Gopalan Nambiyar, C.J.
1. The following question of law has been referred for our opinion under Section 256(1) of the I.T. Act, 1961, by the Income-tax Appellate Tribunal, Cochin Bench, viz.:
'Whether, on the facts and in the circumstances of the case and in view of the fact that the industry was not in existence during the accounting year, the Income-tax Appellate Tribunal was justified in holding that the assessee is entitled to relief under Section 80-I of the Income-tax Act for the assessment year 1972-73 ?'
2. The assessee is a limited company. The assessment year with which we are concerned is 1972-73. The assessee was doing business under thename and style of 'The Cochin State Power and Light Corporation Ltd.' till the Kerala State Electricity Board exercised its option to purchase the undertaking under the Indian Electricity Act, 1910. That was with effect from December 2, 1970. The meter readings of the electricity consumed in any month was being taken by the staff of the company with effect from the succeeding month and the bills were prepared by it. Spot billing was done in respect of some consumers on the 1st and 2nd December, 1970, for the electricity consumed in November, 1970. After the undertaking was vested in the Electricity Board on and from December 3, 1970, the staff of the assessee-company could not attend to the meter reading work of the consumers. The cyclic billing of the consumers for the period from October 31, 1970, to December 2, 1970, which normally should have been done by the assessee's staff, had to be done by the Electricity Board, for and on behalf of the assessee. Such monies were collected by the Electricity Board and credited to the assessee. Therefore, for the purpose of their accounting which closed on 31st March, 1971, the assessee estimated such receipts representing the sale of electricity till December 2, 1970, at Rs. 3,77,3,08. Income-tax return for 1971-72 was made on that basis. On December 17, 1971, the Electricity Board wrote to the assessee regarding the pending matters. This letter showed the amount received by the assessee for the period November and December, 1970, was Rs. 5,21,031. As Rs. 3,77,308 was taken to represent the sale of energy for this period, the excess amount, viz., Rs. l.,43,753 was shown as received in the subsequent accounting year. Before the ITO, the assessee claimed that this amount of Rs. 1,43,753 was income 'attributable to priority industries', in respect whereof, it was entitled to deduction under Section 80A(1) of the Act. The officer negatived the claim on the ground that the assessee-company was not carrying on business during the accounting year and the deduction was, therefore, not tenable. On appeal by the assessee, the AAC sustained the reasoning and the conclusion of the ITO. On further appeal, to the Tribunal, the Tribunal held, differing from the two authorities below, that it was not necessary to show that the assessee functioned either during the whole or any part of the accounting year. Nevertheless, it sustained (sic) the conclusion of the authorities on the ground that it was enough to show that the amount in respect of which the deduction was claimed was 'attributable' tb'a priority industry. Going by the dictionary meaning of this expression, the Tribunal was of the view that it was enough to show that there was a nexus between the amount sought to be deducted and the priority industry in respect of which the deduction was claimed.
3. We think that, on the whole, the view taken by the Tribunal was correct. Section 80A(1) was one of those sections in Chap. VI-A of the I.T.Act, 1961, which was newly introduced by the Finance Act of 1965, At the time, it was so introduced, it consisted only of four sections--Sections 80A to 80D. Section 80E was added by the Finance Act, 1966 ; and Section 80F was added by the Finance Act, 1967. Section 80-I was added by the Finance (No. 2) Act of 1967 on April 1, 1968, and was deleted by the Finance Act, 1972, with effect from April 1, 1973. Section 80-I as it stood at the relevant time reads:
'80-L Deduction in respect of profits and gains from priority industries in the case of certian companies.--(1) In the case of a company to whichthis section applies, where the gross total income includes any profits and gains attributable to any priority industry, there shall be allowed, inaccordance with and subject to the provisions of this section, a deductionfrom such profits and gains of an amount equal to eight per cent. thereof,in computing the total income of the company.
(2) This section applies to a domestic company, save in a case where such company is a company which is referred to in Section 108 and has a gross total income of fifty thousand rupees or less.
(3) Where a company to which this section applies is entitled also to the deduction under Section 80H, the deduction under Sub-section (1) of this section shall be allowed with reference to the amount of the profits and gains attributable to the priority industry or industries as reduced by the deduction under Section 80H in relation to such profits and gains.'
(5% is a substitution for 8% by the Finance Act 2 of 1971).
4. On the language of Section 80-I of the Act, it is difficult to read into the sectionthe requirement that the priority industry must have actually carried on business during the accounting year. But counsel for the revenue wouldcontend that this requirement is implicit by reason of the definition ofpriority industry given in Section 80B, Clause (7). That definition reads as follows :
'80-B. (7) 'priority industry' means the business of generation or distribution of electricity or any other form of power or of construction, manufacture or production of any one or more of the articles or things specified in the list in the Sixth Schedule or the business of any hotel where such business is carried on by an Indian company and the hotel is for the time being approved in this behalf by the Central Government.'
5. If the definition were to be bodily telescoped into Section 80-I of the section, it might be possible to get out the meaning and the content of the section for which counsel for the revenue contends before us. It seems to us that such a course would neither be fair nor permissible. The definition section is subject to the repugnancy clause and is to be read and understood only if there is nothing repugnant in the subject or the context. To read the requirement that the priority industry must have actually Carried on business during the accounting year would be to reduce the ingredient in Section 80-Ithat it should be enough if the amount sought to be deducted is 'attributable' to a priority industry, to something other than what it states or provides for. Profits are attributable to a priority industry, even though, at any specific point of time, the industry might not have carried on business. We also think that such a way of construction and understanding of the section is opposed to the general scheme of computation of income under several heads, and provision for deduction on various counts, embodied in the I. T. Act, 1961, and provided for by several sections.
6. Counsel drew our attention to Section 28 of the Act. But we see no scope for reading the terms of that section and drawing analogies for controlling the clear language of Section 80-I of the Act.
7. In the result we answer the question referred in the affirmative, i.e., in favour of the assessee and against the revenue. No order as to costs.
8. A copy of this judgment under the signature of the Registrar, and the seal of the court, will be communicated to the Income-tax Appellate Tribunal, as required by law.