judgement:
Appeal No. 104[NT] of 1979.
From the Judgment and Order dated 3.10.1978 of the Punjab and Haryana High Court in 1.]".
Reference No. 60 of 1974.
191 WITH Civil Appeal Nos. 1801 to 1804/89 & 6254 (NT)/90 Dr. V.Gauri Shankar, S.Rajappa, Ms. A. Subhashini and Manoj Arora for the Appellants.
T.A.Ramaehandran and Ms. Janki Ramachandran for the Respond ents.
The Judgement of the Court was delivered by RANGANATHAN, J. These appeals involve a common question and hence can be disposed of by a common order.
The respond ent assessees are steel rolling mills engaged in the manu facture of M.S. (Mild Steel) rods, bars or rounds.
The question for consideration is whether they are entitled to a higher rate of development rebate specified in s.33(1) (b) (B) (i)(a) and to relief under s.80 I (as it stood at the relevant time) of the Income tax Act, 1961.
The answer to this question entirely turns on whether the assessees are engaged in the manufacture or production of any one or more of the articles or things specified in the relevant Schedule to the Act.
They claim that the articles manufactured by them fail under item 1 of the list of articles and things set out in the relevant Schedule which reads: "Iron and steel (Metal), ferro alloys and special steels".
This contention was rejected by Income Tax Officer but has been accepted by the Appellate Assistant Commissioner, the Tribunal and the High Court.
Hence these appeals by the Revenue.
It has been brought to our notice that there is a dif ference of judicial opinion on this issue among the High Courts.
The Calcutta High court in Indian Steel and Wire Products Ltd. vs Commissioner of Income Tax, , and the Allahabad High Court in Commissioner of Income Tax vs Kay Charan Pvt. Ltd., have answered the question in the negative and against the assessee.
On the other hand, the Kerala High Court in C.I. T.v.
Mittal Steel Re rolling and Allied Industries (1 ') Ltd. and CIT vs West India Steel Co. Ltd. , FB.
The Madras High Court in the judgment under appeal, reported as Addl.
Commissioner of Income tax v, Trich Steel Rollling Mills Ltd., , the Punjab & Haryana High Court in C.I.T. vs Krishna Copper and Steel Rolling Mills, (1979) 119 I.T.R. 256; (hereunder appeal) C.I.T.v.
Ludhiana Steel Rolling Mills, ; and the Allahabad High Court in Singh Engineering Works Pvt. Ltd. vs C.I.T., have taken a view in favour of the assessee.
This controversy needs to be resolved.
192 It may be useful, at this stage, to refer to three decisions of this Court, the decisions or observations in which have influenced the High court.
(1) The first of these is State of Madhya Bharat vs Hiralal, (1966) 17 S.T.C. 313.
This case arose under the Madhya Bharat Sales Tax Act.
Under section 5 of the said Act, two notifications had been issued.
The first notifica tion exempted from sales tax certain listed goods, one of which was "iron and steel", while the second notification specified the rates and stages lot levy of sales tax on a number of articles, one of which was"goods prepared from any metal other than gold and silver".
Hiralal, who owned a re rolling mill, purchased scrap iron locally and imported iron plates from outside and, after converting them into bars, flats and plates in his mills, sold them in the market.
He claimed exemption under the first of the above notifications.
This claim was upheld by this Court The judgment of the Court is a short one, the relevant paragraph of which reads as follows: "Learned cournsel for the State contends that the expression "iron and steel means iron and steel in the original condition and not iron and steel in the shape of bars, flats and plates.
In our view, this contention is not sound.
A comparison of the said two Notifica tions brings out the distinction between raw materials of iron and steel and the goods prepared from iron and steel; while the former is exempted from tax, the latter is taxed.
Therefore, iron and steel used as raw material for manufacturing other goods are exempted from taxation.
So long as iron and steel continue to be raw materials, they enjoy the exemption.
Scrap iron purchased by the re spondent was merely re rolled into bars, flats and plates.
They were processed for conven ience of sale.
The raw material were only re rolled to give them attractive and acceptable forms.
They did not in the process lose their character as iron and steel.
The dealer sold "iron and steel" in the shape of bars, flats and plates and the customer purchased "iron and steel" in that shape.
We, therefore, hold that the bars, flats and plates sold by the assessee are iron and steel exempted under the Notification.
The conclusion arrived at by the High Court is correct." (2) The second decision referred to is Devidass Gopal Krishnan vs State of Punjab, (1967) 20 S.T.C. 430.
Here, one batch of appellants before the Court carried on business in rolling steel.
They purchased steel scrap and steel ingots and converted them into rolled steel sections.
They 193 contended that the levy of a purchase tax on the steel scrap and ingots side by side with a sales tax on the rolled steel sections constituted double taxation of the same commodity contrary to the provision of section 15 of the .
This contention was rejected.
It was held that the process by which the steel scrap (or ingot) lost its identity and became rolled steel sections was a process of manufacture and that, since the goods purchased and those sold were different, no question of double taxation arose: (3) The third decision, Hindustan Aluminium Corporation Ltd. vs State of U.P., (1981) 48 S.T.C. 411, involved the interpretation of certain notifications issued under section 3A(2) of the U.P. Sales Tax Act, 1948.
The two notifications with which the Court was concerned prescribed rates of tax at which certain goods were taxable.
item no.6 in the notification of 1973 described the goods as: "All kinds of minerals and ores and alloys except copper, tin, zinc, nickel or alloy of these metals only.
" Item No. 1 of the second notification read: All kinds of minerals, ores, metals, and alloys including sheets and circles used in the manufacture of brass wares and scraps containing only any of the metals, copper, tin, zinc, or nickel except those included in any other notification 'issued under the Act.
" The appellant Corporation, which carried on the business of manufacturing and dealing in aluminium metal and vations aluminium products, claimed the benefit of these notifica tions for its products.
The High Court held that, while aluminium ingots, wire bars and billets would fall in the category of "metals and alloys", rolled products prepared by rolling ingots and extrusions manufactured from billets must be regarded as different commercial commodities from the ingots and billets and therefore outside the category of "metals and alloys".
Such rolled products included plates, coils, sheets, circles and strips.
The extrusions were manufactured in the shape of bars, rods, structurals, tubes, angles, channels and different types of sections.
This conclusion was upheld by this Court The Court referred to the history of the notifications issued by the State Govern ment from time to time in this behalf and came to the con clusion that the inference was irresistible that when such a notification referred to a metal, it referred to the metal in the primary or original form in which it was saleable and not to any subsequently fabricated form.
The Court rejected the contention that the word "all" used in the notification in referring to 194 "all kinds of minerals, ores, metals and alloys" should be given its fullest amplitude so as to include even subse quently fabricated forms of the metal.
The Court felt that this construction was inconsistent with the scheme of the earlier notifications to which reference had been made and observed: "While broadly a metal in its primary form and a metal in its subsequently fabricated form may be said to belong to the same genus, the distinction made between the two constitutes a dichotomy of direct significance to the con troversy before US." After referring to its earlier decisions in State of M.P.v.
Hiralal, (1966) 17 S.T.C. 313, Devi Dass Gopal Krish nan vs The State of Punjab, (1967) 20 S.T.C. 430 and State of Tamil Nadu vs Pyarelal Malhotra, (1976) 37 S.T.C. 3 19, the Court concluded: "We are of the definite opinion that the only interpretation possible is that aluminium rolled products and extrusions are regarded as distinct commercial items from aluminium ingots and billets in the notification issued under the U.P. Sales Tax Act.
" The above decisions were rendered in the context of the Sales Tax Acts and notifications thereunder.
They, however, bring out two points.
First, they make it clear that there is a real and clear dichotomy between "iron and steel" and "products or goods made of iron and steel" and, indeed, between any metal as such and the products or goods fabri cated therefrom.
This is also clear from the various entries in the relevant schedules under the Income Tax Act itself.
For instance, item 2 in the List is: "Aluminium, copper, lead and zinc (Metal).
While ingots and sheets manufactured from scrap have been held to fall under item 2, finished commercial products like alumimum pigments, aluminium arti cles and aluminium caps have been held to tall outside it.
See C.I. T.v.
Rashtriya Metal Industries Ltd., a case under the ; Indian Aluminium Co. Ltd. vs CI.T., ; (1983)140 I.T.R 114 (Cal); Jeewanlal, (1929)Ltd.
vs CI.T. and CI.T. vs Fitwell Caps P. Ltd. 'So also, item 7 refers, inter alia, to "cables" which is only a type of thick copper wire used for the transmission of electricity.
