| Case ID |
159de3db-af7a-406d-8c05-dd96f7b725e5 |
| Body |
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| Case Number |
PETITION No. 560 OF 1977 |
| Decision Date |
Nov 07, 1983 |
| Hearing Date |
|
| Decision |
The Bombay High Court ruled in favor of Khandelwal Ferro Alloys Ltd., determining that the income derived from the sale of import entitlements was indeed attributable to the manufacture of ferro manganese. The court clarified that the term 'attributable to' is broader than 'derived from', thus encompassing profits that have a reasonable nexus to the manufacturing activity. The court overturned the previous decisions of the ITO and Commissioner, which had denied the tax credit certificate based on the incorrect interpretation of the law. The court directed the respondents to grant the necessary tax credit certificate for the assessment years 1967-68 and 1970-71 within four weeks, emphasizing that no other impediments existed for the petitioner to obtain this certificate. |
| Summary |
In the landmark case of Khandelwal Ferro Alloys Ltd. v. R.M. Chakravorthy, ITO, the Bombay High Court addressed the applicability of section 280ZB of the Income-tax Act, 1961, concerning tax credit certificates for manufacturing concerns. The petitioner, Khandelwal Ferro Alloys Ltd., engaged in the production and sale of ferro manganese, contested the rejection of its application for a tax credit certificate, arguing that the income from the sale of import entitlements, earned as an export incentive, was directly linked to their manufacturing activities. The court ruled that the term 'attributable to' included profits with a reasonable nexus to manufacturing, thus granting the relief sought by the petitioner. This decision not only clarified the interpretation of the law concerning tax credits but also reinforced the importance of recognizing indirect benefits related to manufacturing activities. The ruling has implications for similar cases in the future, highlighting the need for a broader understanding of income attribution in tax law. |
| Court |
Bombay High Court
|
| Entities Involved |
Khandelwal Ferro Alloys Ltd.,
R.M. Chakravorthy, ITO
|
| Judges |
M.L. Pendse, J.
|
| Lawyers |
T.U. Khatri,
R.J. Joshi,
S.V. Naik
|
| Petitioners |
Khandelwal Ferro Alloys Ltd.
|
| Respondents |
R.M. Chakravorthy, ITO
|
| Citations |
1985 SLD 1040,
(1985) 152 ITR 20
|
| Other Citations |
Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC),
Mysore Electrical Industries Ltd. v. CIT [1978] 114 ITR 865 (Kar.),
Addl. CIT v. Abbas Wazir (P.) Ltd. [1979] 116 ITR 811 (All.),
CIT v. Universal Radiators (P.) Ltd. [1981] 128 ITR 531 (Mad.),
CIT v. Ashok Leyland Ltd. [1981] 130 ITR 900 (Mad.),
Metal Rolling Works (P.) Ltd. v. CIT [1983] 142 ITR 170 (Bom.)
|
| Laws Involved |
Income-tax Act, 1961,
Industries (Development and Regulation) Act, 1951
|
| Sections |
280ZB,
1A(2)
|