Circular No. 57

What it does

Holds that a company refining crude oil into motor spirit, aviation spirit, kerosene and allied articles is engaged in the manufacture or production of 'mineral oil'. The Board was advised that 'mineral oil' takes in both crude petroleum and the liquid products derived from it that are mixtures of hydrocarbons. So the profits attributable to crude oil refining qualify for the higher super tax rebate available under the Finance Act, 1964 and the Finance Act, 1965 for manufacture or production of mineral oil, if the other conditions are met. On the same reasoning, crude oil refining is a priority industry for section 80-I and section 80M, and is manufacture or production of mineral oil for development rebate on machinery and plant under section 33.

Why it was issued

A question had been raised whether a crude oil refiner could be said to manufacture or produce mineral oil for the super tax rebate under the Finance Acts of 1964 and 1965.

Who it reaches

Oil refining companies
Refiners claiming the priority industry deduction under section 80-I
Companies claiming section 80M relief on intercorporate dividends from refiners
Refiners claiming development rebate on plant under section 33

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.33	no counterpart recorded
s.80	s.121, s.138, s.139, s.140, s.141, s.142, s.143
s.80M	s.148

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

SECTION 80-I l PROFITS AND GAINS FROM INDUSTRIES AFTER CERTAIN DATE
559. Business of refining of crude oil - Whether it will be regarded as priority industry for the purposes of deduction under the section
A question has been raised whether a company carrying on the business of refining crude oil into motor spirit, aviation spirit, kerosene and allied articles can be said to be engaged in the manufacture or production of "mineral oil" for purposes of calculating the super tax rebate under the Finance Act, 1964 and the Finance Act, 1965. The Board have been advised that the term "mineral oil" covers both crude oil (crude petroleum) and the liquid products derived from crude petroleum which are in the nature of mixtures of hydrocarbons, namely, motor spirit, kerosene and other allied articles. It, therefore, follows that the profits and gains attributable to the business of refining of crude oil would qualify for higher rebate in respect of super tax available in relation to the profits and gains attributable to the business of manufacture and production of mineral oil under the Finance Act, 1964, and the Finance Act, 1965, provided the other conditions specified in this behalf are fulfilled.
2. On a parity of reasoning, the business of refining of crude oil will be regarded as priority industry for purposes of section 80-I and section 80M and also as business of manufacture or production of mineral oil, for purposes of calculating the development rebate in respect of machinery and plant under section 33.
Circular : No. 57 [F. No. 156(26)/71 - TPL], dated 23-3-1971.

What to watch

The ruling on the Finance Acts of 1964 and 1965 is the primary holding; the extension to sections 80-I, 80M and 33 is made 'on a parity of reasoning'.
The rebate is on profits attributable to the refining business, and the other conditions of the relevant provision must still be satisfied.
The super tax rebate, section 80-I in the form referred to, and the section 33 development rebate are not part of the current law.

Where you meet it

In old assessments of refining companies where priority industry status or development rebate was in issue.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Circular No. 443 — 1537. Additional relief to property bequeathed to educational institutions and hospitals - Notification issued under sub 13 December 1985
Notification No. GSR 83 — 1534. Additional relief to property forming part of trust created for promoting advancement of science, etc. - Notificat 6 January 1985
Circular No. 396 — 1539. Additional relief of gold, gold coin, gold ornament tendered within 6 months of the date of death of deceased as s 28 September 1984
Circular No. 381 — 1538. Additional relief to any one building in occupation of de-recognised Ruler declared as his official residence - No 1 May 1984
Circular No. 377 — 1535. Additional relief to property bequeathed to Jawahar Lal Nehru Memorial Fund - Notification issued under sub-sectio 21 February 1984
Circular No. 352 — 1540. Additional relief to property in respect of which gift-tax has been paid and estate duty has also been levied - No 8 December 1982

← Circular No. 58 · Circular No. 56 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.

What this is