It has been held that insulated copper wires of a type known as winding wires will not fall under item 7 as they are not used for the above purpose and that an industry engaged in its manufacture is not an industry eligible for the reliefs of the kind presently under consideration: See: Hindustan 195 Wire Products vs C.I.T., This deci sion is of no direct relevance here except to point out that no atttempt was made in the case to contend that they will fall under item 2 of the Schedule which covers "aluminium, copper, lead and zinc (metals)".
Item 11 in the Schedule refers to "steel castings and forgings and malleable iron and steel castings".
The expressions "casting" and "forging" refer to processes used in the manufacture or production of articles of iron and steel and also mean, particularly when used in the plural, the articles produced by the process (vide: Glossary of Tenns published by the Bureau of Indian Standards and relating to Iron and Steel: , "Forging").
Item 21 which refers to "Seamless Tubes" also furnishes a similar indication.
There is, therefore, a distinction between the article or thing referred to in the Schedule as "iron and steel (metal)" and articles or things manufactured from "iron and steel".
Secondly, the decision in State of MB.
vs Hiralal, (1966) 17 S.T.C. 313 shows that even the expression "iron and steel" which is wider than the expression we are concerned with as it is not further qualified by the word "metal" was held to mean iron and steel used as raw material for the manufacture of other goods.
The Court held that bars, flats and plates only represented such raw material in attractive and acceptable forms.
Sri Gauri Shankar, for the Revenue, contended that the use of the appellation "metal" in the entry we are concerned with further restricts the nature of the qualify ing industry but we are not inclined to agree.
Obviously it is not used to denote the metal in its pristine form as an ore or as an extraction from the ore.
In the context of a manufacturing industry it is used, we think, for emphasising the distinction between the metal used as a raw material in the manufacture of various articles and the commercial articles made therefrom.
We would, therefore, attach the same meaning to the expression as Hiralal (supra) did.
In that case, the Court held that the bars, flats and pieces turned out by the assessee from the scrap metal were not products manufactured from the raw material but only repre sented the raw material rolled out in attractive and accept able forms.
Per contra, in Devidass Gopal Krishnan, [1962] 20 S.T.C. 430 rolled steel sections were held to be products manufactured from steel scrap and ingots.
But that will not be conclusive here because the relevant provision here contemplates something manufactured out of iron ore or iron scrap.
The question really therefore is: having regard to the nature of the iron and steel industry and its processes, do M.S. bars, rods and rounds represent the raw material for the manufacture of the articles of iron and steel or are they themselves articles made of iron and steel? For deciding the above issue, learned counsel on both sides have placed before us a good deal of literature about the iron and steel industry as well as the glossary of terms used therein: 196 (a) A succinct summary of the processes involved, illus trated by a figurative chart, is given in the very first page of "The Making, Shaping and Treating of Steel", edited by Lankford and others (10th Edition),.
page 1.
It is unnec essary to set out the process in detail here except to note that molten pig iron coming out of the blast furnace and iron scrap are fed into steel making furnaces, wherefrom by a basic oxygen process or electric process or open hearth process, molten steel is ladled out into moulds to form ingots.
There are three stages in the manufacture of the steel: (i) the first stage when ingots are obtained by Lapping and then teeming the molten steel into rectangular moulds; (ii) the second stage where semi finished steel is cast in the form of blooms, billets and slabs by reheating the ingots to an appro priate temperature and rolling or forging them into shapes; and (iii) the production from blooms, billets and slabs again by process of hot rolling, cold rolling, forging, extruding, drawing etc. of finished steel products; bars, plates, structural shapes, rails, wire, tubular products, coated and uncoated sheet steel etc.
all in the many forms required by users of steel.
The third of the processes involves heating the blooms, billets and slabs in heating furnaces and then processing them through various types of mills: (i) Structural mills : for obtaining structural shapes like beams, angles, tees, zees, channels, piling etc.
(ii) Rail mills : for producing standard rails, crane rails and joint bars; (iii) Bar mills : for producing bars which may be flat, round, halfround, triangular, square, haxagonal or octagonal; (iv) Seamless pile mills: for producing pipes and tubes and skelp mills and other tubular products; continuous Butt weld pipe mills (v) Plate mills : for manufacturing plates; and (vi) Hot strip mills : for producing sheets, strips and coils.
and cold reduction mills 197 (b)The Explanatory Not to Chapter 72 (iron and Steel) of the Harmonised Commodity Description and Coding Nomenclature (HCCN) are also on the same lines.
The chapter covers the ferrous metals (pig iron, spilgeleisen, ferro alloys and other materials) as well as certain products of the iron and steel industry (ingots and other primary products and the principal products derived therefrom) of iron or non alloy steel, of stainless steel and of other alloy steel.
It is pointed out that iron ore, waste, scrap metal, pre reduced iron ore and other ferrous waste is converted by reduction in blast furnaces or electric furnaces into pig iron or sponge iron or lump iron.
Electrolysis or other chemical processes are used only when iron of exceptional purity is required for special use.
Most of the pig iron is converted into steel in steel works but some are used in foundries (iron works) for manufacture of ingot moulds, cast iron tubes and pipes and castings and the remainder are cost into the forms of pigs or blocks, m casting machines or sand beds or produced in the form of irregularly shaped lumps (plate iron) or granulated.
Pig iron, cast iron, sponge iron waste and scrap constitute the primary steel making materials.
Steel making processes are either pneumatic or hearth proc esses and the steel produced,by these and other processes are classified in various ways.
Although molten steel may be cast (in foundries) into its final shape in,_ moulds (steel castings), most molten steel is cast into ingots in moulds.
_At the casting, pouring and solidification stages, steel is classified as 'rimming ' or effervescent, 'killed ' or:non effervescent and 'semi killed ' or balanced steel.
After they have solidified and their temperature has been equalised, the ingots are rolled into semi finished productrs (blooms, billets, rounds, slabs, sheet bars) on primary cogging or roughing mills (blooming, slabbing etc.) or converted by drop hammer or on a forging press into semi finished forg ings.
Semi finished products and, in certain cases, ingots are subsequently converted into finished products.
These may be flat products (such as wide flats, universal plates, wild coil, sheets, plates and strip) or long products (such as bars and rods, hot rolled, in irregularly wound coils, other bars, and rods, angles, shapes, sections and wire).
These products are obtained by plastic deformation, hot or cold.
The hot processes are hot rolling, forging or hot drawing and the cold processes.
, are cold rolling, extrusion, wire drawing, bright drawing, centreless grinding or precision turning.
The chapter proceeds to classify the various products in considerable detail. (c) Reference has also been made to the tariff classi fications under the and the Central Excise Tariff Act, 1975.
Our attention was also invited to the Specification and Glossary prepared for the Bureau of Indian Standards by expert Products Sectional Committees on the subject of Iron and Steel.
Extracts were also furnished 198 from the New Encyclopaedia Brittanica Macropaedia (15th Edn., Vol.21), Webster 's Third New International Dictionary, the Encyclopaedia of Chemical Technology by Kirk Othmer (3rd en., Vol.21) and a book on small scale steel making by R.D. Walker.
We do not, however, propose to discuss these ex tracts and definitions as we do not think they can assist us in coming to nay conclusion on the issue before us.
Basically the argument of counsel proceed on the following lines: Sri Ramachandran, learned counsel appearing for the assessee, contends that, in the steel making industry, the manufacture of ingots, billets, blooms, etc. represents only an intermediate stage at which the iron and steel metal becomes semi finished steel.
The semi finished steel is converted into plates, bars or rods which are described as "finished steels.
According to him, the bars, rods and rounds continue to be iron and steel_ m a finished form.
It is only finished steel that is subsequently used to manufac ture, by various processes such as rolling, cutting, shear ing, forging, hammering and so on into various kinds of products, which can be described as products of iron and steel in contrast with 'iron and steel (metal) ', the item covered under the relevant entry of the schedules.
He also draws our attention to a decision of the Calcutta High Court in Indian Aluminium Co. vs CIT, where, while following the earlier decision in Indian Steel and Wire Products Ltd. vs CIT, (1977)108 I.T.R. 802, the court observed that there is really no divergence in view between the Calcutta and Kerala views and that the real question for consideration in each case is whether the articles in ques tion constitute finished products and represent articles of iron and steel or merely represent the raw material viz. iron and steel (metal) in a different form and shape.
