1. Under the provisions of s. 280ZB of the I.T. Act, 1961, where any company engaged in the manufacture or production of any of the articles mentioned in the First Schedule to the Industries (Development and Regulation) Act, 1951, is in respect of its profits and gains attributable to such manufacture or production liable to pay any tax for the assessment year commencing on 1st April, 1965 (as the base year), and for any one or more of the five assessment years next following the base year, and the tax for such succeeding year exceeds the tax payable for the base year, then the company shall be granted a tax credit certificate for an amount equal to twenty per cent. of such excess provided that the amount of the tax credit certificate shall not for any assessment year exceed ten per cent. of such tax payable by the company for that year. Under s. 280ZE of the Act the Central Government is empowered to frame schemes to be called tax credit certificate schemes in relation to such tax credit certificate scheme in relation to such tax credit certificates. The Tax Credit Certificate (Corporation Tax) Scheme, 1966, has been framed under s. 280ZE of the Act. For the purposes of this petition only the provisions of paragraph 8(1) thereof are relevant. Under para. 8(1) with a view to rectifying any mistake apparent from the record, the ITO may by order in writing amend any order passed by him granting a certificate.
2. The petitioners are a public limited company, who, admittedly, manufacture and produce and articles covered by the First Schedule to the Industries (Development and Regulation) Act, 1951, and are entitled to tax credit certificates under s. 280ZB of the Act for the assessment years 1966-67 to 1970-71. The petitioners were in fact granted such certificates. The ITO, however, issued a notice to them under para. 8 of the Scheme so as to exclude the items mentioned therein from their business income. The petitioners objected. However, by five orders, each dated 29th September, 1976, the ITO (the 1st respondent), modified his earlier orders and held that the amounts for which the relevant tax credit certificates were originally granted to the petitioners were in excess of the amounts to which the petitioners were entitled. Therefore, a fresh determination had been made to rectify the mistake apparent from the record.
3. It appears that the petitioners filed appears to the Commissioner under the provisions of the Scheme, but the appeals were turned down on the ground that they did not lie. The orders in appeals are also the subject-matter of challenge here; but as will become apparent, it is unnecessary to go into the question of their validity.
4. Mr. Desai, learned counsel for the petitioners, submitted that it could not be said that there was any mistake apparent from the record which the ITO could purport to rectify. He drew my attention to the judgment of the Supreme Court in T.S. Balaram, ITO v. Volkart Brothers : 82ITR50(SC) . The court there observed that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established only by a long drawn process of reasoning on points on which there may be conceivably two opinions. He also cited the judgment of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT : 113ITR84(SC) , wherein the court was, inter alia, concerned with the interpretation of the expression 'attributable to' in s. 80E. The court observed that the expression 'attributable to' was wider in import than the expression 'derived from'. Had the expression 'derived from' been used, it could have with some force been contended before the court that a balancing charge arising from the sale of old machinery and buildings could not be regarded as profits and gains derived from the conduct of the business of generation and distribution of electricity. In the Supreme Court's view since the expression of wider import, namely, 'attributable to', had been used, the Legislature intended to cover receipts from sources other than the actual conduct of the business of generation and distribution of electricity. The judgment of the Supreme Court in Cambay Electric Supply Co.'s case : 113ITR84(SC) , has been followed by various High Courts. It was Mr. Desai's submission that it was certainly arguable that the income which the ITO had purported to exclude, by the impugned orders, was income which was attributable to the petitioners' manufacture or production of articles mentioned in the First Schedule to the Industries (Development and Regulation) Act, 1951.
5. Mr. Joshi, learned counsel for the respondents, placed stress upon the words 'engaged in the manufacture or production of any of the articles mentioned in the First Schedule' in s. 280ZB of the Act and sought too draw a distinction therein as compared to the words in s. 80E whereunder the total income included 'any profits and gains attributable to the business of generation or distribution of electricity'. He submitted that the use of the word 'business' in s. 80E made the scope of s. 80E much wider than that of s. 280ZB which related only to income 'attributable to the manufacture or production' of articles listed in the First Schedule to the Industries (Development and Regulation) Act, 1951.
6. Whether the word 'business' has a wider connotation than the words 'manufacture or production' is itself not obviously apparent. There is in my mind no doubt that it cannot be established without debate that the income purported to be excluded by the impugned orders, which relates to miscellaneous receipts, rents, interest other than interest on securities, and surplus on sale of assets under . 41(2), is not income attributable to the manufacture or production of the articles mentioned in the First Schedule to the Industries (Development and Regulation) Act, 1951. It cannot, therefore, be held that the inclusion of the income which the ITO has now purported to exclude was a mistake apparent from the record and that the 1st respondent was entitled to rectify it under the provisions of para. 8 of the Scheme.
7. It must be recorded that the vires of para. 8 of the Scheme has not been attacked before me.
8. The petition must, therefore, succeed and is made absolute in terms of prayer (b) with costs.