JUDGMENT
1. On an application under Section 250(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for our opinion :
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding’ that the assessee was entitled to investment allowance on the machinery acquired for manufacture of ice-cream by taking” a view that ice-cream was not a confectionery and did not fall within items of Schedule 11 to the Income-tax Act, 1961, as a result of which the appellate order of the Commissioner of Income-tax (Appeals) cancelling the order of the Assessing Officer under Section 147(b) was upheld ?”
2. The assessee is a private limited company and the method of accounting” adopted was the mercantile system. The original assessment order
made under Section 143(3) of the Act, was reopened under Section 147(b) of the Act. During the course of assessment proceedings, the Income-tax Officer took the view that the assessee-company was engaged in the manufacture of ice-cream which was an item of confectionery included in the Eleventh Schedule to the Income-tax Act. Therefore, according to him, the assessee is not entitled for the investment allowance. In the appeal before the Commissioner of Income-tax (Appeals), it was brought to the notice of the Commissioner of Income-tax (Appeals) that in the earlier assessment year, i.e., 1984-85, the claim of the assessee was allowed. Considering that fact, the Commissioner of Income-tax (Appeals) has cancelled the order of the Assessing Officer under Section 147(b) of the Act. The Revenue carried the matter before the Tribunal. The Tribunal has followed its earlier order in the assessment year 1984-85 and upheld the order of the Commissioner (Appeals).
3. Learned counsel for the Revenue fairly admits that whether ice-cream is a confectionary or a milk product has been considered in sales tax matters by the Allahabad High Court and the Delhi High Court and a view has been taken that it is a milk product and not a confectionery product.
4. Learned counsel for the assessee, Mr. Khaitan, also brought to our notice that in the assessment year 1984-85 this court answered the question in favour of the assessee though the detailed judgment was not available but in the minutes recorded during the hearing of that matter in the court it is recorded that the question is answered in favour of the assessee and against the Revenue.
5. Though there is no direct decision under the provisions of the Income-tax Act wherein item No. 6 of the Eleventh Schedule to the Income-tax Act has been considered in respect of ice-cream, i.e., whether ice-cream is a milk product or a confectionery product, that question has been considered in sales tax matters.
6. In Milco Ice-cream Co. v. CST [1982] 49 STC 294, the Allahabad High Court has taken the view that ice-cream commodity can be said to be a milk product if it is produced from it. Even if in the ice-cream some dry fruits, essence and gum is added that does not change the main constituent which is milk. The main content of the ice-cream is milk. Therefore, it remains a milk product. That view has again been followed by the same High Court in the case of CST v. Dayal Singh Kulfiwala [1982] 49 STC 295.
7. The Delhi High Court has also considered this issue in the case of the same assessee, i.e., Kwality Ice Cream Co. and Restaurant v. STO [1974] 34 STC 396. The Delhi High Court has considered the provisions of the Prevention of Food Adulteration Act, 1954, and the Prevention of Food Adulteration Rules, 1955, which provide the standard which is required for manufacturing of ice-cream. Under the provisions of that Act and the rules, milk shall contain a minimum of 3.5 per cent. milk fat and 8.5 per
cent. milk solid and buffalos’ milk shall contain a minimum of 6 per cent. milk fat and 9 per cent. milk solid. Section 6 of the Act exempts the articles mentioned in the Second Schedule to the Act which includes fresh milk, whole or separated and milk products. The Delhi High Court has also considered the decision of the apex court in Ramavatar Budhaiprasad [1961] 12 STC 286 wherein their Lordships observed as under (page 400 of 34 STC) :
“It is not the dictionary meaning of a term that will invariably prevail in the construction of a statute. The rule of interpretation in such cases is that particular words used by the Legislature in the denomination of articles should be understood according to the common commercial understanding of the term used and not in their scientific or technical sense, for the Legislature does not suppose our merchants to be naturalists or geologists or botanists’.”
8. Their Lordships in such case had taken the view that the articles should be understood according to the common commercial understanding of the term used and not in their scientific or technical sense. Bearing in mind the observations of their Lordships whether it can be said that ice-cream is understood in common parlance as milk product our answer is in the affirmative and that too this court has already answered the similar question in the case of this very assessee in the assessment year 1984-85 in favour of the assessee.
9. In the result, we answer the question in the affirmative, i.e., in favour of the assessee and against the Revenue.
10. The reference application is thus disposed of.