On the other hand, Dr. Gauri Shankar, learned counsel for the Department, submits that iron and steel ceases to be a metal when it comes out of the furnace in the primary steel mills in the form of ingots.
At the best, the next stage at which the ingots become semi finished products in the shape of billets, blooms and slabs may also be said only to convert the raw material into a different form or shape.
But, he says, by no stretch of imagination can the next stage during which the billets, blooms and slabs are heated/and passed through various types of mills enumerated earlier be considered as involving not any manufacture but only a conversion of the raw material into other forms or other shapes.
According to the learned counsel, the expres sion "iron and steel (metal)" only comprehends the iron and steel as it emerges in the form of billets, blooms and slabs from the steel mills and that all subsequent products wheth er in the form of 199 rails, rods (including wire rods), bars, angles, channels, tees, zees, pipes, tubes, sheets, strips, plates and coils turned out by the various other types of mills would consti tute articles made of iron and steel.
He also invited our attention to a clarification by the Central Board of Taxes, in response to a query from the Federation of Indian Cham bers of Commerce and Industry, that "rolling mills making bars and rods are not covered by item 1 of the Fifth Sched ule".
We have considered the arguments addressed by both counsel.
In our opinion, Sri Ramachandran is right in con tending that in interpreting the provisions under considera tion, we would do well to keep in mind the background in which concessions to certain basic industries were intro duced in the Income tax Act.
The process started with the introduction of a rebate for exporters under the Finance Act of 1963 which continued till 1966.
The Budget speech of the Finance Minister vide: (1963) 48 I.T.R. (St.) 34 indicates that the incentive was granted to assessees engaged in the manufacture of any articles in an industry specified in the First Schedule to the Industries (Development & Regulation) Act, 1951.
Item 1 of the said Schedule reads: "1.
Metallurgical Industries: A. Ferrous: (1) Iron and Steel (Metal) (2) Feno alloys (3) Iron and Steel castings and forgings (4) Iron and Steel structurals (5) Iron and Steel pipes (6) Special Steels (7) Other products of iron and steel B. Non ferrous (1) Precious metals including Gold and Silver, and their alloys; (IA) Other non ferrous metals and their alloys; (2) Semi manufactures and manufactures.
Again, in 1964,hen the Finance Act of 1964 decided to grant a rebate in the corporation tax payable by companies in order to encourage development of certain industries which occupy an important place in our economy, the list of indus tries named in the Finance Act was similar to and included many of the items, including items 1 to 3, of the list we are concerned with now.
The reliefs were given to strengthen the reserves and augment the capacity of the corporate sector to develop.
This process was 200 continued under the Finance Act of 1965: Vide, (1965) 55 I.T.R. (St.) 57 and 122 which introduced a higher develop ment rebate for machinery or plant installed for the pur poses of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule.
The Finance Act of 1966 substituted a new concession to these priority industries basic to the commercial development of the community.
This historical background reflects the intention of the legislature to grant progressively certain exemptions, reliefs or conces sions for certain types of industries which were considered important for na tional development / The industry in iron and steel and other metals figures in all these lists_) The only relevance of this background to the issue before us is that it gives an indication that the incentive, concession or relief granted under these provi sions has to be construed in a broad and comprehensive manner so as to cover all manufacturing activities legiti mately pertaining to specified core industry with no limita tion save what may be called for by the wording of a partic ular entry.
So far as items 1 and 2 are concerned, as earli er pointed out, the wording points to a distinction between the metal which is used as the base and other articles manufactured therefrom.
We have earlier pointed out that pig iron and iron scrap are fed into furnaces to produce ingots, billets and blooms.
But both are iron and steel in different form, the latter being referred to as "semi finished steel".
Likewise, we think, the bars, rods, rounds, wife rods and the like constitute the second stage in which one gets only "finished" forms of iron and steel.
Having regard to the nature and weight of the metal, it has to be "finished" to assume these forms before manufacturers of iron and steel articles can take over and proceed to manufacture articles from them by drawing wires or converting them into rails or shaping them into tees, zees, pipes, tubes and the like see CI.T. vs Tensile Steel Ltd., or, again, producing articles of iron like ploughs, shovels, pickaxes, lathes, blowers, surface guiders and drills as in C.I.T. vs Ludhiana Steel Rolling Mills, (1989) 180 I.T.R. 155 (P&H).
Whether the article produced is the raw material or an article made of iron and steel has to be decided on the basis of the nature of the article and not the kind of mill which turns it out.
It is significant that these items do not draw distinction between basic steel mills, integrated steel mills and the various other types of mills that are used in the industry which have been referred to earlier.
The Board 's clarification, referred by Dr. Gaurishankar, that the machinery and plant in "rolling mills" will not be eligible for the higher development rebate would not, there fore, seem to be justified if it intends to draw a distinc tion between the same machinery and plant when used in rolling mills and when used in other mills in the industry.
If machinery and plant installed in steel mills where the process 201 includes not merely the production of ingots, billets and the like but also the production of bars and rods are eligi ble for the higher development rebate, it is difficult to see why the same plant and machinery, when installed in rolling mills which proceed, from the stage of ingots or billets, to manufacture bars and rods should not be eligible for the higher rate of development rebate.
In considering the issue before us, we should not be classifications of stages of manufacture that may be carried away by classifi cation of stages of manufacture that may berelevant forother purposes.
We would like to emphasise, at the cost ofrepeti tion, that what we should examine is not the nature of the mill which yeilds the article but the nature of the article or thing that is manufactured and ask ourselves the question whether such article or thing can be considered as raw material for manufactrure of other articles made of the metal or is it itself an article made of the metal.
On this issue our view is, as we have already stated, that the goods in the present case fall in the former category.
We think Sri Ramachandran is right in pointing out that the mild steel rods, bars or rounds which are manufactured by the assessees here are only finished forms of the metal and not articles made of iron and steel.
They only constitute raw material for putting up articles of iron and steel such as grills or windows by applying to them processes such as cutting or turning.
The rod or the wire rods (with which some of the decisions were concerned) are likewise not products of iron and steel but only certain finished or refined forms of the metal itself.
We do not think much assistance can be derived for the interpretation of the provision before us from the Central Excise & Salt Act or the various classifications statutorily or commercially drawn up for that purpose.
They are more refined and intricate classifications for the purposes of excise duty and cannot be imported into the present context.
As we have mentioned earlier, some guidance as to inter pretation of item 1 to the schedule can be derived from item no.11, which refers to "forgings and castings".
These ex pressions obviously refer to articles obtained from the raw material iron and steel by forging and casting.
The argument in some of the decisions referred to before us that item No. 1 should be interpreted strictly because of the existence of item No. 11 seems to proceed on an erroneous basis.
It would be more appropriate to say that forging and castings are not covered by item 1 being articles made of iron and steel but that since the legislature definitely intended to give relief even in respect of such articles, item 11 and (also item 21) were introduced.
In fact, there is some force in the contention urged on behalf of the assessees that even if MS steel rods, bars and rounds cannot be taken as iron and steel (metal), they would fall under the category of "forg ings and castings" referred to in item 11.
We do not, howev er, wish to express any 202 concluded opinion on this aspect because item No. 11 was not relied upon by the assessee at any earlier stage.
In C.A. No. 1404/79, the assessee, Krishna Copper and Steel Rolling Mills, manufactured iron rods and girders out of scrap metal initially converted into billets.
Before the High Court the argument seems principally to have turned on the question whether an assessee manufacturing these arti cles out of iron scrap would be entitled to the higher development rebate.
The assessee cited a circular of the Board that, under item 2 of the schedule, the higher devel opment rebate would be available to an assessee who manufac tured articles from aluminium scrap [vide, circular no.25 D (XIX 16) dated 10th October, 1966].
The High Court, on this basis, answered the question by saying that the assessee before it was also entitled to the higher development rebate though it produced articles only from iron scrap.
This does not really answer the real question but, for the reasons we have already given, we agree with the conclusion drawn by the High Court.
For the reasons stated above we are of the opinion that the view taken by the High Courts in the present cases does not call for any interference.
The appeals, therefore, fail and are dismissed.
But in the circumstances we make no order regarding costs.
V.P.R. Appeal dismissed.
