Facts giving rise to constitution of this Special Bench are that application was submitted by assessee for constitution of Special Bench to resolve controversy involved in present bunch of appeals as to whether Gutkha manufactured by assessee falls under expression 'tobacco preparations' within meaning of Item No. 2 of Eleventh Schedule to Income-tax Act so as to deprive assessee of special relief under sections 80-I and 80-IA of Income-tax Act. In said application, assessee pointed out that Division Bench of this Tribunal at Allahabad has taken view in Kothari Products Ltd. v. Asstt. CIT [1991] 37 ITD 285 that 'Zarda Yukta Pan Masala' (pan masala containing tobacco) is not 'tobacco preparation' under Item No. 2 of Eleventh Schedule and that deduction under sections 32AB and 80-I of Income-tax Act could not, therefore, be denied to assessee on ground that said pan masala was tobacco preparation within meaning of Item No. 2 in Eleventh Schedule in Income-tax Act. In its application seeking constitution of Special Bench, assessee further pointed out that Division Bench of this Tribunal at Pune has, however, taken contrary view in assessee's own case for assessment years 1994-95 and 1995-96 and has held that Gutkha manufactured by assessee is tobacco preparation within meaning of Item No. 2 in Eleventh Schedule and thus not eligible for deduction under section 80-I/80-IA. Since two Division Benches of this Tribunal have taken divergent views, matter was referred by Division Bench at Pune to Hon'ble President of this Tribunal for constitution of special Bench to resolve controversy. Accepting reference made by Division Bench, Hon'ble President has constituted this Special Bench for disposal of all aforementioned appeals. 2. Perusal of Order passed by Hon'ble Bombay High Court on 24-7- 2006 in Dhariwal Industries Ltd. v. Asstt. CIT [Income-tax Appeal Nos. 118 and 119 of 2005 with appellate side writ petition No. 3837 of 2006] shows that ld. counsel for assessee had made prayer before Hon'ble High Court that i t would be desirable that appeals arising out of order passed by Division Bench of this Tribunal at Pune for assessment years 1994-95 and 1995- 96 which were pending before Hon'ble High Court should be set aside and said appeals be restored to this Tribunal with direction to hear them along with ITA Nos. 203/96, 864/02, 865/02, 960/03 and 961/03 referred to this Special Bench. Hon'ble High Court has accepted submission made by assessee and accordingly, set aside order of Division Bench of this Tribunal at Pune for assessment years 1994-95 and 1995-96 with direction that aforesaid two appeals be disposed off along with other appeals referred to Special Bench. Hon'ble President has consequently transferred aforesaid two appeals also to this Bench for hearing and disposal so as to ensure compliance with directions of Hon'ble High Court. 3. In all appeals under consideration, major issue involved is whether Gutkha manufactured by assessee is tobacco preparation within meaning of Item No. 2 in Eleventh Schedule to Income-tax Act and, therefore, not entitled to deduction under section 80-I/80-IA of Income-tax Act. Both parties have argued present bunch of appeals with reference to assessment year 1997-98 and hence, we shall take up that appeal first. ITA No. 864/PN/2002: assessment year 1997-98: Department's appeal 4. Department has taken following grounds of appeal:- "(1) On facts and in circumstances of case and in law, ld. CIT(A) has erred in allowing deduction under sections 80-I and 80-IA of Income-tax Act, to assessee-company, without appreciating fact that Gutkha is tobacco preparation and will fall within item-2 of Eleventh Schedule to Income-tax Act. (2) On facts and in circumstances of case and in law, ld. CIT(A) failed to appreciate fact that Gutkha takes colour of tobacco preparation inasmuch as 7 per cent tobacco mixed with Supari in Gutkha/pan masala has injurious effect to converting it into tobacco preparation." Relevant provisions of Income-tax Act. 5. For better appreciation of facts of case and issues involved in light of relevant provisions of law, it may be useful at outset itself to reproduce relevant portions of section 80-IA and Eleventh Schedule to Income-tax Act as they stood on 1-4-1997. They read as under:- Income-tax Act as they stood on 1-4-1997. They read as under:- "80-IA. Deduction in respect of profits and gains from industrial undertakings, etc., in certain cases.-(1) Where gross total income of assessee includes any profits and gains derived from any business of industrial undertaking or hotel or operation of ship or developing, maintaining and operating any infrastructure facility or scientific and industrial research and development or providing telecommunication services whether basic or cellular (such business being hereinafter referred to as 'the eligible business'), to which this section applies, there shall, in accordance with and subject to provisions of this section, be allowed, in computing total income of assessee, deduction from such profits and gains of amount equal to percentage specified in sub-section (5) and for such number of assessment years as is specified in sub-section (6). (2) This section applies to any industrial undertaking which fulfils all following conditions, namely:- (i) & (ii)** ** ** (iii) it manufactures or produces any article or thing, not being any article or thing specified in list in Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India:- Provided that condition in this clause shall, in relation to small scale industrial undertaking or industrial undertaking referred to in sub-clause (b) of clause (iv) which begins to manufacture or produce article or thing during period beginning on 1-4-1993, and ending on 31-3-1998, apply as if words 'not being any article or thing specified in list in Eleventh Schedule' had been omitted; Eleventh Schedule [See section 32A, section 32AB, section 80CC(3)(n)(i), section 80-I(2), section 80J(4) and section 88A(3)(a)(i)] List of articles or things 1. Beer, wine and other alcoholic spirits. 2. Tobacco and tobacco preparations, such as, cigars and cheroots, cigarettes, biris, smoking mixtures for pipes and cigarettes, chewing tobacco and snuff. 3. Cosmetics and toilet preparations. 4. Tooth paste, dental cream, tooth powder and soap. 5. Aerated waters in manufacture of which blended flavouring concentrates in any form are used. Explanation.-'Blended flavouring concentrates' shall include, and shall be deemed always to have included, synthetic essences in any form. 6. Confectionery and chocolates." Facts of case 6. Briefly stated, facts of case are that assessee-company, namely, M/s. Dhariwal Tobaaco Products Ltd. (now changed to Dhariwal Industries Ltd.) was engaged in business of manufacture and sale, inter alia, of Gutkha during previous years relevant to assessment years under appeal. Its manufacturing activities were located at Ghodnadi, Baroda and Hyderabad. assessee claimed deduction amounting to Rs. 3,18,54,241 under section 80-I in respect of Ghodnadi unit while it claimed deduction amounting to Rs. 3,14,89,948 and Rs. 2,91,60,476 under section 80-IA in respect of Baroda unit and Hyderabad unit respectively. Assessing Officer examined case of assessee. Following order passed by ld. Commissioner of Income-tax under section 263 on 4-1-1996 for assessment year 1993-94 and his assessment order for assessment year 1995-96, Assessing Officer denied deduction claimed by assessee under sections 80-I and 80-IA of Income-tax Act. He held that Gutkha manufactured by assessee was tobacco preparation within meaning of Item No. 2 in List of Articles or Things appearing in Eleventh Schedule to Income-tax Act and hence, assessee was not entitled to claim deduction under sections 80-I and 80-IA. 7. It is evident on perusal of assessment order that Assessing Officer has followed order passed by ld. CIT under section 263 on 4-1- 1996 for assessment year 1993-94. said order passed by ld. Commissioner under section 263 is subject-matter of appeal by assessee (ITA No. 203/PN/1996) before this Tribunal and is also under consideration in this bunch of appeals. It may, therefore, be useful to briefly refer to order passed by ld. Commissioner under section 263. Relevant portion of said order reads as under:- ". . .On behalf of assessee Shri P.C. Parmar, FCA has appeared and argued case. His contention is that in Gutkha preparation there is mixture of tobacco ranging from 6.57 per cent to 7 per cent. For financial year 1990-91 it is 6.980 per cent, for financial year 1991-92 it is 7 per cent and for financial year 1992-93 it is 6.571 per cent. It has been argued that predominant ingredient for preparation of Gutkha is betel nut and not tobacco. mixture of tobacco is only 7 per cent maximum and, therefore, it cannot be said to be tobacco preparation. He has cited example that if certain percentage of alcohol is mixed in medicine it does not become alcoholic preparation. He has further stated that if one or two spoon sugar is mixed in tea it does not become sugar preparation and, therefore, he has argued that it is still betel nut preparation and not tobacco preparation as laid down in Eleventh Schedule of Income-tax Act, 1961. Apart from that he has stated that there is different classification in Central Excise Tariff and Pan Masala has been taxed at rate of 50 per cent and manufacturing tobacco and tobacco manufacture products substitutes have been taxed separately and therefore, even Central Excise makes distinction between Gutkha and tobacco preparation. He has further placed reliance on decision of Income-tax Tribunal decision Vol. 37(1991) pages 285 to 292, 37 ITD 285 in case of Kothari Products Ltd. 2. I have gone through facts of case. Eleventh Schedule talks about Tobacco preparation and it gives certain example but examples are not exhaustive. What is tobacco preparation is to be understood in common parlance. It has not been defined in Act exhaustibly. I am of opinion that once 7 per cent tobacco is mixed in Pan Masala it changes texture and use of Pan Masala and anybody who is not addicted to Zarda or tobacco will not take it. Therefore, Government has in this wisdom prescribed that in such preparation it should be written that it is injurious to health while in case of Plain Pan Masala it is nowhere been mentioned. Suppose food is prepared and arsenic is mixed in small quantity it no longer remains food preparation and it becomes poisonous preparation and its effect is that of poison and not that of food. Similarly once 7 per cent tobacco is mixed in plain pan masala or Gutkha it changes effect of product and it can no longer be taken by ordinary person who is not addicted to tobacco and, therefore, I am of opinion that it takes colour of tobacco preparation. example which assessee has cited is altogether different than mixing tobacco with Pan Masala or with Gutkha, e.g., if tobacco is mixed in betel leaves it becomes different preparation and only one who is addicted to tobacco can eat it and not other persons. In view of above, I am of opinion that once 7 per cent tobacco is mixed in Gutkha or pan masala it changes its effect and it becomes tobacco preparation. I have gone through decision of Kothari product as cited by assessee and I am of opinion that above points have not been considered by ITAT while deciding this issue. Apart from that classification with reference to Central Excise Act is not relevant to Income-tax Act. Under these circumstances, I am of opinion that order of Assessing Officer is erroneous in eyes of law and prejudicial to interest of revenue and, therefore, I direct Assessing Officer to withdraw deduction of Rs. 8,01,315 already allowed to assessee under section 80-I." Decision of first appellate authority, i.e., CIT(A) 8. Aggrieved by order of Assessing Officer, assessee carried matter in appeal before CIT(A). Ld. CIT(A) accepted assessee's claim and directed Assessing Officer to allow deduction under sections 80-I and 80-IA of Income-tax Act. ld. CIT(A) has held that Gutkha