Important Point
1. Those who are engaged in the business of hatcheries are neither industrial undertakings nor engaged in the business of producing articles or things and such assessees are neither an industrial undertaking nor does the business of hatchery carried out by the assessee fall within the meaning of Section 32A and Section 88J of the Income Tax Act.
2. The meaning assigned to words ‘articles or things’ in the Fifth Schedule cannot be assigned to the words ‘articles or things’ used in Sections 32A and 80J of the Act.

Headnote:(i) Income Tax Act, 1961-Section 32A-Investment allowance-Hatchery-Cannot be termed as an industrial undertaking producing articles or things-Not entitled investment allowance.
       (ii) Income Tax Act, 1961-Section 80HHA - Deductions -Profits and gains from newly established small-scale industrial undertakings - Hatchery - Cannot be termed as an industrial undertaking producing articles or things-Not qualify for deduction.
       (iii) Income Tax Act, 1961-Section 80I, 80J - Deductions-Profits and gains from industrial undertaking or ship-Hatchery-Cannot be termed as industrial undertaking producing articles or things-Not qualify for deduction.
       Held : According to dictionary meanings of the word produce does indicate that if a living creature is brought forth it can be said that it is produced. However, dictionary gives more than one meaning of the word ‘produce’. Neither the word ‘produce’ nor the word ‘article’ has been defined in the Act. When the word is not so defined in the Act it may be permissible to refer to dictionary to find out the meaning of that word as it is understood in the common parlance. But where the dictionary gives divergent or more than one meaning of a word, in that case it is not safe to construe the said word according to the suggested dictionary meaning of that word. In such a situation the word has to be construed in the context of the provisions of the Act and regard must also be had to the legislative history of the provisions of the Act and the scheme of the Act. It is settled principle of interpretation that the meaning of the words, occurring in the provisions of the Act must take their colour from the context in which they are so used. In other words, for arriving at the true meaning of a word, the said word should not be detached from the context. Thus, when the word read in the context conveys a meaning, that meaning would be the appropriate meaning of that word and in that case we need not rely upon the dictionary meaning of that word. (Para 9)
       As noticed earlier, the omission of Section 2(27) and reenactment of Section 80JJ was done simultaneously. It is a very well recognised rule of interpretation of statutes that where a provision of an Act is omitted by an Act and the said Act simultaneously re-enacts a new provision which substantially covers the field occupied by the repealed provision with certain modification, in that event such re-enactment is regarded having force continuously and the modification or changes are treated as amendment coming into force with effect from the date of enforcement of re-enacted provision. Viewed in this background, the effect of re-enacted provision of Section 80JJ was that profit from the business of livestock and poultry which enjoyed total exemption under Section 10(27) of the Act from assessment years 1964-65 to 12975-76 became partially exempt by way of deduction on fulfillment of certain conditions. (Para 12)
       This matter may be examined from another angle. As noticed earlier, Section 10(27) specifically excluded poultry income from being included in total income. Section 14(D) of the Income Tax Act deals with one part of the total income, namely, profit and gains of business. Section 29 of the Income Tax deals with deductions from the profit and gains. Section 32A is one of the sections dealing with such deductions. Therefore, the income from poultry being outside the scope of total income by virtue of omitted Section 10(27) of the Act, there was no question for application of Sections 32A and 80J to them at least when we find that Section 80JJ was consciously simultaneously re-enacted on the omission of Section 10(27) of the Act specially for those who were engaged in the business of poultry. If omitted Section 10(27) and Sections 32A, 80J and 80JJ are read together along with the legislative history it is evident that the provision giving benefit to those who were engaged in running poultry farming was separate and distinct from the provisions which provided incentive to industrial undertakings engaged in the business of manufacturing or producing articles. Thus, if the expression industrial undertaking for purpose of business of manufacture or production of an article or thing is read in the context of the provisions of the Act and with regard to legislative history of the provisions of the Act, it is abundantly clear that those who are engaged in the business of hatcheries are neither industrial undertakings nor engaged in the business of producing articles or things. (Paras 13 & 14)
       From a perusal of the self-stated steps taken by the assessee for the alleged production of chicks it is clear that the assessee does not contribute to the formation of chicks. The formation of chicks is a natural and biological process over which the assessee has no hand or control. In fact, what the assessee is doing is to help the natural or biological process of giving birth to chicks. The chicks otherwise can also be produced by conventional or natural method and in that process also, same time is taken when the chicks come out from the eggs. What the assessee by application of mechanical process does in the hatchery is to preserve and protect the eggs at a particular temperature. But the coming out of chicks from the eggs is an event of nature. The only difference seems to be that, by application of mechanical methods, the mortality rate of chicks is less and the assessee may get chicks more in number. This, however, would not mean that the assessee produces chicks and that chicks are ‘articles or things’. We are, therefore, of the opinion that the assessee is neither an industrial undertaking nor does the business of hatchery carried out by the assessee fall within the meaning of Section 32A and Section 88J of the Income Tax Act. (Para 17)
       It is, no doubt, true that processed seeds and fish have been described under the heading ‘articles or things’ in the Fifth Schedule. Generally, the same words in a statute have the same meaning whenever used in that statute, but they may also have a different meaning in different provisions of the same statute. The same word, if read in the context of one provision of the Act, may mean or convey one meaning and another in a different context. The Legislature in its wisdom had chosen to place processed seeds and fish under the heading articles or things in the Fifth Schedule as Legislature is competent to give artificial meaning to any word. We are, therefore, of the opinion that the meaning assigned to words ‘articles or things’ in the Fifth Schedule cannot be assigned to the words ‘articles or things’ used in Sections 32A and 80J of the Act. (Paras 18 & 19)
       The result of the aforesaid discussion is that the assessee is neither an industrial undertaking nor is it engaged in the business of producing ‘articles or things’. Consequently, the assessee is not entitled to developmental allowance under Section 32A of the Act and deductions under Sections 80HH, 80HHA, 80I and 80J of the Act. (Para 22)
       (iv) Interpretation of Statute-Words occurring in provisions of Act must take their colour from context in which they are so used-Where dictionary gives divergent or more than one meaning of a word it is not safe to construe said word according to suggested dictionary meaning. (Para 9)
       (v) Words and Phrases-Industrial undertaking as occurring in Sections 32A, 80HHA, 80I and 80J-Hatchery business-Whether could be termed as industrial undertaking manufacturing or producing articles or thing. (Para 17)
       (vi) Words and Phrases-‘Article or thing’ as occurring in Sections 32A, 80HHA, 80I and 80J-Hatching of chicks in poultry-Whether amounts to ‘articles or things’ manufactured or produced in Industrial undertaking. (Para 17)