201 includes not merely the production of ingots, billets and the like but also the production of bars and rods are eligi ble for the higher development rebate, it is difficult to see why the same plant and machinery, when installed in rolling mills which proceed, from the stage of ingots or billets, to manufacture bars and rods should not be eligible for the higher rate of development rebate.
In considering the issue before us, we should not be carried away classi fications of stages of manufacture that may be relevant for other purposes.
We would like to emphasise, at the cost of repetition, that what we should examine is not the nature of the mill which yeilds the article but the nature of the article or thing that is manufactured and ask ourselves the question whether such article or thing can be considered as raw material for manufactrure of other articles made of the metal or is it itself an article made of the metal.
On this issue our view is, as we have already stated, that the goods in the present case fall in the former category.
We think Sri Ramachandran is right in pointing out that the mild steel rods, bars or rounds which are manufactured by the assessees here are only finished forms of the metal and not articles made of iron and steel.
They only constitute raw material for putting up articles of iron and steel such as grills or windows by applying to them processes such as cutting or turning.
The rod or the wire rods (with which some of the decisions were concerned) are likewise not products of iron and steel but only certain finished or refined forms of the metal itself.
We do not think much assistance can be derived for the interpretation of the provision before us from the Central Excise & Salt Act or the various classifications statutorily or commercially drawn up for that purpose.
They are more refined and intricate classifications for the purposes of excise duty and cannot be imported into the present context.
As we have mentioned earlier, some guidance as to inter pretation of item 1 to the schedule can be derived from item No. 11, which refers to "forgings and castings" These expressions obviously refer to articles obtained from the raw material iron and steel by forging and casting.
The argument in some of the decisions referred to before us that item No. 1 should be interpreted strictly because of the existence of item No. 11 seems to proceed on an erroneous basis.
It would be more appropriate to say that forging and castings are not covered by item 1 being articles made of iron and steel but that since the legislature definitely intended to give relief even in respect of such articles, item 11 and (also item 21) were introduced.
In fact, there is some force in the contention urged on behalf of the assessees that even if MS steel rods, bars and rounds cannot be taken as iron and steel (metal), they would fall under the category of "forgings and castings" referred to in item 11.
We do not, however, wish to express any 202 concluded opinion on this aspect because item No. 11 was not relied upon by the assessee at any earlier stage.
In C.A. No. 1404/79, the assessee, Krishna Copper and Steel Rolling Mills, manufactured iron rods and girders out of scrap metal initially converted into billets.
Before the High Court the argument seems principally to have turned on the question whether an assessee manufacturing these arti cles out of iron scrap would be entitled to the higher development rebate.
The assessee cited a circular of the Board that, under item 2 of the schedule, the higher devel opment rebate would be available to an assessee who manufac tured articles from aluminium scrap [vide, circular no.25 D (XIX 16) dated 10 th October, 1966].
The High Court, on this basis, answered the question by saying that the assessee before it was also entitled to the higher development rebate though it produced articles only from iron scrap.
This does not really answer the real question but, for the reasons we have already given, we agree with the conclusion drawn by the High Court.
For the reasons stated above we are of the opinion that the view taken by the High Courts in the present cases does not call for any interference.
The appeals, therefore, fail and are dismissed.
But in the circumstances we make no order regarding costs.
V.P.R. Appeals dismissed.

summary/full:
The respondents assessees were engaged in the manufacture of mild steel rods, bars or rounds.
They claimed that as the articles manufactured by them fell under item 1 of the list set out in the Fifth Schedule, they were entitled to a higher rate of development rebate specified in section 33(1) (b) (B) (i) (a) and to relief under section 80 1 of the Income Tax Act, 1961.
The Income Tax Officer rejected the claim of the assessees, whereas the Appellate As sistant Commissioner, the Tribunal and High Court accepted their claim.
Hence the Revenue filed appeals before this Court.
The contentions of the appellant Revenue were that iron and steel ceased to be a metal when it came out of the furnace in the primary steel mills in the form of ingots.
In the next stage the ingots became semi finished products in the shape of billets, blooms and slabs.
It was said to be the stage where the raw materi als were converted into.
In different form or shape; that the expression "iron and steel (metal)" meant the iron and steel as it emerged in the form of billets, blooms and slabs from the steel mill and that all subse quent products whether in the form of rails, rods (including wire rods), bars, angles, channels, tees, sees, pipes, tubes, sheets, strips, plates and coils would constitute articles made of iron and steel, and that rolling mills making bars and rods were not covered by item 1 of the Fifth Schedule.
188 On the other hand, the respondents asses sees contended that in the steel industry the manufacture of ingots, billets, blooms, etc.
represented only an intermediate stage at which the iron and steel metal became semi finished steel.
When the semi finished steel was converted into plates, bars or rods, they became finished steel.
The bars, rods and rounds, which were continued to be iron and steel in a finished form, were used to manu facture the products of iron and steel by various processes, such as, rolling, cutting, shearing, forging, hammering, etc.
and that the products of iron and steel were different from that of iron and steel (metal).
Dismissing the appeals filed by the Revenue, this court, HELD: 1.
In interpreting the provisions in S.33(1)(b)(B)(i)(a), S.80 I of the Income Tax Act, 1961, the Court would do well to keep in mind the background in which concessions to certain basic industries were introduced in the Income Tax Act.
The historical background reflects the intention of the legislature to grant progressively certain exemptions, re liefs and concessions for certain types of industries, which were considered important for national development.
The industry in iron and steel and other metals figured in all the lists.
[199 C, 200 B] 2.
The incentive concession or relief granted under the provisions has to be con strued in a broad and comprehensive manner so as to cover all manufacturing activities legitimately pertaining to the specified core industry with no limitation save what may be called for by the wording of a particular entry.
So far as items 1 and 2 are concerned, the wording points to a distinction between the metal which is used as the base and other articles manufactured therefrom.
Pig iron and iron scrap are fed into furnaces to produce ingots, billets and blooms.
But both are iron and steel in different forms, the latter being referred to as "semi finished steel".
Like wise, the bars, rods, rounds, wire rods and the like constitute the second stage in which one gets only "finished" forms of iron and steel.
Having regard to the nature and weight of the metal, it has to be "finished" to assume these forms before manufacturers of iron and steel articles can take over and proceed to manufacture articles from them by drawing wires or converting them into rails or shaping them into tees, zees, pipes, tubes and the like.
[200 C E] 3.
Whether the article produced is the raw material 01, an article made of iron and steel has to be decided on the basis of the 189 nature of the article and not the kind of mill which turns it out.
It is significant that these items do not draw distinction between basic steel mills, integrated steel mills and the various other types of mills that are used in the industry.
[200 G] 4.
The departmental instructions that machinery and plant in "rolling mills" will not be eligible for the higher development rebate would not seem to be justified if it intends to draw a distinction between the same machinery and plant when used in rolling mills and when used in other mills in the industry.
If machinery and plant installed in steel mills where the process includes not merely the production of ingots, billets and the like but also the production of bars and rods are eligible for the higher development rebate, it is difficult to see why the same, plant and machinery, when installed in rolling mills which proceed, from the stage of ingots or billets, to manufacture bars and rods should not be eligible for the higher rate of devel opment rebate.
[200 G 201 B] 5.
In considering the issue, the court should not be carried away be classifications of stages of manufacture that may be relevant for other purposes.
What the court should examine is not the nature of the mill which yields the article but the nature of the article or thing that is manufactured and ask the question whether such articles or things can be considered as raw material for manufac ture of other articles made of the metal or is it itself an article made of the metal.
[201 B C] 6.
The goods in the present case fail in the former category.
The mild steel rods, bars or rounds which are manufactured by the asses sees are only finished forms of the metal and not articles made of iron and steel.
They only constitute raw material for putting up arti cles of iron and steel such as grills or windows by applying to them processes, such as cutting or turning.
The rod or the wire rods are likewise not products of iron and steel but only certain finished or refined forms of the metal itself.
[201 C D] 7.
Forging and castings are not covered by item 1 being articles made of iron and steel but that since the legislature definite ly intended to give relief even in respect of such articles, item 11 and also item 21 were introduced.
Even if MS steel rods, bars and rounds cannot be taken as iron and steel (metal), they would fail under the category of "forgings and castings" referred to in item 11.
[201 G H] 190 8.
The conclusion drawn by the High Court that the assessee was entitled to the higher development rebate, though, it produced arti cles only from iron scrap, does not call for any interference.
[202 C, D] C.I. T. vs Mittal Steel Re tolling and Allied Industries (P) Ltd., ; CI.