manufactured by assessee is not tobacco preparation within meaning of Item No. 2 in 'List of Articles or Things' appearing in Eleventh Schedule to Income- tax Act, 1961. Ld. CIT(A) has given, in brief, following reasons for his decision that Gutkha is not 'tobacco preparation' within meaning of Item No. 2 in Eleventh Schedule:- (i) words 'tobacco' and 'tobacco preparations' in Item No. 2 in Eleventh Schedule are joined by conjunction 'and' which indicates that, product in order to constitute 'tobacco preparation' under Item No. 2 in Eleventh Schedule, must have close affinity with 'tobacco' and, therefore, such product must have 'tobacco' as its main ingredient. He has also noted that words 'tobacco preparation' in Item No. 2 in Eleventh Schedule are followed by specific products, such as, cigars and cheroots, cigarettes, biris, smoking mixtures for pipes and cigarettes, chewing tobacco and snuff. aforesaid particular products have tobacco as their main ingredient and, therefore, 'tobacco preparations' should be such which have close resemblance with those specific products following tobacco products in Item No. 2 of Eleventh Schedule. According to him, use of words 'such as' in Item No. 2 in Eleventh Schedule immediately after words 'tobacco preparations' makes it very clear that tobacco preparations should have close resemblance with individual products specified therein. He has further noted that though 'tobacco preparations' in Item No. 2 in Eleventh Schedule do not end with particular products following thereafter as definition of 'tobacco preparations' is inclusive but intention of Legislature is quite clear that only those tobacco preparations should fall in mischief of Eleventh Schedule which have got close resemblance with particular products listed in Item No. 2. Gutkha manufactured by assessee does not, according to ld. CIT(A), have close resemblance with specific products listed in Item No. 2. He has also considered consumption chart of raw materials in preparation of Gutkha and noted that consumption of tobacco in preparation of Gutkha was only 6 to 7 per cent while percentage of consumption of betel nut was 78 to 80 per cent. He has, therefore, held that Gutkha can, at best, be considered as betel nut preparation and not as tobacco preparation. According to ld. CIT(A), tobacco, cardamom, perfumes etc., are used in preparation of Gutkha to enhance its taste. He has thus concluded that tobacco in Gutkha acts only as taste enhancer. (ii)The ld. CIT(A) has applied rule of ejusdem generis for coming to conclusion that words 'tobacco preparations' in Item No. 2 should take colour conclusion that words 'tobacco preparations' in Item No. 2 should take colour from particular words/products following them. (iii)Referring to Maxwell on Interpretation of Statutes and judgment of Hon'ble Supreme Court in CIT v. Taj Mahal Hotel [1971] 82 ITR 44 (SC), ld. CIT(A) has held that while interpreting items in taxing statute, resort should not be had to scientific or technical meaning assigned to items but to meaning attached to them by those dealing in them in their commercial sense. Having said so, ld. CIT(A) has held that Gutkha or pan masala containing tobacco is considered different from 'tobacco preparations' such as, cigars and cheroots, cigarettes, biris, smoking mixtures for pipes and cigarettes, chewing tobacco and snuff. According to him, Gutkha in common parlance is not known as tobacco product and that consumer buys Gutkha f o r composite taste of betel nut, kattha, perfumes together with kick provided by tobacco. If consumer is interested in tobacco, he will prefer chewing tobacco or Zarda, which is much cheaper than Gutkha instead of b u y i n g Gutkha. According to learned CIT(A), Gutkha has its own independent identity as against common tobacco preparations like Zarda or other form of chewing tobacco. He has also taken note of marketing strategy of assessee and concluded that Gutkha is marketed as Gutkha and not as tobacco product. He has supported his conclusion by referring to different categories of tariffs specified under Central Excise Act which gives different treatment to pan masala containing tobacco as compared to 'tobacco preparations' such as cigars, cigarettes, cheroots, Zarda, etc. In this connection, he has also referred to and taken support from decision of Division Bench (Allah.) of this Tribunal in Kothari Products Ltd.'s case (supra). (iv)The ld. CIT(A) has held that contents of Gutkha like supari, kattha, tobacco and unknown trade secret perfumes may be hazardous to health and may have been banned by law but Gutkha has not been included in list of tobacco preparations as given in Item No. 2 in Eleventh Schedule and, therefore, manufacture or production of Gutkha is not hit by Item No. 2 of Eleventh Schedule. Submissions on behalf of revenue 9. Aggrieved by order of learned CIT(A), Department is now in appeal before this Tribunal. In support of appeal, ld. Departmental Representative invited our attention to legislative history of section 80-I of Income-tax Act. He submitted that predecessor of section 80-I was section 80E, which was operative in assessment years 1966-67 and 1967-68 and dealt with deduction in respect of profits and gains from specified priority industries in case of certain companies. He emphasized that focus of deduction under said section 80-I was on profits and gains derived from specified priority industries and not on non-priority industries. He submitted that section 80E was replaced, for and from assessment year 1968-69, by section 80-I. focus of section 80-I as it existed then, according to him, was again on making deduction available in respect of profits and gains from priority industries in case of certain companies. He re-emphasized that focus of section 80- I, like section 80E, was on giving deduction in respect of profits and gains from priority industries alone. Section 80-I was on statute book in that form till assessment year 1972-73. He pointed out that said section 80-I was omitted for and from assessment year 1973-74. He submitted that present section 80-I was inserted by Finance (No. 2) Act, 1980 with effect from 1-4- 1981, i.e., for and from assessment year 1981-82, and sub-section (2) thereof specifically provided that section 80-I would apply to industrial undertaking on fulfilment of certain conditions enumerated therein. One of conditions laid down in clause (iii) of sub-section (2) of section 80-I was that industrial undertaking should be engaged in manufacture or production of any article or thing, not being any article or thing specified in Eleventh Schedule. He submitted that focus of sections 80E and 80-I till assessment year 1971-72 was on giving deduction in respect of profits and gains of specified priority industries. Section 80-IA in its present form does not make any reference to priority industries because subject-matter of priority industry has been dealt with by including certain items in List of Articles or Things specified in Eleventh Schedule, which industrial undertaking must not manufacture or produce. He submitted that purpose of Eleventh Schedule was to specify priority industries by enumerating articles or things, which must not be manufactured or produced by industrial undertaking claiming deduction under section 80-IA. According to him, concept of priority industry existed not only in sections 80E and 80-I till assessment year 1971-72 but also continues to exist in present section 80-I/80-IA in form of Eleventh Schedule regarding which reference has been made in sub-section (2) of section 80-I. He contended that benefit of section 80-I could not be granted to any industrial undertaking if it was found engaged in manufacture or production of any article or thing specified in Eleventh Schedule. 10. Referring to Item No. 2 in 'List of Articles or Things' appearing in Eleventh Schedule, ld. Departmental Representative submitted that industrial undertaking manufacturing or producing 'Tobacco and tobacco preparations, such as, cigars and cheroots, cigarettes, biris, smoking mixtures for pipes and cigarettes, chewing tobacco and snuff was not eligible for deduction under section 80-IA. He further submitted that present section 80-I was inserted in Income-tax Act with effect from assessment year 1981-82 while Eleventh Schedule was inserted in 1977 when Gutkha was not in use. It was, therefore, according to him, not possible to include Gutkha as separate item in Item No. 2 of Eleventh Schedule. He argued that Gutkha was not only 'tobacco preparation' but also 'chewing tobacco' within meaning of Item No. 2 of Eleventh Schedule. He pointed out that Gutkha was nothing but pan masala with tobacco, which was prepared before hand and put in pouches in ready to use form and further that tobacco was added to pan masala to create intoxicating effect. According to him, it was well-known that tobacco caused intoxicating effect and, therefore, inclusion of tobacco as constituent of Gutkha was intended to produce intoxicating effect. He contended that it was not quantum or percentage of tobacco, which was relevant but its potency in causing intoxicating effect that was relevant in judging whether Gutkha was tobacco preparation. He submitted that these facts were so widely known that no scientific evidence was needed to prove that quantity of tobacco added in pan masala or gutkha was sufficient to cause same intoxicating effect as would be caused by consumption of tobacco and that consumers understood it very well and, therefore, preferred Gutkha or pan masala containing tobacco to other pan masalas without tobacco as they preferred to consume tobacco which was most potent ingredient in Gutkha or pan masala containing tobacco otherwise they would prefer other forms of pan masala without tobacco. According to him, aforesaid distinction between two preparations, namely, gutkha and pan masala containing tobacco on one hand, and other forms of pan masala not containing tobacco on other hand established quite well that while gutkha and pan masala containing tobacco were 'tobacco preparations', other forms of pan masala not containing tobacco were not 'tobacco preparations'. He submitted that it was not quantum of tobacco added to pan masala but retention of potency of tobacco in pan masala and gutkha, which was relevant to decide issue under appeal. In this connection, he pointed out that quantum of tea added for preparing cup of tea was quite small and yet it was known as tea or tea preparation and not as water or water preparation notwithstanding fact that water constituted major proportion of tea preparation. He also referred to example that glass of alcohol usually consumed would have significantly smaller quantity of alcohol than soda/water but still it was known as alcoholic preparation and not as soda/water or as soda/water preparation in spite of fact that quantum of soda/water was more than quantum of alcohol. In support of his aforesaid submissions, he relied upon judgment in Indian Steel & Wire Products Ltd. v. CIT [1977] 108 ITR 802 (Cal.). 