Judgment

V.N. Khare, J.-Leave granted.

2. In this group of civil appeals and special leave petitions the main question that arises for consideration is whether the business of hatchery run by the assessee comes within the meaning of the expression “manufacture or produce articles or things” occurring in Section 32A(2) and Section 88J of the Income Tax Act (hereinafter referred to as `the Act’). The further question to be decided is whether the assessee is an `industrial undertaking’. The appeals excepting Civil Appeal No. 2596 of 1997 are directed against the judgments of Andhra Pradesh and Karnataka High Courts whereby the two High Courts following the decision in the case of Commissioner of Income-tax v. Sri Venkateswara Hatcheries (P) Ltd.1 rejected the applications of the Revenue filed under Section 256(2) Act holding that the business of hatchery comes within the meaning of the expression “an industrial undertaking producing articles or things” and in one case answered the questions in favour of assessee. Whereas in Civil Appeal No. 2596/97, the Bombay High Court has rejected the application of the assessee under Section 256(2) of the Act following the decision in the case of Commissioner of Income-Tax v. Deejay Hatcheries2 wherein it was held that the business of hatchery cannot be termed as an industrial undertaking producing articles or things. That is how both sets of appeals are before us.

3. Respondents in these civil appeals and the appellant in civil appeal No. 2596/97 (hereinafter referred to as the assessee) have poultry farms and they run hatcheries where eggs are hatched on large scale by adopting latest scientific and technological methods. The aforesaid questions arose when the assessees in connection with their income tax assessments for the relevant years claimed that since they are industrial undertakings engaged in the business of producing articles or things, they are entitled to development allowance under Section 43A and deductions under Sections 80HH, 80HHA, 80I and 80J of the Act.

4. The first contention on behalf of the Revenue is that chicks, being animate creatures, cannot be termed as articles or things within the meaning of Section 32A, (2)(iii) or Section 80J(4)(iii) of the Act. The second contention is that even if a chick could be construed as an article or thing it cannot be said that the assessee is producing chicks, that being a natural process of the development of the eggs. The third contention is that if the dictionary meaning of the word ‘articles or things’ conveys different meanings, in that event the said words have to be interpreted in the context of the provisions of the Act, and regard must also be had to the legislative history of the provisions of the Act and the scheme of the Act and the fourth submission is that the assessee is not an industrial undertaking.

5. Since the arguments raised by the learned counsel for the Revenue are overlapping we, therefore, propose to deal them together.

6. The learned counsel appearing for the assessee on the other hand maintained that hatching of eggs comes within the meaning of the expression production of an article or thing. He contended that the word ‘produce’ is of wider import and for that purpose he referred to various dictionary meanings of the word ‘produce’.

7. In Webster’s New International Dictionary the word ‘produce’ means something that is brought forth either naturally or as a result of effort and work; a result produced.

8. In Black’s Law Dictionary the meaning of the word ‘produce’ is “to bring forward; to show or exhibit; to bring into view or notice; to bring to surface”.

9. A reading of aforesaid dictionary meanings of the word produce does indicate that if a living creature is brought forth it can be said that it is produced. However, dictionary gives more than one meaning of the word ‘produce’. Neither the word ‘produce’ nor the word ‘article’ has been defined in the Act. When the word is not so defined in the A

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1999 Supreme(SC) 376

Cases Referred (1)