West India Steel Co. Ltd., (Kerala); Addl.
Commissioner of Income Tax vs Trichy Steel Rolling Mills Ltd., ; C.I.T.v.
Krishna Copper Steel Roll ing Mills, & Har yana); CI.T.v.
Ludhiana Steel Rolling Mills, & Haryana) and Singh Engineering Works Pvt. Ltd. vs CI.T., , approved.
Indian Steel and Wire Products Lid vs Commissioner of Income tax, and Commissioner of Income Tax vs Kay Charan Pvt. Ltd., ; over ruled.
State of Madhya Bharat vs Hira Lal, (1966) 17 STC 313 (S.C.) Devi Dass Gopal Krishnan vs State of Punjab, (1967) 20 STC 430 (SC); Hindustan A1uminium Corporation Ltd. vs State of (U.P., (1981) 48 STC 411 (S.C.) State of Tamil Nadu vs Pyarelal Malhotra, (1976) 37 STC 319 (SC); C.I.T.v.
Rashtriya Metal Industries Co. Ltd., ; Indian A1uminium Co. Ltd vs
C.I.T, Cal.
and Cal; Jeewanlal vs CI.T., ; C.I.T vs Fitwell Caps P. Ltd., ; Hindustan Wire Products vs CI.T 1 ; Indian Steel and Wire Products Lid vs C.I.T. ; C.I.T.v.
Tensile Steel Lid, and CI.
Ludhiana Steel Rolling Mills, & H) referred to.
Speci 'fication and Glossary By Expert Products Sectional Committee of Bureau of India Standards, New Encyclopedia Brittanica Macropaedia, 15th Edn. Vol.21; Websters, Third New International Dictionary; Encyclopaedia of Chemical Technology By Kirk Othmer, 3rd.
Vol.21;// Book on Small Scale Steel Making By R.D.Walker, The Budget Speech of the Finance Minister, (1968) 48 ITR [Statutes] 34; (1965) 55 ITR [Statutes] 57 and 122 referred to.


judgement:
ivil Appeal Nos.
10574 10583 of 1983.
From the Judgment and Order dated 7.7.1980 of the Alla habad High Court in I.T.R. No. 948 of 1975.
V.Gourishanker, B.V. Desai, S.K. Aggarwal and Ms. Vinita Gharpade for the Appellants.
S.C. Manchanda, B.B.Ahuja, Manoj Arora and Ms. A. Subha shini (N.P.) for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, CJ.
Radhasoami Satsang, an assessee under the Income Tax Act in these appeals by special leave assails the decision of the Allahabad High Court on refer ence under Section 256 of the Income tax Act.
The following question had been referred by the Tribunal to the High Court: "Whether on the facts and in the circumstances of the case Tribunal is justified in holding that the income derived by the Radha Swami Satsang, a religious institution, is entitled to exemption under sections 11 and 12 of the income Tax Act, 1961 '." ' The ambit and purport of the question would not be properly appreciated unless the background is indicated.
The assessee is the Radhasoami Satsang, Agra.
This sect was founded by Swami Shiv Dayal Singh in 1861.
The tenets of this faith, inter alia, accept the position that God is represented on earth by a human being who is called the Sant Satguru.
The first of such gurus .was the thunder himself and he was popularly known as 'Soamiji Madharaj ' The second Satguru (1889 1898) was Rai 315 Bahadur Salig Ram and he was known as 'Bazoor Maharaj '.
The third sant Satguru was Pandit Brahma Shanker Misra (1898 1907) and was widely known as 'Maharaj Sahib '.
These three Satgurus have been regarded as the real exponents of the creed.
Out of donations and offerings made to the Satgurus, large funds were built up and properties were acquired over the years.
During the time of the third Satguru, in 1902, the members of the creed at a largely attended convention established a Central Council and the right, title and interest of all the properties movable and immovable which had by then been collected were vested in the Council under the directions of Maharaj Sahib.
In June, 1904 the constitution and bye laws of the Central Council of Radhasoami Satsang were drawn up in a formal way and a body by the name 'Radhasoami Satsang Trust ' was set up.
A trust deed was executed by some members of the Central Council in October, 1904.
A set of bye laws were also framed.
On the death of third Satguru which took place in Octo ber 1907, the oread split into two and came to be known as Swami Bagh Sect and the Dayal Bagh Satsangis respectively.
Disputes arose as to the management of the shrines and the administration of the properties which had vested in the trustees under the Trust Deed of 1904.
The Dayal Bagh Sat sangis claimed that all the properties were held in a trust for a public purpose of a charitable and religious nature and prayed for a decree by going to the Civil Court The litigation had started in the form of an application under section 3 of the Charitable and Religious Trusts Act, 1920 but was converted into a regular suit and eventually ended with the decision of the Privy Council in the case of Patel Chhotahhai and Ors.
vs Jnan Chandra Basic and Ors., AIR 1935 Privy Council 97.
The Judicial committee reversed the deci sion of the High Court and held that even if the trust came into existence it was difficult to hold that it was of a public, charitable or religious character as contemplated by the Charitable and Religious Trust Act, 1920.
The question of assessing the income for the first time arose in the assessment year 1937 38.
The Income Tax Officer relied upon the observations of the Privy Council and com pleted assessments for two years being 1937 38 and 1938 39 treating the then Satguru, Sri Madho Prasad Sinha as the assessee.
He was a retired Assistant Accounts Officer and was earning a pension.
His pension as also the income from the institution were tagged together for assessment.
The Appellate Assistant Commissioner confirmed the assessments.
Assessee then filed applications under section 66(2) of the Income tax Act of 1922 for reference.
The Commissioner took the view that the offerings though made to the Satgurus were not used for their personal benefit and held that even though no formal 316 trust had been created by the donors in respect of offer ings, the guru impressed the offerings with trust character at the time of receipt, and treated the offerings as held in trust.
He was, therefore, of the view that such offerings were exempt under section 4(3)(1) of the Income tax Act, 1922 and directed that the offerings be deleted from the assessment for the two years.
He accordingly held that no reference under Section 66(2) was necessary to be made.
an application under section 35 of the Act was later filed for ratification by pointing out that offerings received by the Satgurus consisted of interest income, property income, and income derived from sale of books and photographs etc.
and the same should also be excluded.
On 8.12.1945 the Commis sioner directed deletion thereof.
For the year 1939 40, the income tax Officer did not grant exemption under section 4(3)(1) of the Act but the appeal challenging the assessment was accepted by the Appel late Assistant Commissioner in September, 1947 upholding the assessee 's claim of exemption.
Nothing substantial happened until the assessment year 1963 64.
During this period refund applications of the Satsang were accepted by the department on the basis that the income was exempt and as tax had been deducted at source the same was refundable.
For the first time claim for refund in the years 1964 65, 1965 66 and 1966 67 was not allowed and the assessee was treated as an association of persons and taxed; subsequentiy for the assessment years 1966 67, 1967 68 and 1968 69 and 196970 assessments were also com pleted.
The Income tax Officer did not accept the assessee 's claim of exemption and proceeded to hold that the donations and contributions had been received voluntarily and had been limited to religious use but there was no obligation to do so.
The assessee appealed but the appellate authority upheld the assessments for the years referred to above.
The asses see then appealed to the Tribunal.
The Tribunal examined the matter from various aspects and held: "So far as the Radhasoami sect is concerned its properties were held only for the further ance of the object of the Satsang and this object was to propagate the religion known by the name of Radhasaomi.
This was a purely religious purpose as held by the Privy Council and therefore the objects of the assessee are clearly religious objects.
" While the Tribunal did not accept that the words 'held under trust ' merely meant a consideration of the factual position and that if the income had been applied for reli gious purpose it was unnecessary to find out whether in law a trust had been created or not.
But the Tribunal was of 317 the opinion that the words legal obligation were much wider and the activities of the Satsang could be brought within the purview of that expression.
It finally held that the assessee was entitled to the exemption claimed under section 11.
The High Court did not accept the conclusions of the Tribunal by heavily relying upon the revocability of the trust as clearly specified in the document and accepting the stand of the Revenue that exemption under section 11 was subject to the provisions of ss.60 to 63 of the Act and on the finding that the trust was revocable it upheld liability, Section 11(1) of the Act, as far as relevant, provides: "Subject to the provisions of sections 60 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income: (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and Co) where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of 25% of the income from such property;. " The conditions which have to be satisfied to entitle one for exemption, therefore, are: (a) the property from which the income is derived should be held under trust or other legal obligation.