11. Referring to order of ld. CIT(A), ld. Departmental Representative submitted that learned CIT(A) was not justified in holding that Gutkha did not fall under any of specific words following 'tobacco preparations' in Item No. 2 of Eleventh Schedule and, therefore, was not in nature of tobacco preparation. He submitted that ld. CIT (A) fell in grave error in applying rule of ejusdem generis in interpreting meaning of expression 'tobacco preparations'. He contended that words 'such as' after 'tobacco preparations' in Item No. 2 of Eleventh Schedule were merely illustrative and not exhaustive and, therefore, not restrictive of meaning of 'tobacco preparations' and, therefore, rule of ejusdem generis was not applicable for interpreting words 'tobacco preparations'. His next argument against applicability of rule of ejusdem generis was that said rule was applicable to construe general words following particular words. He submitted that Item No. 2 contained list of specific words following general words and not general words following particular words. He pointed out that words 'tobacco preparations' were general words while words following 'tobacco preparations' were particular/specific words. His next argument was that word 'tobacco' in 'tobacco preparations' was adjective and would include any preparation in which tobacco was used. Without prejudice to aforesaid submission, he further submitted that Gutkha was 'chewing tobacco' in Item No. 2 of Eleventh Schedule and, therefore, was very much covered by aforesaid specific denomination also. 12. Referring to specific words following words 'tobacco preparations' in Item No. 2 in Eleventh Schedule, ld. Departmental Representative submitted that Eleventh Schedule was appended to Income-tax Act in 1977 when Gutkha was not known and it was for this reason that it could not be included in list of specific preparations in Item No. 2 as Legislature could not have foreseen various other forms of tobacco preparations which would come to use after Eleventh Schedule was appended in 1978. He contended that law has to keep pace with latest changes and this is what should guide interpretation of term 'tobacco preparations'. He argued that if product having tobacco in its composition retained potency of tobacco, such product would qualify to be called as tobacco preparation. He argued that it was qualitative aspect of product, which was decisive and if product had undergone metamorphosis as result of addition of tobacco, product would be tobacco preparation. He further contended that it was not name of product but quality of product that was important. According to him, pan masala without tobacco is available in t h e market and so is pan masala containing tobacco and gutkha and, therefore, consumer does not buy Gutkha or pan masala with tobacco unless he is interested to consume tobacco. 13. Referring to reliance placed by ld. CIT(A) on treatment of pan masala and related products under Central Excise Act and other legislations, ld. Departmental Representative submitted that definition given in one legislation could not be automatically applied to another legislation. He relied upon judgment of Hon'ble Madras High Court in CIT v. South India Viscose Ltd. [1998] 229 ITR 198 for proposition that 'The definition of expression in one statute cannot be automatically applied to another statute expression in one statute cannot be automatically applied to another statute whose object and purpose are entirely different'. 14. ld. Departmental Representative further submitted that provisions of section 80-I/80-IA should be strictly construed and deduction admissible thereunder should not be extended unless assessee satisfied relevant conditions in that behalf. According to him, assessee producing pan masala with tobacco or Gutkha would be covered by 'tobacco preparations' as also by 'chewing tobacco' and therefore, would not be entitled to claim deduction under section 80-I/80-IA. Submissions on behalf of assessee 15. Replying to submissions made by ld. Departmental Representative, ld. Sr. counsel for assessee supported and defended order of CIT(A). His line of argument was broadly similar to reasoning given by ld. CIT(A) for holding that Gutkha was not tobacco preparation. He submitted that provisions of sections 80-I and 80-IA were incentive provisions enacted to enhance industrial production and therefore ld. Departmental Representative was not right in his submissions that deductions available thereunder were intended in respect of profits and gains of priority industries. He contended that provisions of sections 80-I and 80-IA being incentive provisions should be interpreted liberally so as to promote industrial production. He argued that purpose of sections 80-I and 80-IA was not to ban or discourage production of tobacco and tobacco preparations, Gutkha, etc., as second proviso to clause (iii) of sub-section (2) of section 80-I itself extended deduction to small scale industries manufacturing or producing articles or things including tobacco and tobacco preparations specified in Item No. 2 of Eleventh Schedule. He submitted in same breath that Income-tax Act was not social welfare scheme and therefore, admissibility of deduction or otherwise needed to be examined with reference to relevant provisions of law and not with reference to social objectives. 16. Inviting our attention to Item No. 2 in Eleventh Schedule to Income-tax Act, ld. counsel submitted that emphasis in Item No. 2 was o n tobacco in both expressions, namely, 'Tobacco' and 'Tobacco preparations' and, therefore, expression 'tobacco preparations' would cover only those preparations in which substantial, main and dominant ingredient was tobacco. He contended that his submission, as aforesaid, was clearly in conformity with specific products enumerated in Item No. 2 in Eleventh Schedule. Explaining significance of words 'such as' appearing in Item No. 2 in Eleventh Schedule, ld. counsel made two-fold submissions. His first submission was that words 'such as' in Item No. 2 of Eleventh Schedule were words of limitation and, therefore, specific words/products following words 'tobacco preparations' would limit meaning of words 'tobacco preparations' to those specific words. For this proposition, he relied upon judgment in Bombay Municipal Corpn. v. Daily Taj (P.) Ltd. AIR 2001 Bom. 263 in which it has been held that words 'that is to say', 'such as' are words generally understood as 'words of limitation.' He further submitted that scope of 'tobacco preparations' could not, therefore, be extended beyond specific products enumerated in Item No. 2 of Eleventh Schedule. According to him, listing of products in Item No. 2 was quite exhaustive and hence did not permit inclusion of Gutkha in itself. His second submission, in alternative, in this behalf was that Gutkha was not tobacco preparation, as it did not have tobacco as its main, substantial and dominant ingredient. 17. Elaborating his arguments, learned senior counsel submitted that tobacco was substantial, main and dominant ingredient in all specific products enumerated in Item No. 2, namely, cigars and cheroots, cigarettes, biris, smoking mixtures for pipes and cigarettes, chewing tobacco and snuff. In this connection, he took us through Dictionary meaning of words 'bidi', 'cheroot', 'cigar', 'cigarette', 'snuff and 'preparation' as given in 'The Random House Dictionary' and submitted that all aforesaid specific products enumerated in Item No. 2 had tobacco as substantial and dominant ingredient. H e pointed out that tobacco constituted 6-7 per cent in Gutkha and hence, it could not be said that tobacco was substantial, main and dominant ingredient in Gutkha so as to call it 'tobacco preparation'. He contended that ingredient w o u ld constitute dominant ingredient in any product if it constituted substantial portion in overall composition of preparation either in terms of quantity or value or base. According to him, tobacco constituted about 6 to 7 per cent of Gutkha in terms of quantity and 1 per cent in terms of value and that base of Gutkha was also not tobacco. He submitted that aforesaid facts clearly established that tobacco was neither dominant nor substantial ingredient in Gutkha and hence, Gutkha manufactured by assessee could not be said to be tobacco preparation. He contended that 'tobacco preparation' was not something which simply contained tobacco but preparation, which had tobacco as its main, substantial or dominant ingredient similar to seven specific products enumerated in Item No. 2. He reiterated that mere presence of small quantity of tobacco in Gutkha would not convert Gutkha into tobacco preparation. In this connection, he took us through Explanation to Item No. 5 in Eleventh Schedule to Income-tax Act (supra), which defines 'Blended flavouring concentrates'. According to said Explanation, 'Blended flavouring concentrates shall include, and shall be deemed always to have included, synthetic essences in any form.' On basis of aforesaid, ld. senior counsel contended that where intention of Legislature was to cover any product having tobacco as one of its ingredients, Legislature has said it specifically as it has said in aforesaid Explanation. He contended that, in absence of similar words as in Explanation to Item No. 5 in Eleventh Schedule, mere inclusion of small quantity of tobacco as ingredient in Gutkha would not be sufficient to treat it as falling under 'tobacco preparations'. He emphasized that presence of tobacco should be predominant in composition of preparation in order to call it as tobacco preparation. Applying aforesaid test, ld. counsel submitted that Gutkha having tobacco content of 6-7 per cent did not fall in category of tobacco preparations. According to him, champagne does not become poison because some body has added poison to it. 18. Referring to Item No. 2 in Eleventh Schedule, ld. Sr. counsel submitted that there was no clear word or phrase in said Schedule that Gutkha or pan masala would be included or treated as 'tobacco preparation' n d hence, it was not possible to include Gutkha within list of items enumerated in Item No. 2 in Eleventh Schedule. In this connection, he referred to judgment in CIT v. Naga Hills Tea Co. Ltd. [1973] 89 ITR 236 (SC) and also to judgment of Hon'ble Gujarat High Court in CWT v. Shri Sadiqlal Samsuddin [1985] 152 ITR 190. 19. ld. Sr. counsel invited our attention to Sr. No. 1 in Part 'A' of Thirteenth Schedule (inserted by Finance Act, 2003, with effect from 1-4- 2004 for State of Sikkim) and submitted that 'tobacco and tobacco products' specifically included 'cigarettes, cigars and Gutka, etc.' According to him, Legislature was well aware of Gutkha, as Zarda Yukta Pan Masala was being manufactured by M/s. Kothari Products Pvt. Ltd. since 1970, when Eleventh Schedule was inserted in 1970 in Income-tax Act and therefore, exclusion of Gutkha from list under Eleventh Schedule was deliberate and clear expression of legislative will that Gutkha was not to be treated as tobacco preparation. On basis of aforesaid, ld. Sr. counsel contended that where intention of Legislature was to cover any product having tobacco as one of its ingredients, Legislature has said so in specific terms. According to him, Legislature has neither included pan masala nor Gutkha in Item No. 2 in Eleventh Schedule nor said that pan masala or any chewing material having tobacco as one of its ingredients would be called tobacco preparation and hence, it was not possible to import such meaning to expression 'tobacco preparations' in Item No. 2 in Eleventh Schedule. 20. He submitted that tobacco and pan masala have been dealt with differently in legislations dealing with levy of Central Excise and Sales Tax and, therefore, they were perceived even by Government to be different from each other and that Gutkha was not treated as tobacco preparation even under those legislations. In this connection, he took us through orders passed by Sales Tax Authorities. Referring to Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003, ld. Sr. counsel submitted that term 'tobacco products' has been defined in section 2(p) of said Act as meaning products specified in Schedule. Inviting our attention to Schedule to said Act, ld. Sr. counsel submitted that first seven items in said Schedule, namely, cigarettes; cigars; cheroots; beedis; cigarette tobacco, pipe tobacco and hookah tobacco; chewing tobacco and snuff were exactly same as in Item No. 2 of Eleventh Schedule in Income- tax Act. It was Sr. No. 8 in Schedule to Act of 2003 that 'Pan masala or tax Act. It was Sr. No. 8 in Schedule to Act of 2003 that 'Pan masala or any chewing material having tobacco as one of its ingredients (by whatever name called)' and Sr. No. 9 in said Schedule that 'Gutkha' have been included as 'tobacco products' as defined in section 2(p) of Act of 2003. He submitted that focus of Sr. No. 8 in said Schedule was on any chewing material having tobacco as one of its ingredients, which converts any chewing material into tobacco product. According to him, similar words as in Sr. No. 8 of Act of 2003 are missing in Item No. 2 in Eleventh Schedule to Income-tax Act. ld. counsel thereafter took us through Explanation to item No. 5 in Eleventh Schedule to Income-tax Act to which reference has already been made earlier in this Order. 