Gopalan Nambiyar, C.J.
1. These two writ appeals are by the ITO, A-Ward, Company Circle, Ernakulam, and the CIT and raise the same question. Broadly stated, the question is whether the power of rectification of the assessment under Rule 8 of the Tax Credit Certificate (Corporation Tax) Scheme, 1966, had been properly exercised or not That rule allows the rectification of the assessment to be made on the ground of a mistake apparent from the record.
2. In the cases before us, the assessment years with which we are concerned are 1967-68 and 1968-69. The assessee is a company whose income is derived from the manufacture and sale of yarn, cellulose film and other commercial products. For the years in question it had made an application for the issue of a tax credit certificate under Section 280ZB of the I.T. Act. That section, in so far as it is material, reads :
280ZB.--Tax credit certificate to certain manufacturing companies in certain cases.--(1) 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 (65 of 1951), is, in respect of its profits and gains attributable to such manufacture or production,--
(i) liable to pay any tax for the assessment year commencing on the 1st day of April, 1965 (hereinafter referred to as the base year), and for any one or more of the five assessment years next following that year; or
(ii) not liable to pay any tax for the base year but becomes so liable for any succeeding year (hereinafter; referred to as the succeeding base year) and also for any one or more of the assessment years following that year, not being an assessment year commencing on the 1st day of April, 1971, or any subsequent assessment year.....'
3. The ITO accepted the position that the income was made up from the manufacture and sale of articles listed in the First Schedule to the Industries (Development and Regulation) Act, 1951. This was by Ex. P-l letter dated May 9, 1968. At the instance of the writ petitioner, a rectification was made by Ex. P-3 order dated June 11, 1969. More than three years from that date, the ITO issued a notice dated Decembers, 1972, under Section 148 of the I.T. Act, proposing to reassess certain income which wasalleged to have escaped assessment. This was dropped on the assessee's objection. It was thereafter that by Ex. P-4 notice dated January 31, 1973, the 1st respondent proceeded to take action for rectification of the assessment under Rule 8(4) of the Tax Credit Certificate (Corporation Tax) Scheme, 1966. That rule provides:
'8. Modification of orders and certificates under certain circumstances. --(1) With a view to rectifying any mistake apparent from the record, the Commissioner may, by order in writing, amend any order passed by him under paragraph 5 and the Income-tax Officer may, by order in writing, amend any order passed by him under paragraph 4.....
(4) No order under sub-paragraph (1) which prejudicially affects any person to whom the certificate was originally issued and no order under sub-paragraph (3) shall be made unless the officer passing the order has given notice to such person of his intention so to do and has allowed such person a reasonable opportunity of being heard.'
4. The foundation for action under the above rule is the existence of a mistake apparent from the record. The view of the officer was that the rebate or tax credit certificate granted to the assessee at the time of the assessment on the basis that the assessee was engaged in the manufacture or production of articles mentioned in the First Schedule to the Industries (Development and Regulation) Act, 1951, disclosed a mistake apparent from the record. It was on this ground that the ITO proceeded to rectify the order of assessment by Ex. P-8. The assessee filed an appeal against Ex. P-8 order which was dismissed by the Commissioner as incompetent, vide Ex. P-10. The assessee sought to quash those orders. The learned judge took the view that on the merits the view taken by the officer that the deductible expenses were not in respect of the manufacture or production of any of the articles mentioned in the First Schedule to the Industries (Development and Regulation) Act is not correct and, therefore, the officer was wrong in having rectified the order of assessment. The learned judge was also of the view that there was no mistake apparent on the face of the record to attract the power of rectification. On both these grounds the learned judge, allowed the writ petition of the assessee and quashed the impugned orders.
5. The entry under the Industries (Development and Regulation) Act, 1951, with respect to which rebate or deduction was claimed by the assessee was entry 24 of the First Schedule, which reads as follows :
'24. Paper and pulp including paper products.
(1) Paper--writing, printing and wrapping.
(3) Paper board and straw-board.
(4) Paper for packaging (corrugated paper, craft paper, paper bags, paper containers and the like).