(b) the property should be so held for charitable or religious purposes which enure for the benefit of the public.
It is well settled that no formal document is necessary to create a trust.
The reference itself accepts the position that the assessee is a religious institution.
There has been some amount of debate in the forums below as to whether Radha soami Satsang is a religion.
This Court in Acharya Jagdish waranand ,Avadhuta & Ors.
vs Commissioner of Police, Calcut ta & Anr.
; , while examining the claim of Anand Marg is to be treated as a separate religion indicat ed: "The words 'religious denomination ' in Article 25 of the Constitution must take their colour from the word 'religions ' and 318 this be so the expression religious denomina tion must also satisfy three conditions: (i) it must be a collection of individu als who have a system of beliefs of doctrines which they regard as conductive to their spiritual well being, that is, a common faith, (ii) common organisation; and (iii) designation by a distinctive name." In that case Anand Marg was held to be a 'religious denomination ' within the Hindu religion.
It is not necessary for us to decide whether Radhasoami Satsang is a denomina tion of the Hindu religion or not as it is sufficient for our purposes that the institution has been held to be reli gious and that aspect is no more in dispute in view of the frame of the question.
The question of assessment to income tax arose only following the decision of the Privy Council in the dispute between the two factions.
The Judicial Committee found that the properties which were the subjectmatter of the suit were acquired with the moneys presented to the Sant Satguru in the form of bhents or other contributions by the followers of the Radhasoami faith.
The Judicial Committee found that it was almost inconceivable that the followers of the faith when making their gifts to the Sant Satguru intended to create a trust within the meaning of the Act 14 of 1920 of which they, the donors and the worshippets, should be the beneficiaries.
The Privy Council further also found that it could not be said that the donors of the gifts were the authors of the alleged public trust.
The question was exam ined keeping the provisions of the 1920 Act in view.
The requirements of section 11 of the Income Tax Act are considerably different from what the Judicial Committee of the Privy Council was required to consider.
We have already pointed out that after 1907 the denomi nation got divided.
The claim of Dayalbagh group for exemp tion under the IncomeTax Act came for consideration before the Allahabad High Court in the case of The Secretary of State for India in Council vs Radha Swami ,Sat Sang, There it was found that the offerings made by the Dayalbagh Satsangis to Sahebji Maharaj and the property which had grown out of them and which admittedly stood in the name of the Sabha and the property which at all material times had stood in the name of the Sabha vested in the Sabha for the benefit of the Satsangis and Sahebji Maharaj had no beneficial or personal interest in that.
What has been found for the Dayalbagh Satsangis on this score is fully applica ble so far as the assessee is concerned, There is no dispute that the properties of the assessee are 319 also recorded in the name of the Sabha (Central Council) and there is no personal interest claimed by the Sant Satguru in such property.
Ever the years the Satguru has never claimed any title over, or beneficial interest in, the properties and they have always been utilized for the purpose of the religious community.
The test applied by the Privy council in the case of A 11 India Spinners ' Association vs Commis sioner of Income Tax.
Bombay is indeed applica ble to the facts of the present case and the result would then be in favour of the assessee.
We would like to point out that even if the trust was revocable, the property was not to go back to the Satguru on revocation.
The constitu tion and the bye laws on record indicate in clause 1(b): "1.
The constitutional powers of the Central Council Radhasoami Satsang . . . . are as below: (b) to collect, preserve and administer the properties movable and immovable that have been or may hereafter be dedicated to Radha soami Dayal or that may be acquired for or presented to the Radhasoami Satsang for the furtherance of the objects of the Satsang.
" This envisages that where the property was given to the Sant Satguru, it was intended for the common purpose of further ing the objects of the Sant Satguru and the Central Council had the authority to manage the property.
Clause 9 of the document stipulated that the properties would vest in the trust and clause 25 provided that the trust shall be revoca ble at the discretion of the Council and the trustees shall hold office at its pleasure.
Upon revocation the property was not to go back to the Satguru and at the most.
in place of the trust, the Central Council would exercise authority.
It is on record that there has been no Satguru long before the period of assessment under consideration.
As a fact, therefore, the Tribunal was justified in holding that the property was subject to a legal liability of being used for the religious or charitable purpose of the Satsang.
This aspect had not been properly highlighted before the High Court.
One of the contentions which the learned senior counsel for the assessee appellant raised at the hearing was that in the absence of any change in the circumstances, the Revenue should have felt bound by the previous decisions and no attempt should have been made to reopen the question.
He relied upon some authorities in support of his stand.
A full Bench of the Madras High Court considered this question in T.M.M Sankaralinga Nadar & Bros. & Ors, vs Commissioner of Income Tax, Madras, After dealing with the con cession the Full Bench expressed the following opinion: 320 "The principle to be deducted from these two cases is that where the question relating to assessment does not vary with the income every year but depends on the nature of the property or any other question on which the rights of the parties to be taxed are based, e.g., whether a certain property is trust property or not, it has nothing to do with the fluctua tions in the income; such questions if decided by a Court on a reference made to it would be res judicata in that the same question cannot be subsequentiy agitated.
" One of the decisions referred to by the Full Bench was the case of Hoystead &Ors.
vs Commissioner of Taxation Speaking for the Judicial Committee Lord Shaw stat ed: "Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be proper apprehension by the Court of the legal result either of the construction of the document or the weight of certain circum stances.
If this were permitted litigation would have no end, except when legal ingenuity is exhausted.
It is a principal of law that this cannot be permitted, and there is abun dant authority reiterating that principle.
Thirdly, the same principle namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed.
In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken.
" These observation were made in a case where taxation was in issue.
This Court in Parashuram Pottery Works Co. Ltd. vs Income Tax Officer, Circle 1, Ward A, Rajkot, at p. 10 stated: "At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversite as it must in other spheres of human activity.
" Assessments are certainly quasi judicial and these observations equally apply.
321 We are aware of the fact that strictly speaking resjudi cata does not apply to income tax proceedings.
Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.
On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter and if there was not change it was in support of the assessee we do not think the question should have been reopened and contrary to what had been decided by the Com missioner of Income Tax in the earlier proceedings, a dif ferent and contradictory stand should have been taken.
We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirma tive, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was enti tled to exemption under sections 11 and 12 of the Income Tax Act of 1961.
Counsel for the Revenue had told us that the facts of this case being very special nothinng should be said in a manner which would have general application.
We are inclined to accept this submission and would like to state in clear terms that the decision is confined to the facts of the case and may not be treated as an authority on aspects which have been decided for general application.
We direct the parties to bear their respective costs.
V.P.R. Appeals allowed.

dataset_name: IN-Abs

summary/full:
The then Satguru of the appellant Creed was assessed for the assessment years 1937 38, 1938 39 for the first time.
He was a retired Govt.
servant.
His pension as well as the income from the institution were assessed together.
On appeal, the Assistant Commissioner of Income tax confirmed the assessments made by the Income tax Officer.
The Income tax Commissioner under reference made under section 66(2) of the Income tax Act, 1922 held that the offerings made to the assessee Satguru were offerings as held in trust and same were exempted under section 4(3)(1) of the Act.
When an application under Section 35 of the Act was made for ratification, whether the offerings received by the assessee consisted of interest income, property income, and income derived from sale of books and photographs etc.
to be excluded, the Commissioner directed deletion thereof.
For the year 1939 40, though the Income tax Officer did not allow exemption u/s.4(3)(1) of the Act, the Appellate Assistant Commissioner allowed exemption.
Till 1963 64 the appellant was not taxed and its refund applications were accepted by the respondent Revenue.
For the assessment years 1964 65, 1965 66, 1966 67, 1967 68, 1968 69, 1969 70, the assessee appellant was as sessed, treating it to be an association of persons, and held that the donations and contributions received volun tarily had limited religious use.
When the appellant assesses appealed, the appellate authority upheld the assessments.
313 Against the orders of the Appellate authority the asses see appealed before the Income tax Tribunal.
The Tribunal allowing the appeals of the assessee, held that the assessee was entitled to the exemption claimed under Section 11 of the Income tax Act, 1961.
On the question, referred to the High Court by the Tribunal, "Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the income derived by the Radha Swami Satsang, a religious institution, was entitled to exemption under Sections 11 and 12 of the Income Tax Act, 1961?", the High Court answered the question in favour of the Revenuerespondent, holding that the trust deed was revocable and the conditions for exemption under Sections 11 and 12 of the Act were not satisfied.