21. Supporting his submission that Gutkha was not tobacco preparation as it did not contain tobacco in substantial portion either in terms of quantity or value, learned senior counsel took us through provisions of section 80- I(2)(iii) and submitted that deduction under section 80-I was available to industrial undertaking if 'it manufactures or produces any article or thing, not being any article or thing specified in list in Eleventh Schedule.' ld. counsel submitted that use of words 'not being' in aforesaid provision clearly showed that deduction was available to all industrial undertakings unless they manufactured article or thing not being one specified in Eleventh Schedule. He submitted that words 'not being' in said provision should be liberally construed. For this proposition, he placed reliance on judgment in Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 188 (SC) in which it has been held that 'A Provision in taxing statute granting incentives for promoting growth and development should be construed liberally. . . . .' He, however, submitted that exclusion clause or restrictive clause contained in Item No. 2 of Eleventh Schedule should be construed strictly so as to deny incentive only to those industrial undertakings, which, in terms of strict construction, manufactured or produced those very articles or things, which are specified in Eleventh Schedule. In other words, submission of ld. counsel was that while incentive provisions should be construed liberally, exclusion clause should be construed strictly. Relying on aforesaid provisions, ld. counsel submitted that all seven specific products following 'tobacco preparations' should be construed strictly and not liberally so as to include product what is not strictly including in said seven products within meaning of 'tobacco preparations'. For this proposition, he relied on decision of Hon'ble Andhra Pradesh High Court in CIT v. Progressive Engg. Co. [1998] 230 ITR 729. 22. ld. counsel for assessee submitted that identical issue has been considered and decided by Division Bench of this Tribunal at Allahabad i n Kothari Products Ltd.'s case (supra) in which it has been held that Zarda Yukta Pan Masala (i.e., pan masala containing tobacco) was not tobacco preparation within meaning of Item No. 2 of Eleventh Schedule so as to disentitle assessee from claiming deduction under sections 32AB and 80-I of Income-tax Act. He further submitted that Reference Application filed by Department under section 256(1) and section 256(2) against said order of Tribunal was dismissed by both Tribunal as also by Hon'ble Allahabad High Court on ground that no question of law arose out of order passed by Tribunal. ld. Sr. counsel has also filed copy of order passed by Hon'ble Supreme Court on 12-7-1996 dismissing Special Leave Applications filed by Department against order of Hon'ble Allahabad High Court rejecting RAs of Department under section 256(2). He contended that order passed by Allahabad Bench of this Tribunal has become final and, therefore, same should be followed by us as reasoning given by Division Bench of this Tribunal in said case stood endorsed and confirmed both by Hon'ble Allahabad High Court as also by Hon'ble Supreme Court. Rejoinder submissions 23. In his rejoinder submissions, ld. Departmental Representative submitted that Gutkha was recent phenomenon which was hardly known at tim e when Eleventh Schedule was inserted in Income-tax Act in 1977. According to him, Gutkha would not cease to be tobacco preparation on sole ground that Gutkha was not included as specific product in Item No. 2 of Eleventh Schedule. He contended that name of product was immaterial as it was quality of product that would decide true nature of product. He reiterated that Gutkha, in qualitative terms, was tobacco preparation. In this connection, he referred to judgment in CCE v. Parle Exports (P.) Ltd. [1990] 183 ITR 624 (SC). 24. Replying to submission of ld. Sr. counsel that words 'such as' in Item No. 2 of Eleventh Schedule were in nature of limitation as held in Bombay Municipal Corpn.'s case (supra), ld. Departmental Representative submitted that said judgment was given in particular context and that observations made by Hon'ble High Court in said case would not universally apply and more particularly in interpreting words 'tobacco preparations' used in Item No. 2. 25. Refuting submission of ld. Sr. counsel that reasoning given by Allahabad Bench of this Tribunal in Kothari Products Ltd.'s case (supra) stood approved by Hon'ble Allahabad High Court and Hon'ble Supreme Court, ld. Departmental Representative submitted that superior courts declined to interfere with order passed by Tribunal in said matter on sole ground that no question of law was involved in matter and, therefore, orders passed by them should not be taken as endorsement or confirmation o f reasoning given by Allahabad Bench of this Tribunal on merits. He further submitted that mere dismissal of SLP would not mean declaration of law: Nawab Sir Mir Usmal Ali Khan v. CWT [1986] 162 ITR 888 (SC). In this connection, he invited our attention to judgment dated 24-7-2006 of Hon'ble Bombay High Court in assessee's own matter (Income-tax Appeal Nos. 118 and 119 of 2005) by which Hon'ble High Court has set aside orders passed by Division Bench of this Tribunal at Pune for assessment years 1994-95 and 1995-96 and restored appeals relating to aforesaid assessment years for disposal afresh by this Tribunal. He submitted that issue, therefore, needed consideration de novo in light of materials available on record. Decision 26. We have heard parties and considered their submissions including authorities referred to by them. simple issue in present bunch of appeals is whether 'Gutkha' manufactured by assessee falls under expressions 'tobacco preparations' and 'chewing tobacco' in Item No. 2 of Eleventh Schedule. answer to aforesaid issue turns essentially on facts. In Kothari Products Ltd.'s case (supra), Allahabad Bench of this Tribunal has held that Zarda Yukta Pan Masala does not fall under expression 'tobacco preparations' while Pune Bench of this Tribunal has held otherwise. Hon'ble Allahabad High Court has dismissed Reference Application filed by Department against said order of Allahabad Bench on ground that no referable question of law was involved. Thus, Hon'ble High Court considered aforesaid issue as one involving question of fact and not of law. Hon'ble Supreme Court has also declined to interfere with aforesaid order of Hon'ble High Court. Thus, both Hon'ble Allahabad High Court and Hon'ble Supreme Court have held in identical case that issue whether Gutkha falls under expression 'tobacco preparations' is question of fact and not question of law. Keeping this in view, we shall now proceed to first examine in detail factual aspects surrounding issue. 27. Tobacco is agricultural product processed from fresh leaves of plants in genus Nicotiana Tobacum. Thus, 'tobacco' connotes processed narcotic leaves derived from said plants. Dried tobacco leaves are often smoked in cigars, cigarettes and pipes, and are also chewed in mouth or sniffed in nose. Tobacco contains nicotine which is absorbed from respiratory tract, and through mouth tissue and skin. As little dose of 'nicotine' as contained in one half of cigar or three cigarettes can prove to be lethal; however, only very small fraction of nicotine contained in smoking tobacco products is actually released into smoke and, therefore, is not lethal. Tobacco users risk many very serious and often fatal illnesses, such as cancer, strokes, heart disease, and lung disease. It's matter of common knowledge that tobacco use is considered by health agencies all over world as single most important preventable risk to human health and important cause of premature (early) death worldwide. 28. As stated earlier, use of tobacco can be either in form of smoking tobacco or in form of smokeless tobacco. Smokeless tobacco (ST) can either be chewed in mouth or sniffed in nose. After tobacco was introduced in India in or around 17th century, it became ingredient of betel quid. India in or around 17th century, it became ingredient of betel quid. Through its association with socially accepted practice, namely, betel chewing, smokeless use of tobacco as ingredient in betel preparation found its way and became widespread due to its intoxicating effect and 'buzz' that it created on its use. Currently almost all habitual users of betel quid use it with tobacco. most recent, variant of betel quid is pan masala, manufactured item containing areca nut and other ingredients common in betel quid; some brands contain dehydrated and powdered betel leaves also. Four types of pan masalas are available in domestic market, namely, plain pan masala; sweet pan masala; pan masala containing tobacco and gutka. Pan masalas of all variants are generally sold under same brand name and so is Gutkha. 'Gutkha' is also spelled guttkha, guthka or Gutka. 29. Gutkha is preparation of crushed betel nut, tobacco, and sweet or savory flavourings. Sold across India in small, individual-size attractive packets that cost between 1 and 4 rupees piece, it is consumed much like chewing tobacco. gutkha, powdery, granular white substance, is placed between bottom lip and gum, or under tongue. Within moments, gutkha begins to dissolve and turn deep red in colour. It imparts upon its user 'buzz' somewhat more intense than that of tobacco. Highly addictive and known carcinogen, gutkha is currently subject of much controversy in country. Many States have sought to curb its immense popularity by taxing sales of gutkha heavily or by banning it outright. Due to its often sweet taste, easy availability and cheapness, it is popular with poor children, school boys and girls, who can exhibit pre-cancerous lesions at very early age as result of its use. Gutkha also has effects on environment. After it is consumed, it is generally spat onto wall or ground or inside bus/train and other public services including public toilets, causing unsightly red stain that is quite resistant to elements. Some building owners have taken to combating this unpleasantness by painting murals of Gods on their walls, with idea that gutkha-chewers would not spit on God. 30. There are four major reasons for popularity of pan masala containing tobacco and gutkha. As stated earlier, pan masala of all variants is generally sold under same brand name. single name for all variants of pan masala affords significant marketing advantage to manufacturer. Since there are no restrictions on advertising consumer product that contains no tobacco, pan masala without tobacco is vigorously advertised and promoted. Pan masala of all variants including gutkha carry same brand name and, therefore, get considerable benefit from unrestricted advertisement and promotion of its non-tobacco counterpart and thereby through surrogate advertising, i.e., duplicating brand image of one product extensively to promote another product of same brand. As result of such high-profile advertising and surrogate advertising, smokeless tobacco use is increasing rapidly in stratum of society from which it had almost disappeared-among individuals with college education who are in business and in middle and high- level management positions. Pouches and sachets of smokeless tobacco are becoming more common in public places including schools and colleges as also places of worship. It is visible even to naked eyes. Driven by massive advertisement, another factor responsible for popularity of pan masala is perish-ability of betel leaf, fresh green leaf from betel vine, in which various ingredients of quid are smeared and wrapped. tenderness and freshness of leaf are highly prized and, therefore, betel leaf does not last for more than few days. Betel vine is said to be delicate plant, requiring much care and attention, and cannot be grown everywhere. leaf is thus difficult to obtain in places distant from betel-growing areas. Third reason for popularity of pan masala containing tobacco or gutkha is difficulty in detecting its use. It is easy to spot and detect user of betel leaves, cigarettes, snuff, etc., but it is not so easy to spot user of pan masala containing Gutkha or Gutkha. In other words, it is far easy and convenient to use pan masala containing tobacco or gutkha without fear of detection by parents, guardians, teachers, etc., as in use of other tobacco products. Ease of concealing it, better taste, low price, etc., make pan masala containing tobacco and gutkha extremely popular even with school children and also with those who would have otherwise found it difficult to consume them openly for fear of being detected or identified. Fourth reason is pleasant taste of gutkha and pan masala containing tobacco which is achieved by adding various flavouring agents to tobacco. This is what makes gutkha and pan masala containing tobacco extremely popular even amongst those who would have otherwise found it difficult to use smoking tobacco or other forms of smokeless tobacco for its bad odour or taste. 