(5) Pulp--wood pulp, mechanical, chemical including dissolving pulp.'
6. The officer took the view that the products in question manufactured by the assessee did not fall within entry 24(4) as claimed by the assessee but was 'cellophane' which would not fall within the entry as claimed by the assessee. The short question agitated, therefore, was whether the cellophane would fall within the above entry as paper for packaging (corrugated paper, craft paper, paper bags, paper containers and the like). The learned judge took the view that the entry was wide and comprehensive and cellophane would fall within the entry--at least within the last part of the entry covered by the expression and the like. It was on this ground that the learned judge disagreed on the merits with the view taken by the ITO.
7. Counsel for the appellant invited our attention to the decision in Sree Rama Trading Co. v. State of Kerala [1971128 STC 469, where a Division Bench of this court ruled that cellophane is not paper coming within entry 42 in the First Schedule to the Kerala General Sales Tax Act as it stood at the relevant time. It discussed the meaning of the word 'cellophane' in the commercial and popular sense and, in the light of the principles of interpretation, recorded its view that cellophane cannot pass as paper or paper products within the meaning of the entry. Entry 2 of the First Schedule construed by the Division Bench in that case was :
'Paper (other than newsprint), cardboards, straw-board and their products.'
8. Counsel for the revenue would claim that the above pronouncement of the Division Bench was a direct decision in favour of the revenue to the effect that cellophane is not paper and that, in view of the said decision, the stand of the ITO in effecting the rectification was correct as there was a mistake apparent from the record, in the rebate having been originally granted on the footing that the deduction had to be allowed. On the other hand, the counsel for the assessee maintained that entry 42 in the First Schedule to the General Sales Tax Act which was construed by the Division Bench and which we have quoted above is not ad idem with entry 24(4) of the Industries (Development and Regulation) Act, 1951, which has to be construed in the present case and that it would be wrong and dangerous to import into the consideration of the said entry things which are germane to the consideration of a different entry altogether. We are impressed by this reasoning of counsel for the assessee. It seems to us there is a fundamental difference between the nature and the content of entry 24(4) of the First Schedule in the Industries (Development and Regulation) Act with which we are concerned, and entry 42 of the First Schedule to the Sales Tax Act. The purpose and the object of the legislations are also different. In these circumstances, we cannot accept the contention of counsel for the revenue that the decision of the Division Bench of this court directly covers the question with which we are concerned and that the view taken by the ITO in the order of rectification was correct and proper. The learned judge held that on the strength of the Division Bench ruling, the question had to be directly found against the revenue, and that though paper and cellophane are both manufactured from cellulose, and cellophane sheets are used as packing materials, these would not mean that paper and cellophane are the same in the commercial and popular sense.
9. In our view, there was no need to pronounce on the question as to whether cellophane would fall within entry 24(4) of the First Schedule of the Industries (Development and Regulation) Act, 1951. That appears to us to be really unnecessary and we shall not be understood as having expressed ourselves at all on that question. It appears to us that the learned judge's judgment allowing the writ petition can be safely sustained on a shorter and a much narrower ground. Rectification of an order of assessment under Rule 8 of the Tax Credit Certificate (Corporation Tax) Scheme, 1966, can be allowed only if there is a mistake apparent from the record. In the instant case, the question is claimed to be directly covered in favour of the revenue. That itself is a debatable question. The nature of the entry is different; and having regard to the terms and the content of entry 24(4) of the First Schedule of the 1951 Act, it is a still more vexed and difficult question as to whether cellophane would fall within the entry or be outside it. In the circumstances, we are by no means satisfied that there was any mistake apparent from the record in the original assessment made on the footing that the assessee was entitled to rebate in respect of the expenses claimed. On this short ground, it appears to us that the power of rectification was not attracted and that the ITO was wrong in passing the impugned order of rectification. Therefore, the learned judge's order allowing the writ petition and quashing the impugned orders was correct. On this short ground, we maintain the judgment of the learned judge and dismiss the appeals with no order as to costs.
10. Leave to appeal prayed for is refused as there is no substantial question of law.
11. Issue carbon copies of this judgment to counsel.