Allowing the appeals of the assessee, this Court, HELD: 1.01.
Assessments are quasi judicial.
Each assess ment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have al lowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.
[320H, 321 A B] 1.02.
No formal document is necessary to create a trust.
The conditions which have to be satisfied to entitled one for exemption are: (a) the property from which the income is derived should be held under trust or legal obli gation, (b) the property should be so held for charitable or religious purposes which enure for the benefit of the pub lic.
[317 E G] 1.03.
The property was given to the Satguru for the common purpose of furthering the objects of the Sat Guru.
The property was therefore subject to a legal liability of being used for the religious or charitable purpose of the Satsang.
[319 E, F] 1.04.
The Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under Sections 11 and 12 of the Income Tax Act, 1961.
[321 D] Patel Chhotahhai and Ors.
Janan Chandra Bask and Ors., AIR 314 1935 Privy Council 97; Acharya Jagdish Waranand Avadhuta & Ors.
vs Commissioner of Police, Calcutta & Ant., , The Secretary of State for India in Council vs Radha Swami Sat Sang, ; All India Spinners 'Associ ation vs Commissioner of Income Tax, Bombay, ; TM.M. Sankaralinga Nadar & Bros. & Ors.
vs Commissioner of Income tax, Madras, ; Hoystead & Ors.
vs Commis sioner of Taxation, and Parashuram Pottery Works Co. Ltd. vs Income tax Officer, Circle 1, Ward A Rajkot, at p.10, referred to.


judgement:
Criminal Appeal No. 710 of 1991.
From the Judgment and Order dated 29.1. 1991 of the Delhi High Court in Cr.
W.P. No. 9 of 1991.
B.Pajha and Manoj Prasad for the Appellant.
V.C.Mahajan, S.D.Sharma and S.N.Terde for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
Special leave is granted.
The appellant, Havildar Ratan Singh was tried and convicted by Summary Court martial.
He was reduced in rank and sentenced to suffer rigorous imprisonment for one year.
He filed an application under Article 226 of the Constitu tion of India before the Delhi High Court, which was dis missed by the impugned judgment.
372 3.
Although a number of questions were raised in the writ petition and the special leave petition, the ground urged by the learned counsel for the appellant before us is confined to one point.
It has been contended that having regard to the nature of the charge against the appellant, the provisions of section 34 of the (herein after referred to as the Act) are attracted, and in view of section 120 (2) of the Act, trial by summary not permitted.
The learned counsel has placed the relevant provisions of the Act indicating that the appellant would have been enti tled to a qualitatively better right of defence before a court martial other than a summary court martial which was denied to him on a wrong assumption that the case was cov ered by section 36, and not by section 34.
The question which arises in this case, is whether the Summary Court Martial had jurisdiction to try the appellant in the facts as alleged in the present case.
The charge sheet states that when fired upon by a group of terrorist militants during an armed operation against them, the appellant quitted his place without orders from his superior officer.
Section 120 of the Act states that subject to the provisions of sub section (2) of the section a summary court martial may try any offence punisha ble under the Act.
Sub section (2) reads as follows : "(2) When there is no grave reason for immedi ate action and reference can without detriment to discipline be made to the officer empowered to convene a district court martial or on active service a summary general court martial for the trial of the alleged offender, an officer holding a summary court martial shall not try without such reference any offence punishable under any of ' the sections 34, 37 and 69, or any offence against the officer holding the Court.
" The position, thus, is that if the offence is covered by section 34 and immediate action for the specified reasons is not warranted, the summary court martial shall not have jurisdiction to hold the trial.
Section 34 states that any person subject to the Act, who commits any of the offences enumerated thereunder, shall on conviction by court martial, be liable to suffer death or such less punishment as prescribed.
The offences are detailed in 12 clauses and clauses (a) and (h) appear to be relevant in the present context.
They are quoted below: "(a) shamefully abandons or delivers up any garrison, fortress, post, place or guard, committed to his charge, or which it is his duty to defend or uses any means to compel or induce any 373 commanding officer or other person to commit any or the said acts; or ****************************************** (h) in time of action leaves his commanding officer or his post,guard, picquet, patrol or party without being regularly, relived or without leave; or. " 6.
The evidence in the case, included in the paper book prepared by the appellant, indicates that the appellant while engaged in an armed action against a group of mili tants is alleged to have run away when the militants opened fire and he, thus, in a cowardly manner left his post with out permission of his superior officer.
The allegations included in the charge sheet on the basis of which the appellant was tried are also to the same effect.
The appel lant is, therefore, right in his stand that if the prosecu tion case be assumed to be correct (which he denies) he was guilty of a more serious offence under clauses (a) and (h) of section 34 of the Act than under section 36.
In reply it is contended on behalf of the respondents that the case is covered by section 36, and, therefore, the Summary Court Martial was fully authorised to try the appellant under section 120 (1).
There is no dispute that the appellant is governed by the provisions of the Act.
It is also not suggested on behalf of the respondents that there was in existence any grave reason for immediate action so as to justify trial by an officer holding summary court martial.
The Operation in which the appellant was engaged was directed against the militants who were undisputedly included in the expression 'enemy ' within section 3(x).
The impugned order is attempted to be justified solely on the ground that section 36 covers the case.
The argument overlooks the position that it is not the scope of section 36 which can answer the question raised in the present case.
The issue is whether the offence is punishable under section 34 or not.
Section 36 covers a wide range of offences and the scope of section 34 is limited to a smaller area where the offence is more serious attracting more severe punishments.
If the allegations are assumed to be true then the appellant, on the militants opening fire, shamefully abandoned the place committed to his charge and which he was under a duty to defend.
Both clauses (a) and (h) are, therefore, clearly attracted.
The impugned trial by summary court martial and the decision thereby must be held to be without jurisdiction and have to be quashed.
We do not find any merit in the other points men tioned in the writ petition or in the special leave peti tion.
They are finally rejected.
374 9.
During the course of the hearing we drew the pointed attention of the learned counsel for the appellant that if he succeeded on the basis that the Summary Court Martial was without jurisdiction, he (the appellant) may have to be retired and awarded a more severe punishment, The learned counsel, however, decided to press the point even at the risk of a second trial of the.
appellant.
The learned coun sel for the respondents stated that a fresh proceeding may now be barred by the law of Limitation, and in view of the fact that the appellant is guilty of a very serious charge, this Court should decline to exercise its power under Arti cle 136.
In reply the learned counsel for the appellant pointed out that the period of limitation for commencing a fresh proceeding against the appellant shall not expire before 05.02.92 and the apprehension expressed on behalf of the respondents that the appellant, even if guilty, may escape a trial is misconceived.
We hold that the appellant is correct.
Accordingly we set aside the impugned judgment of the High Court as also the conviction and sentence passed against the appellant by the Summary Court Martial, but allow the respondents authorities to proceed to hold a fresh trial of the appellant in accordance with law.
The appeal is accordingly allowed.
T.N.A. Appeal allowed.

summary/full:
The appellant, a Havildar, was charge sheeted on the ground that during an armed action against a group of mili tants when the militants opened fire he ran away in a cow ardly manner and left his post without permission of his superior.
The respondent authorities proceeded on the ground that his offence was covered by section 36 of the and accordingly section 120 (1) of the Act was applicable.
Consequently, he was tried by a summary court Martial and was convicted and reduced in rank and imprisoned for one year.
He filed an application under Article 226 before the Delhi High Court which was dismissed.
In appeal to this Court it was contended on behalf of the appellant that having regard to the nature of the charge against him section 34 of the was attracted and in view of section 120(2) of the Act trial by summary Court was not permitted.
Allowing the apeal and setting aside the judgment of the High Court, this Court, HELD: 1.
Under section 120 (2) of the if an offence is covered by section 34 and immediate action for the specified reasons is not warranted, the summary court martial shall not have jurisdiction to hold the trial.
[372 D F] 2.
Section 36 covers a wide range of offences and the scope of 371 section 34 is limited to a smaller area where the offence is more serious attracting more severe punishments.
The opera tion in which the appellant was engaged was directed against the militants who were undisputedly included in the expres sion 'enemy within section 3 (x).
If the allegations are assumed to be true, than the appellant, on the militants ' opening fire shamefully abandoned the place comitted to his charge and which he was under a duty to defend.