31. It is well acknowledged that growth of pan masala industry was very slow in 1970's when only plain and sweet pan masala were introduced. Those who have seen those days would distinctly recall that pouches or sachets containing pan masala with tobacco or gutkha were nowhere visible in any part of country. However, this industry saw rapid growth from 1980s onwards, after introduction of pan masala containing tobacco and Gutka, especially in small sachets, which increased their transportability and cost of purchase. Synopsis of Debates (Proceedings other than Questions and Answers) held on 1-8-2005 in Rajya Sabha in this behalf shows, as example, reality of situation as to whether gutkha is perceived to be tobacco preparation and also as to how this industry has witnessed phenomenal growth over last thirty years or so. Let us have glimpse of relevant portion of debate. It reads as under:- "II. Demand to ban production of Gutkha in country-Dr. Gyan Prakash Pilania: 'Gutkha' is most popular brand in various forms of consumption of tobacco. trade in regard to Gutkha was merely Rs. Six Lakh in year 1974-75 and now days, it has risen as high as ten thousand crore of rupees. number of tobacco shops are opened nearby educational institutions. Continuous use of Gutkha, causes cancer because it contains several harmful things in it. Therefore, I urge upon Government to ban production of Gutkha immediately. (Shri Kripal Parmar, Prof. R.B.S. Varma, Shri Lalitbhai Metha and Shri Lekhraj Bachani associated.)" 32. It is evident from aforesaid that masses in this country perceive 'Gutkha' as most popular brand in various forms of tobacco use. purpose of aforesaid discussion is two-fold: one, to highlight various well- known forms and aspects of tobacco use for proper understanding of expressions 'tobacco', 'tobacco preparations' and 'chewing tobacco' used in Item No. 2 of Eleventh Schedule; and, two, to highlight as to how pan masala containing tobacco and gutkha are treated by cross-sections of society and also by all those who are actively involved in dealing with pan masala containing tobacco and gutkha, as tobacco preparations. Only those individuals who are addicted to or want to taste tobacco would use gutkha or pan masala containing tobacco. Those who do not want to consume tobacco do not use gutkha. Gutkha and pan masala containing tobacco are thus consumed for reason that it has tobacco. Other ingredients are added to tobacco in Gutkha and pan masala containing tobacco to provide better flavour, taste, etc. It is for this reason that consumers prefer gutkha to other forms of tobacco use. By its very nature, tobacco has very unpleasant taste and hence, other ingredients are added to provide taste to tobacco. Tobacco being unpleasant in taste cannot provide taste to other ingredients in gutkha or pan masala containing tobacco. 33. Let us now turn to meaning of expressions 'tobacco' and 'tobacco preparations' used in Item No. 2 of Eleventh Schedule. 'Tobacco' connotes processed narcotic leaves obtained from plants in genus Nicotiana. In addition to 'tobacco', Item No. 2 in Eleventh Schedule also uses another expression, namely, 'tobacco preparations'. element of tobacco is common in both 'tobacco' and 'tobacco preparations'. Does it then mean that both expressions, namely, 'tobacco' and 'tobacco preparations' carry same meaning and import. In our view, answer is in negative. If meaning of both of them had been same, there would then have been no occasion to use both of them in Item No. 2. When Legislature enacts particular phrase in statute presumption is that it is saying something which has not been said immediately before. rule that meaning should, if possible, be given to every word in statute implies that words add something which has not been said before. Leaves of plants in genus Nicotiana are first processed before being put to use. There can be two forms in which said processed leaves can be put to use. First form of use is where said leaves are used directly after being processed. phrase 'tobacco' in Item No. 2 would, therefore, cover product in which processed tobacco leaves are used directly in substantial quantity, like, cigarette, cheroot, hookah, etc. Then, what are 'tobacco preparations'. Should 'tobacco preparations' be also interpreted in same sense in which 'tobacco' is understood? answer again is in negative for reasons already stated earlier. In our view, 'tobacco preparations' would cover all those preparations and products which are prepared using tobacco if properties of tobacco are retained in preparation without undergoing any metamorphosis as result of addition of other ingredients. In such case, preparation would qualify to be called 'tobacco preparation'. Notwithstanding fact that gutkha contains tobacco to extent of 6-7 per cent, tobacco in Gutkha retains all qualities of tobacco including pharmacology of nicotine and physiological and psychological of nicotine and to same extent as in other forms of tobacco use. It has also to be kept in view that quantity and rate of absorption of nicotine present in chewing tobacco is much higher, faster and far more effective than in use of smoking tobacco as chewing tobacco is absorbed directly and immediately in body in full quantity through extremely sensitive mouth tissues. 34. As stated earlier, tobacco has very unpleasant taste and, therefore, it is orally consumed better when it is mixed with other ingredients. That is why Legislature has taken care to include 'tobacco preparations' together with 'tobacco' in Item No. 2. Tobacco, in form of processed leaves, is never only constituent in spit or chewing tobacco. It is neither possible nor practicable to orally consume tobacco, i.e., processed leaves for several reasons. First is lethal effect of nicotine. very small quantity of nicotine can prove to be lethal if it is orally consumed. Besides, it is not possible for anyone to orally consume purest form of tobacco, i.e., processed leaves or nicotine, without mixing it with other agents. As stated earlier, tobacco contains nicotine, which is absorbed from respiratory tract, and through mouth tissue and skin. However small fraction of tobacco containing nicotine is needed when it is orally consumed for reason that nicotine so consumed is directly released in body while larger quantity of tobacco is needed in smoking tobacco. It is for this reason that quantity of tobacco cannot be as substantial in chewing tobacco as it is in smoking tobacco. Second is that only small quantity of tobacco is necessary for use as neurostimulant and for getting kick and buzz. quantity of tobacco which is included in gutkha is sufficient to reflect its potency and produce its effect on its consumer. small quantity of tobacco in gutkha carries as much nicotine as it is in smoking tobacco or other tobacco preparations. Third is that tobacco per se has very unpleasant taste. It is, therefore, simply not possible to orally consume tobacco in form of processed leaves. person orally consuming tobacco in form of processed leaves will, in all likelihood, immediately vomit it out. If he somehow happens to absorb it, he will, in all likelihood, suffer from serious intoxication and other health complications. That is why several ingredients are added so as to make 'chewing tobacco' taste pleasant, palatable and attractive for human consumption. All these are matters of common knowledge. Gutkha or pan masala containing tobacco will not become tobacco-less preparations on sole ground that content of tobacco is 6-7 per cent ignoring fact that said composition of tobacco in gutkha or pan masala containing tobacco carries same pharmacology of nicotine and physiological or psychological effects of nicotine; as other tobacco products, like cigarettes, cheroots, etc. 35. Learned senior counsel vehemently contended that preparation would not be tobacco preparation unless tobacco was its main or dominant ingredient. According to him, ingredient, would be dominant ingredient in any preparation if it constituted substantial portion in overall composition of preparation either in terms of quantity or value or base. We have given serious thought to submissions made by learned senior counsel. In our view, ingredient in preparation would be dominant one if its properties dominate or prevail over other ingredients present in preparation regardless of fact that smaller quantity of such ingredient is used in preparation than quantities of other ingredients. success of pan masala industry lies in fact that pan masala containing tobacco and gutkha produced by it are extremely palatable, tasty and carry same strength or potency of tobacco as in other forms of tobacco use and it is for this reason that it is so popular even amongst school children and also amongst those who would not have used smoking tobacco or other forms of smokeless tobacco due to its unpleasant taste or odour. Gutkha having tobacco content of 5 to 7 per cent carries same pharmacology of nicotine and causes same physiological and psychological effect as any other tobacco preparation or product individually specified in Item No. 2. Other ingredients are added to make spit or chewable tobacco, i.e., Gutkha taste pleasant and palatable and this is what is exactly done in manufacturing of gutkha and pan masala containing tobacco. As stated earlier, pharmacology of nicotine, physiological and psychological effects of nicotine are intact in tobacco added to other ingredients in Gutkha and pan masala containing tobacco in same way and in same strength as they are in other forms of tobacco use. Thus, tobacco content present in Gutkha has dominant effect over all other ingredients in Gutkha. Other ingredients in Gutkha simply make it tasty and easy to chew tobacco present in Gutkha without affecting quality or potency of tobacco. It is neither size nor length nor quantum of ingredient in preparation which can decide by itself as to what is dominant or main ingredient in preparation but strength or potency of ingredient which would decide as to what is dominant ingredient in preparation. In this view of matter, it is not possible to accept that gutkha and pan masala containing tobacco should not be treated as tobacco preparation only because of fact that tobacco constituted small portion, i.e., 6 to 7 per cent of their overall composition. It is like fact that glass of coke is treated as coke notwithstanding presence of substantial quantity of water in it and very small quantity of coke in it. Likewise, cup of tea is called tea preparation notwithstanding fact that processed tea leaves are in smaller quantity than quantity of other ingredients, like water, in it. Beer is called alcoholic preparation even though content of alcohol in beer is just 5 to 6 per cent. In homoeopathic preparations, quantity of liquid medicine is nominal while sugar pills constitute bulk of homeopathic preparation but nobody calls homoeopathic medical preparation sugar preparation. Same principles apply to various drug preparations. tests suggested by learned senior counsel fall flat in all aforesaid examples. overall nature of preparation cannot, therefore, be judged by applying test of substantial quantity or test of substantial value of ingredient in overall composition of product nor is it necessary that it should form main base of product. In our view, dominant ingredient in preparation is one which retains by virtue of its potency its basic characteristic without undergoing any metamorphosis. It is quality of t h e product which decides nature of product. If preparation is consumed for its tobacco content and tobacco content does not undergo any morphosis after addition of other ingredients, preparation would be tobacco preparation. Thus, qualitative aspect of preparation and popular perception of all those who deal with preparation will ultimately decide true nature of preparation. If both aforesaid tests are applied to Gutkha, then there can be no manner of doubt that Gutkha and pan masala containing tobacco are tobacco preparations notwithstanding fact that they may have 5-7 per cent of tobacco in them. We hold accordingly. 