventh Schedule read with section 32A of the Income-tax Act is specifically prohibited for the same ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the deduction under section 80HH be allowed before allowing deduction under section 32A/32B (sic-32AB) of the Income-tax Act ?" 2. The assessee deals in manufacture and sale of vanaspati ghee and soap. It claimed deduction under section 32A/32AB of the Income-tax Act, 1961 (for short, "the Act"), on the machinery purchased and installed f....

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....93] 201 ITR 968. It was noticed that the contrary view had been taken by the Gujarat High Court in Paushak Ltd. v. CIT [1994] 210 ITR 535 and the Delhi High Court in Gedore Tools (India) P. Ltd. v. CIT [1993] 199 ITR 83.  The same view was taken by the Delhi High Court in Motilal Pesticides (India) P. Ltd. v. CIT [1994] 207 ITR 636. The Tribunal held that since one view was in favour of the assessee, interpretation more, favourable to the assessee had to be followed. 4. We have heard learned counsel for the parties and perused the findings recorded. Re : Question No. 1 5. Learned counsel for the Revenue submitted that "soap" was specifically mentioned in entry No. 4 and after deletion of entries Nos. 20 and 21, it could not be....

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....manufactured by the petitioner being not in the negative list as per the Eleventh Schedule, it would be entitled to investment allowance in terms of section 32A of the Act. 8. We find substance in the contentions raised by counsel for the assessee as against the plea of counsel for the Revenue. The principle noscitur a sociis is well accepted principle for interpretation of entries in the taxing statute. Any commodity mentioned in any entry gets its colour from the commodities or things mentioned either before or after the particular item for the purpose of assigning the same a correct meaning. In the present case, the above principle is squarely applicable. In our view, the washing soap manufactured by the assessee will not fall under e....