Both clauses (a) and (h) of section 34 are clearly attracted.
The appel lant was therefore guilty of a more serious offence under clauses (a) and (h) of section 34 of the Act than under section 36.
1373 D G] It is also not suggested on behalf of the respondents that there was in existence any grave reason for immediate action so as to justify trial by an officer holding summary court martial.
Consequently the impugned, hed trial by Summary Court Martial and the decision thereby must be held to be without jurisdiction and is quashed.
The conviction and sentence passed against the appellant is set aside.
[373 E G] 3.
The respondents authorities can proceed to hold a fresh trial of the appellant in accordance with law.
[374. C]


judgement:
Appeal No. 4541 of 1991.
From the Judgment and Order dated 6.8.1991 of the Punjab and Haryana High Court in C.W.P. No. 2415 of 1991.
Dr. Anand Prakash, Mrs. Veena Birbal and Raj Birbal for the Appellants.
D.R. Sehgal, S.K. Bagga and Mrs. S.K. Bagga for the Respond ents.
The Judgment of the Court was delivered by VERMA, J.
The respondent, Jagjit Singh Mehta, is em ployed at present in the Bank of India as an officer in Junior Management Grade Scale 1 and posted in a Branch Office of the Bank in District Giridih in the State of Bihar.
The respondent was earlier employed in the clerical cadre of the Bank and was posted at Chandigarh.
According to the policy contained in Annexure B read with notice dated March 28, 1988 (Annexure C), on promotion from the clerical cadre to the Officers ' Grade, the respondent had to indicate his preparedness for posting anywhere in India according to the availability of vacancies.
The respondent readily indi cated his preparedness to be posted anywhere in India by Annexure D dated April 19, 1988 when the respondent was posted as a Clerk at Chandigarh prior to his promotion as an Officer.
After getting the promotion as an officer and being posted in Bihar on the above basis, the petitioner filed Civil Writ Petition No. 2415 of 1991 in the High Court of Punjab and Haryana for a direction to the Bank to transfer him from the Bihar Zone to the Chandigarh Zone on the ground that his wife is employed as a Senior Accountant at Chandi garh.
The writ petition has been allowed by a Division Bench (M.R Agnihotri & D.S.Mehra, JJ,) of the High Court by a cryptic order dated 6.8.1991 which reads as under : "After hearing the learned counsel for the parties, we allow this petition and direct the respondents by issuing a writ of mandamus commanding the Bank of India to transfer the peti 495 tioner and post him somewhere near Chandigarh as his wife is posted as a Clerk in the office of the Advocate General, Punjab, Chandigarh.
This shall be done within a period of two months.
No costs.
" The petitioner Bank of India is aggrieved by the above order of the High Court.
Special leave is granted.
In the face of Regulation 47 of the Bank of India (Officers ') Service Regulations, 1979 according to which every officer is liable for transfer to any office or branch of the Bank of India or to any place in India and the clear provision for such a transfer in the policy (Annexure B) read with notice dated March 28, 1988 (Annexure C), it is difficult to sustain the High Court 's order.
However, learned counsel for the respondent placed reliance on para 4 (vi) of a Memorandum dated April 3, 1986 (AnnexureH) of the Government of India containing guidelines for posting of husband and wife at one station which are meant to be fol lowed also by all the Public Sector Undertakings.
Learned counsel urged that according to the statutory provisions contained in the and the Bank of India (Officers ') Service Regulations, 1979 made thereunder, the Bank is bound to follow the guidelines and directions issued by the Cen tral Government in this behalf.
There can be no doubt that ordinarily and as far as practicable the husband and wife who are both employed should be posted at the same station even if their employers be different.
The desirability of such a course is obvious.
However, this does not mean that their place of posting should invariably be one of their choice, even though their preference may be taken into account while making the deci sion in accordance with the administrative needs.
In the case of All India Services, the hardship resulting from the two being posted at different stations may be unavoidable at times particularly when they belong to different services and one of them cannot be transferred to the place of the other 's posting.
While choosing the career and a particular service, the couple have to bear in mind this factor and be prepared to face such a hardship if the administrative needs and transfer policy do not permit the posting of both at one place without sacrifice of the requirements of the adminis tration and needs of other employees.
In such a case the couple have to make their choice at the threshold between career prospects and family life.
After giving preference to the career prospects by accepting such a promotion or any appointment in an All India Service with the incident of transfer to any place in India, subordinating the need of the couple living together at one 496 station, they cannot as of right claim to be relieved of the ordinary incidents of All India Service and avoid transfer to a different place on the ground that the spouses thereby would be posted at different places.
In addition, in the present case, the respondent voluntarily gave an undertaking that he was.
prepared to be posted at any place in India and on that basis got promotion from the clerical cadre to the Officers ' grade and thereafter he seeks to be relieved of that necessary incident of All India Service on the ground that his wife has to remain at Chandigarh.
No doubt the guidelines require the two spouses to be posted at one place as far as practicable, but that does not enable any spouse to claim such a posting as of right if the departmental authorities do not consider it feasible.
The only thing required is that the departmental authorities should consid er this aspect along with the exigencies of administration and enable the two spouses to live together at one station if it is possible without any detriment to the administra tive needs and the claim of other employees.
The High Court was in error in overlooking all the relevant aspects as well as the absence of any legal fight in the respondent to claim the relief which the High Court has granted as a matter of course.
The High Court 's order must, therefore, be set aside.
Consequently, the appeal is allowed, the impugned order of the High Court is set aside and the respondent 's writ petition is dismissed.
No costs.
P. Appeal allowed.

summary/full:
Regulation 47 of the Bank of India (Officers ') Service Regulations, 1979 provided that every officer was liable for transfer to any office or branch of the Bank of India or to any place in India.
The respondent was posted as a clerk in the appellant Bank at Chandigarh.
At the time of his promotion to the Junior Management Grade Scale 1, he gave an undertaking for posting anywhere in India, and was consequently posted as Branch Officer in the State of Bihar.
Thereafter, he filed a writ petition in the High Court claiming his transfer to Chandigarh Zone on the ground of his wife being employed at Chandigarh.
The writ petition was allowed.
The Bank filed appeal by special leave to this Court.
It was contended on behalf of the respondent that para 4 (vi) of Memorandum dated 3.4.1986 of the Government of India contained guidelines for posting of husband and wife at one station which were meant to be followed also by all the Public Sector Undertakings, and, according to the provisions of the Banking Compa 493 nies (Acquisition and Transfer of Undertakings) Act 1970 and the Bank of India (Officers ') Service Regulations, 1979 made thereunder, the bank was bound to follow the guidelines and directions issued by the Central Government.
Allowing the appeal of the Bank, this Court, HELD: 1.
Although the guidelines require the two spouses to be posted at one place as far as practicable the desirability of such a course being obvious yet that does not enable any spouse to claim such a posting as of right if the departmental authorities do not consider it feasible; nor does it mean that their place of posting should invaria bly be one of their choice even though their preference may be taken into account while making the decision in accord ance with the administrative needs.
The only thing required is that the departmental authorities should consider the feasibility of a suitable posting along with the exigencies of administration and enable the two spouses to live togeth er at one station if it is possible without any detriment to the administrative needs and the claim of other employees.
[pp 495 E; 496 BC] 2.
After accepting a promotion or any appointment in an All india Service, subordinating the need of the couple living together at one station, they cannot as of right claim to be relieved of the ordinary incidents of the serv ice and avoid transfer to a different place on the ground that the spouses thereby would be posted at different places.
While choosing the career and a particular service the couple have to bear in mind this factor and be prepared to face such a hardship particularly when they belong to different services.
They have to make their choice at the threshhold between career prospects and family life.
[pp 495 F H; 496 A] 3.1 In the instant case, the respondent voluntarily gave an undertaking that he was prepared to be posted at any place in India and on that basis got promotion and thereaf ter sought to be relieved of that necessary incident of an All India Service on the ground that his wife had to remain at Chandigarh.
[p. 496 AB] 3.2 In the face of Regulation 47 of the Bank of India (Officers ') Service Regulations, 1979 according to which every officer is liable for transfer to any office or branch of the Bank of India or to any place in India and the clear provision for such transfer in the policy read with the notice dated March 28, 1988, the High Court 's order cannot be sustained.
[p. The High Court was in error in overlooking all the relevant aspect as well as the absence of any legal right in the respondent to claim the relief which it granted as a matter of course.
[p. 496 CD]