36. Besides, expression 'tobacco preparations' has to be understood in contradistinction to 'tobacco-less preparation'. As 'tobacco-less preparation' cannot become 'tobacco preparation', 'tobacco preparation', by same logic, cannot become 'tobacco-less preparation'. It cannot be said that 'Gutkha' is tobacco-less preparation'. 37. Learned senior counsel has vehemently contended that seven items 'enumerated in Item No. 2, namely, cigars and, cheroots, cigarettes, biris, smoking mixtures for pipes and cigarettes, chewing tobacco and snuff were quite exhaustive and, therefore, would restrict scope of 'tobacco preparations' to those seven products alone. learned senior counsel contended that there was, therefore, no scope to treat Gutkha and pan masala containing tobacco as 'tobacco preparations'. We have carefully considered submissions made by learned counsel. rule of construction noscitur sociis means that meaning of word is to be judged by company it keeps. As stated by Privy Council in Angus Robertson v. George Day [1879] 5 AC 63, p. 69 (PC), it is legitimate rule of construction to construe words in Act of Parliament with reference to words found in immediate connection with them. careful perusal of aforesaid seven items in Item No. 2 of Eleventh Schedule would show that all seven items fall in category of (i) smoking tobacco, or (ii) smokeless tobacco, i.e., chewing tobacco or snuff. Therefore, expression 'tobacco preparations' in Item No. 2 needs to be construed in manner that includes all aforesaid three forms of tobacco use namely smoking tobacco and smokeless tobacco comprising of chewing tobacco and snuff. Those seven items make it absolutely clear that all aforesaid three forms of tobacco use have been included within phrases 'tobacco' and 'tobacco preparations'. purpose of enumerating seven items in Item No. 2 is to include all forms of tobacco use and cover them either in 'tobacco' or in 'tobacco preparations' and not to restrict phrase 'tobacco preparations' to those seven items alone. That is why general phrases like 'tobacco' and 'tobacco preparations' are followed by is why general phrases like 'tobacco' and 'tobacco preparations' are followed by specific words in Item No. 2. It is not, in our view, purpose of enumeration of all aforesaid items that words 'tobacco preparations' should receive interpretation so as to restrict expressions 'tobacco' and 'tobacco preparations' to those seven items alone. If that had been intention of Legislature, then there was no need to use words 'tobacco' and 'tobacco preparations' in Item No. 2. Legislature, in that case, would have specified those seven items alone without using expressions 'tobacco' and 'tobacco preparations' preceding them. This further strengthens view that purpose of enumeration of all seven items in Item No. 2 is to illustrate, by way of example, various forms of tobacco use and to cover all of them under expressions 'tobacco' and 'tobacco preparations'. What is intended by inclusion of seven items in Item No. 2 is that all aforesaid forms of tobacco use must be included under expressions 'tobacco' and 'tobacco preparations' and that none of them must be excluded from their purview. Therefore, listing of seven items in Item No. 2 is not intended to convert smokeless use of tobacco like 'Gutkha' from being 'tobacco preparation' into 'tobacco-less preparation'. Without prejudice to aforesaid, if aforesaid seven items were still to be treated as exhaustive or limiting/restricting meaning of words 'tobacco preparations', then limitation/restriction placed by them would be that expression 'tobacco preparations' would extend to cover use of tobacco either as smoking tobacco or smokeless tobacco and to no other form of tobacco use. In that case also, smokeless use of tobacco will cover Gutkha manufactured by assessee and thus fall under expression 'tobacco preparations'. 38. learned senior counsel, however, contends that words 'such as' in Item No. 2 are always words of limitation. We are unable to agree with him. At page 3129 in second volume of 'The New Shorter Oxford English Dictionary' (1993 Edition), meaning of words 'such as' is given as 'for example'. In Royal Hatcheries v. State of Andhra Pradesh AIR 1994 SC 666, it has been held t page 668 of said report that words 'such as' indicate that what are mentioned thereafter are 'only illustrative and not exhaustive'. At page 670 of said Report, it is stated: 'So far as words 'such as' are concerned, there is no dispute that they are meant to be illustrative and not exhaustive.' At page 671 of said Report, terms 'viz.' and 'etc.' have been interpreted thus: 'The opinion of Viscount Finlay shows that expression 'viz.' stands for 'videlicet', which means 'to wit' or 'that is to say'. These words are generally understood as words of limitation. Regarding meaning of word 'etc.', it was observed that word 'etc.,' is absolutely different from 'et alia' and that it means 'all rest'.' It cannot, therefore, be said as universal and inflexible rule that words 'such as' would always import limitation. In contextual setting of Item No. 2 of Eleventh Schedule, expression 'such as' indicates that what are mentioned thereafter are only illustrative of various forms of tobacco use and 'tobacco preparations'. We, therefore, hold that all seven items specified in Item No. 2 of Eleventh Schedule are illustrations of various forms of 'tobacco preparations' and their use. 39. Without prejudice to aforesaid observations, let us accept for while submission of learned senior counsel and assume that expression 'such as' in Item No. 2 is in nature of limitation. In event of that assumption, natural question would be whether Gutkha manufactured by assessee falls under any of items specified in Item No. 2 of Eleventh Schedule. One of items mentioned therein is 'chewing tobacco'. question now is whether Gutkha and pan masala containing tobacco fall under 'chewing tobacco' or not. If they fall under 'chewing tobacco', they would be specifically also covered by Item No. 2 of Eleventh Schedule. obvious question, therefore, is what is 'chewing tobacco'? It is something, which one neither smokes nor swallows. All one has to do is to slosh it around in his mouth and spit out brown juices every few seconds. It may be pretty disgusting but after all this is what is called 'chewing tobacco' or spit tobacco-a form of smokeless tobacco. It is well known that Gutkha and pan masala containing tobacco are chewed and would, therefore, also fall under expression 'chewing tobacco' which is one of items denominated in Item No. 2 of Eleventh Schedule. It is not case of assessee that 'Gutkha' is chewed sans tobacco in it. Tobacco in Gutkha is also chewed. As stated earlier, other ingredients are added to tobacco in Gutkha to make use of tobacco pleasant. We have also noted earlier in this Order that chewing tobacco, e.g., Gutkha carries with it same pharmacology of nicotine and same physiological and psychological effects of nicotine as smoking tobacco or other forms of tobacco use. Gutkha is thus nothing but different form of tobacco use through mouth. Gutkha belongs to genus 'chewing tobacco' as also 'tobacco preparations'. Thus, Gutkha and pan masala containing tobacco will be covered not only by expression, namely, 'tobacco preparations' but also by specific denomination, namely, 'chewing tobacco' in Item No. 2 of Eleventh Schedule. In this view of matter, submission of learned senior counsel that Gutkha is not tobacco preparation because it is not specifically covered by any of items denominated in Item No. 2 of Eleventh Schedule does not help assessee even if words 'such as' in Item No. 2 were treated as words of limitation. 40. ld. counsel has contended that 'Gutkha' is not one of items enumerated in Item No. 2 of Eleventh Schedule. He submits that Zarda Yukta Pan Masala was being manufactured by Kothari Products Ltd., since 1970 and, therefore, Parliament was well aware of existence of use of Gutkha. T h e learned Departmental Representative, on other hand, contends that when Eleventh Schedule was inserted in 1977, use of Gutkha was not widely known and hence, this was reason why it could not be included in Item No. 2 in Eleventh Schedule. We have given serious thought to rival submissions made by both parties. Without prejudice to our finding earlier in this Order that Gutkha is form of chewing tobacco falling under expression 'chewing tobacco' in Item No. 2, we shall now proceed to examine as to whether mere absence of word 'Gutkha' in Item No 2 would take it away from sweep of Item No. 2 of Eleventh Schedule. Eleventh Schedule was inserted in Income-tax Act by Finance (No. 2) Act, 1977 with effect from 1-4-1978. It is fact that, use of Gutkha and pan masala with tobacco was not widely known at that point of time notwithstanding its production in smaller quantities by M/s. Kothari Products since 1970 as stated by learned senior counsel for assessee. ld. counsel has also referred to Thirteenth Schedule inserted by Finance Act 2003 with effect from 1-4-2004 wherein Gutkha has been specifically included in phrase 'Tobacco and Tobacco products (including cigarettes, cigars, Gutkha etc.,)'. It is seen that said Sr. No. 1 forms part of Part 'A' of Thirteenth Schedule, which is applicable for State of Sikkim. aforesaid Schedule was inserted by Finance Act, 2003 by which time use of Gutkha had become widely prevalent and it is for this reason that Gutkha has been specifically included in Thirteenth Schedule. This fact, itself suggests that Gutkha was not widely used in 1977 when Eleventh Schedule was inserted in Income-tax Act and, therefore, pan masala containing tobacco or Gutkha could not be included in Item No. 2. It does not however alter fact that Legislature was well aware, when Eleventh Schedule was inserted in Income-tax Act, about various forms of tobacco use and therefore, included all forms of tobacco use prevalent at that time, namely, smoking tobacco and smokeless tobacco specifically including 'chewing tobacco' in Item No. 2 in Eleventh Schedule. Widespread use of Gutkha is recent phenomenon. It nevertheless falls within ambit of 'tobacco preparations' as also within ambit of 'chewing tobacco' in Item No. 2 of Eleventh Schedule. Let us pause here for while. If manufacturer of 'cigarette' retaining properties of 'tobacco' had named it as 'Rose', would cigarettes so manufactured have ceased to be 'tobacco preparations' and become 'rose' not falling under Item No. 2 of Eleventh Schedule? answer is emphatic 'No'. It is for this reason that Courts all over world have time and again declined to be bound by labels and have always tried to look through substance in order to determine true nature of preparation or product. Besides, latest developments, which go well with phraseology of statute, cannot be ignored. It is fairly well settled that language of statute can be extended to new things which were not known and could not have been contemplated when Act was passed, when Act deals with genus and thing winch afterwards comes into existence was species of that genus. As stated at page 102 in 'Maxwell on Interpretation of Statutes' (Twelfth Edition by P. St. Langan), provision of Magna Carta, which exempted Lords from liability of having their carts taken for carriage, was held to extend to degrees of nobility not known when it was made, such as Dukes, Marquises and Viscounts. As stated earlier in this Order, Gutkha was not much in use at time when Schedule 11 was inserted in Income-tax Act. Gutkha is one of species of 'chewing tobacco' as also 'tobacco preparations'. In this view of matter, mere fact that Gutkha or pan masala containing tobacco is specifically not included in Eleventh Schedule inserted in 1977 with effect from 1-4-1978 will not make any difference and thus will not advance cause of assessee. view that we have taken in matter is supported by principle laid down in SIL Import, USA v. Exim Aides Silk Exporters AIR 1999 SC 1609, 1612-13, in which Hon'ble Supreme Court, in context of service of notice under section 138 of Negotiable Instruments Act, has held as under:- "Francis Bennion in 'Statutory Interpretation' has stressed need to interpret statute by giving allowance for any relevant changes that have occurred, since Act's passing, in law, social conditions, technology, meaning of words and other matters. For need to update legislations, Courts have duty to use interpretative process to fullest extent permissible by enactment. following passage at page 167 of above book has been quoted with approval by three Judge Bench of this Court in State v. S.J. Choudhary 1996 AIR SC 1128 at page 1131:- 'It is presumed that Parliament intends Court to apply to ongoing Act construction that continuously updates its wording to allow for changes since Act was initially framed (an updating construction). While it remains law, it is to be treated as always speaking. This means that in its application on any date, language of Act, though necessarily embedded in its own time, is nevertheless to be construed in accordance with need to treat it as current law'." 41. As already stated above, Gutkha and pan masala containing tobacco fall under expression 'chewing tobacco'. mere fact that they have not been individually specified in Item No. 2 of Eleventh Schedule does not mean by itself that they would fall outside scope of 'chewing tobacco' or 'tobacco preparations' only because of fact that they came to be widely used after Eleventh Schedule was inserted in Income-tax Act. 42. ld. counsel has kly relied upon provisions of Acts dealing with Central Excise and Sales Tax in support of his submission that pan masala, Gutkha, tobacco preparations have been treated by them differently. In our view, reference to aforesaid Acts is neither necessary nor warranted. It has been held in CIT v. Venkateshwara Hatcheries (P.) Ltd. [1999] 237 ITR 174 (SC) that 'the meaning assigned to particular word in particular statute cannot be imported to word, used in different statute'. Besides, Acts relating to Central Excise and Sales Tax deal with structure of duty and taxes in respect of various goods, articles and things classified by them. Classification for purpose of duty or taxes is hardly relevant for deciding scope of 'tobacco preparations' and 'chewing tobacco' used in Item No. 2 of Eleventh Schedule. 43. ld. counsel for assessee has kly relied upon decision of Division Bench of this Tribunal at Allahabad in Kothari Products Ltd.'s case (supra) and submitted that reasoning given by Tribunal in said case stood endorsed or approved by High Court and Supreme Court as superior courts have declined to entertain Reference Applications filed by revenue against said order of Tribunal. In our view, submissions made by ld. counsel for assessee do not carry much weight. It is true that Allahabad Bench of this Tribunal has taken one view but it is equally true that Pune Bench of this Tribunal has taken contrary view. Special Bench is constituted under section 255 to resolve such controversies including controversies on facts. mere fact that Hon'ble Allahabad High Court has declined to admit Reference Application against order of Allahabad Bench of this Tribunal in Kothari Products Ltd.'s case (supra) on ground that n o referable question of law arose means in legal terms that Hon'ble High Court has considered and held that issue whether Gutkha falls 'tobacco preparations' in Item No. 2 of Eleventh Schedule is question of fact and not of law. Hon'ble Supreme Court has declined to interfere with said order of Hon'ble High Court. Their decisions are affirmation that issue whether Gutkha falls under expression 'tobacco preparations' is question of fact and not question of law. In view of divergence of views between Division Benches of this Tribunal at Allahabad and Pune on this important question of fact, assessee sought and Hon'ble President of this Tribunal accepted that issue required to be referred to this Special Bench for adjudication. But issue whether Gutkha falls under expression 'tobacco preparations' remains question of fact as held by Hon'ble Allahabad High Court and Hon'ble Supreme Court in Kothari Products Ltd.'s case (supra) involving identical issue. It is for this reason that we have examined in detail facts surrounding issue and it is after such examination that we record finding of fact that Gutkha manufactured by assessee falls under expressions 'tobacco preparations' as well as 'chewing tobacco' within meaning of Item No. 2 of Eleventh Schedule. 44. Both parties have argued as to how provisions of section 80- I/80-IA and more particularly words used in Item No. 2 of Eleventh Schedule should be construed. ld. Departmental Representative submitted that they should be construed strictly while ld. senior counsel contended that incentive provisions should be construed liberally but exclusion or restrictive clauses and words should be construed strictly. In our view, task of interpretation hardly arises in present case. meaning of words 'tobacco preparations' and 'chewing tobacco' are fairly well known and clear. We have simply endorsed what is popularly believed to be true nature of Gutkha and pan masala containing tobacco as 'tobacco preparations' and 'chewing tobacco'. It may be relevant to mention that name of assessee-company itself was 'Dhariwal Tobacco Products Private Ltd.'. This shows as to how assessee itself treated its own products. We are conscious that assessee has since changed its name. But that does not alter perception of assessee itself about nature of products manufactured by it. 45. In view of foregoing, we hold as under:- "(i) expressions 'tobacco' and 'tobacco preparations' in Item No. 2 of Eleventh Schedule in Income-tax Act do not mean one and same thing. While expression 'tobacco' means processed narcotic leaves and hence 'tobacco' would mean product in which said leaves are substantially used in terms of quantity, value or base, expression 'tobacco preparations' m e n s preparation using tobacco if pharmacology of nicotine and physiological and psychological effects of nicotine are dominant and properties of nicotine, substance derived from tobacco, do not undergo any metamorphosis as result of addition of other ingredients in preparation. Tested on this principle, 'Gutkha' falls under expression 'tobacco preparations'. We, therefore, hold accordingly. (ii) test suggested by learned senior counsel requiring that substantial quantity of 'tobacco', either in terms of weight/quantity or value or base in preparation, must be present in product/preparation is relevant for judging whether product falls under expression 'tobacco' or not. test whether ingredient is dominant one in preparation is relevant for judging whether preparation falls under expression 'tobacco preparations' or not. dominant nature of ingredient in preparation must be judged in light of fact whether properties of that ingredient are retained and dominate preparation without undergoing any metamorphosis as result of addition of other ingredients in preparation. Tested on this principle also, Gutkha falls under expression 'tobacco preparations' for reasons explained earlier in this Order. (iii) words 'such as' used in Item No. 2 are merely illustrative and not exhaustive. They are indicative of what are mentioned thereafter. In contextual setting of Item No. 2 of Eleventh Schedule, words 'such as' are mere indication of various forms of tobacco use, namely, (i) smoking tobacco; and (ii) smokeless tobacco comprising of various forms of 'chewing tobacco' and 'snuff'. Without prejudice to aforesaid, words 'chewing tobacco' in Item No. 2 would also cover 'Gutkha' within its sweep and ordinary meaning. (iv) fact that Gutkha is not one of items individually enumerated in Item No. 2 of Eleventh Schedule does not mean that it does not fall under expressions 'tobacco preparations' and 'chewing tobacco' used therein. Courts have time and again declined to be bound by labels and have always tried to look through it and reach to substance. In substance, Gutkha is well covered by aforesaid expressions and hence, absence of its individual denomination in Item No. 2 of Eleventh Schedule is not material. This is more so as Gutkha was not widely used at time when Eleventh Schedule was inserted in Income-tax Act. (v) In popular sense also, Gutkha is used for its tobacco content taste of which is further enhanced by other ingredients present in Gutkha. Those who are not interested in tobacco would never use Gutkha for reason that other variants of pan masala without tobacco are available in market and, therefore, persons interested in using other ingredients of Gutkha would use them for sake of taste of other ingredients and not Gutkha. Besides, name of assessee, namely Dhariwal Tobacco Products Private Ltd., indicates that assessee treats itself as manufacturer of tobacco products and its Gutkha as tobacco product. Subsequent alteration in name would not dilute nature of products produced by assessee. Thus, it is evident that all concerned understand Gutkha as falling under 'tobacco preparations' as well as under 'chewing tobacco' in Item No. 2. In Royal Hatcheries (P.) Ltd.'s case (supra), Hon'ble Supreme Court has held that particular words used by Legislature in denomination of articles are to be understood according to common commercial understanding of terms used. Tested on this principle also, 'Gutkha' is perceived, according to common commercial understanding, as 'tobacco preparation' and 'chewing tobacco'. (vi) Classification of goods under legislations dealing with levy of taxes and duties on them is relevant only for purpose of those legislations. They are not relevant for purpose of interpreting expressions 'tobacco', 'tobacco preparations' and 'chewing tobacco'. meaning of aforesaid expressions used in Item No. 2 has to be seen in their contextual setting in Item No. 2 of Eleventh Schedule. (v) judgment of Hon'ble Allahabad High Court declining to admit Reference Application filed by Department against order of Division Bench of this Tribunal at Allahabad in Kothari Products Ltd.'s case (supra) and Hon'ble Supreme Court declining to interfere with aforesaid judgment of High Court is authority for proposition that issue whether Gutkha falls under expression 'tobacco preparations' within meaning of Item No. 2 of Eleventh Schedule is pure question of fact. Our finding on facts is that Gutkha manufactured by assessee falls under expressions 'tobacco preparations' as well as 'chewing tobacco' within meaning of Item No. 2 of Eleventh Schedule." 46. Keeping all facts of case and applicable law in view, we hold that Gutkha and pan masala containing tobacco are 'tobacco preparation' and 'chewing tobacco' within meaning of Item No. 2 of Eleventh Schedule t o Income-tax Act. Since assessee is manufacturing or producing Gutkha, which is one of items covered by Eleventh Schedule, assessee is not entitled to claim deduction under section 80-I/80-IA. In this view of matter, order of CIT(A) is vacated. appeal filed by Department is allowed. ITA No. 865/PN/2002: assessment year 1998-99: Department's appeal 47. Grounds taken by Department read as under:- "(1) On facts and in circumstances of case and in law, ld. CIT(A) has erred in allowing deduction under sections 80-I and 80A of Income-tax Act, to assessee-company, without appreciating fact that Gutkha is tobacco preparation and will fall within Item-2 of Eleventh Schedule to Income-tax Act. (2) On facts and in circumstances of case and in law, ld. CIT(A) failed to appreciate fact that Gutkha takes colour of tobacco preparation inasmuch as 7 per cent tobacco mixed with Supari in Gutkha/pan masala has injurious effect to converting it into tobacco preparation." 48. issue raised by Department in aforesaid appeal is identical with one raised by it in its appeal for assessment year 1997-98 which we have already considered and decided in favour of Department. Following same, appeal filed by Department for assessment year 1998-99 is allowed. ITA Nos. 961 & 960/PN/2003: assessment years 1999-2000 & 2000-01: Department's appeal 49. Grounds taken by Department read as under:-"(1) On facts and in circumstances of case and in law, ld. CIT(A) has erred in allowing deduction under sections 80-I and 80A of Income-tax Act, to assessee-company, without appreciating fact that Gutkha is tobacco preparation and will fall within Item-2 of Eleventh Schedule to Income-tax Act. (2) On facts and in circumstances of case and in law, ld. CIT(A) failed to appreciate fact that Gutkha takes colour of tobacco preparation inasmuch as 7 per cent tobacco mixed with Supari in Gutkha/pan masala has injurious effect of converting it into tobacco preparation." 50. issue raised by Department in aforesaid appeal is identical with one raised by it in their appeal for assessment year 1997-98 which we have already considered and decided in favour of Department. Following same, appeals filed by Department for assessment years 1999-2000 and 2000-01 are allowed. ITA No. 1612/PN/2004: assessment year 2001-02: Assessee's appeal 51. assessee has taken following ground of appeal:- "(1) On facts and in circumstances of case and in law, ld. CIT(A) has erred legally and factually in holding that 'Since issue is already decided against appellant by Hon'ble ITAT, Pune Bench, Pune, ground of appeal raised by appellant has to be rejected as appellant would not be entitled to any allowance of deduction under section 80-IA of Income-tax Act, 1961 as held by Assessing Officer and upheld by Hon'ble ITAT, Pune Bench. CIT(A) has thus erred in not even applying his judgment to fact of case. deductions claimed under section 80-I and under section 80-IA as claimed by assessee-company should be allowed." 52. issue raised by assessee in aforesaid appeal is identical with one raised by Department in its appeal for assessment year 1997-98 which we have already considered and decided in favour of Department and against assessee. Following same, appeal filed by assessee for assessment year 2001-02 is dismissed. ITA No. 1182/PN/1997: assessment year 1994-95: Department's appeal ITA No. 169/PN/1998: assessment year 1995-96: Department's appeal 53. grounds raised by Department in both aforesaid appeals are identical and read as under:- "(1) On facts and in circumstances of case and in law, ld. CIT(A) has erred in allowing deduction under section 80-I of Income-tax Act without appreciating fact that Gutkha is tobacco preparation and will fall within Item 2 of Eleventh Schedule to Income-tax Act. (2) On facts and in circumstances of case and in law, ld. CIT(A) failed to appreciate fact that Gutkha takes colour of tobacco preparation inasmuch as 7 per cent tobacco mixed with supari in Gutkha/Pan masala has injurious affect of converting it into tobacco preparation." 54. aforesaid appeals filed by Department were earlier disposed off by Division Bench of this Tribunal at Pune by its Order dated 20-7-2004. said order was challenged before Hon'ble Bombay High Court. By its Order dated 24-7-2006, Hon'ble High Court has set aside aforesaid order of this Tribunal and restored appeals for fresh disposal together with other appeals bearing ITA Nos. 203/PN/1996; 864/PN/2002; 865/PN/2002; 960/PN/2003; and 961/PN/2003 to ensure uniformity in decision without expressing any opinion on merits of case. In respectful compliance with order of Hob'ble Bombay High Court, we have heard these appeals together with other appeals. aforesaid issues have already been considered by us in earlier paragraphs and decided against asscssee. Following aforesaid order, appeals filed by Department for both aforesaid assessment years are allowed. ITA No. 203/PN/1996: assessment year 1993-94: Assessee's appeal 55. Grounds taken by assessee read as under:- "(1) CIT(A) has erred legally and factually in concluding that order of Assessing Officer is erroneous in eyes of law and prejudicial to interest of revenue and has, therefore erred in directing Assessing Officer to withdraw deduction under section 80-I of Income-tax Act of Rs. 8,01,315 withdraw deduction under section 80-I of Income-tax Act of Rs. 8,01,315 already granted to assessee-company. order passed under section 263 by CIT, Pune may, therefore, be quashed. (2) CIT, Pune has erred legally and factually in holding that even though main ingredient of Gutkha is betel nuts, and only small percentage of tobacco is added in Gutkha, Gutkha is 'tobacco preparation', and has further erred in holding that it is item covered by List of Articles Item No. 2 of Schedule XI to Income-tax Act, 1961 and in directing Assessing Officer to withdraw deduction under section 80-I of Income-tax Act, 1961. He ought not to have withdrawn deduction under section 80-I of Income-tax Act, which was rightly allowed. (3) Without prejudice to above grounds of appeal, CIT has completely erred in not even considering fact than in Plain Pan Masala, even small percentage of tobacco is not added and has further erred in holding and directing Assessing Officer to withdraw total deduction under section 80-I of Income-tax Act, 1961. He ought to have allowed section 80-I deduction on other varieties of Pan masala. (4) CIT, Pune has erred in not following ratio of ITAT decision in case of Kothari Products Ltd. (37 ITD 285) when facts and circumstances of case squarely apply to appellant's case and when it is learnt that Reference Application in Kothari Products Ltd. case is rejected and ITAT decision has become final. He ought to have followed ratio of ITAT decision in case of Kothari Products Ltd." 56. aforesaid appeal has been filed by assessee against order passed by ld. CIT(A) under section 263 of Income-tax Act, 1961 on 4-1- 1996 on ground that assessment order passed by Assessing Officer was erroneous in eyes of law and prejudicial to interest of revenue. After having held so, ld. Commissioner further directed Assessing Officer to withdraw deduction amounting to Rs. 8,01,315 allowed by Assessing Officer to assessee under section 80-I of Income-tax Act. 57. Facts of case, in brief, are that assessment under section 143(3) was completed by Assessing Officer on 30-12-1994 assessing total income of assessee at Rs. 18,69,740 after allowing deduction amounting to Rs. 8,01,315 under section 80-I to assessee. Bare perusal of assessment order shows that there is no discussion of any kind in assessment order regarding aforesaid claim made by assessee. ld. Commissioner called for records, examined them and issued show-cause notice dated 5-12-1995 calling upon assessee to explain as to why he should not take suitable action under section 263 of Income-tax Act and issue appropriate directions to Assessing Officer in matter. After considering explanation given by assessee, ld. Commissioner passed order under appeal. Relevant portion of his order has already been extracted and reproduced earlier in this order. 58. Aggrieved by aforesaid order passed by ld. Commissioner, assessee is now in appeal before this Tribunal. ld. Sr. counsel took us through entire order passed by ld. Commissioner and submitted that it was no where mentioned by Commissioner in his order as to how assessment order passed by Assessing Officer was erroneous and prejudicial to interest of revenue. According to him, it was not case of ld. Commissioner that Assessing Officer had not examined matter while passing order. He submitted that Assessing Officer took possible view in conformity with decision of Allahabad Bench of this Tribunal in Kothari Products Ltd.'s case (supra) which was binding on him at that time in absence of any contrary view and, therefore, Assessing Officer could not be said to have committed any error in allowing claim of assessee under section 80-I. According to him, Assessing Officer was bound to allow claim in terms of decision of Tribunal in aforesaid case: Union of India v. Kamlakshi Financc Corpn. Ltd. 1991 (55) ELT 433 (SC). ld. counsel has placed reliance on following decisions:- 1. CIT v. Jagadhri Electric Supply & Industrial Co. [1983] 140 ITR 490 (Punj. & Har.); 2. CIT v. Chandrika Educational Trust [1994] 207 ITR 108 (Ker.); 3. CIT v. Max India Ltd. [2004] 268 ITR 128 (Punj. & Har.). 59. Per contra, ld. Departmental Representative supported order passed by ld. Commissioner under section 263. He submitted that order passed by Assessing Officer was cryptic and without application of judicial mind. According to him, it was passed without any examination of relevant issue either in terms of facts or in terms of law. He contended that decision given by Allahabad Bench of this Tribunal was distinguishable and not binding on Assessing Officer. He further submitted that each assessment year was separate unit of assessment and, therefore, issue in each assessment year needed to be decided on its own facts and in accordance with prevailing law. 60. We have considered rival submissions. We have perused assessment order. Para 2 of assessment order reads as under:- "2. assessee derives income from manufacturing activities of various kinds of pan masala. It has undertaken activities of trading also. assessee runs business at different centers i.e., Indore, Bombay and Pune. consolidated account is kept at head office at Pune. Books of account kept are cash book, ledger, petty cash books, sales and purchases register, debit note, credit note register and production register. books of account are closed and adjusted. Copies of trading account, P & L A/c. balance sheet and relevant extracts are filed. books are audited and necessary reports in Form Nos. 3CA and 3CD are filed. assessee has filed necessary compliances as called for from time to time. 3. During this year, total sales are made to tune of Rs. 6,09,94,887 against which GP worked out at Rs. 1,77,18,636 which gives 29 per cent. During last year, sales took place at Rs. 2,38,38,790 and GP was shown at Rs. 28,10,253 which gives 11.79 per cent. sales and purchases are entirely billed and verifiable. assessee has kept quantity details for each kind of varieties manufactured. expenses claimed are supported by bills and all payments are made by cheques. expenses claimed under head 'Advertisement' for Rs. 42,34,314 has been fully scrutinized. assessee has kept separate register and bills in this connection. extract of account has been brought on record. All payments are effected through cheques/banks. other expenses claimed are verifiable." 61. It is quite evident on bare perusal of assessment order that Assessing Officer has misdirected himself in assuming that assessee derived its income from manufacturing activities of various kinds of pan masala. He lost sight of fact that assessee was also manufacturer of Gutkha, which contained tobacco. Serial No. 10 of ITNS-65 (i.e., form of assessment order) requires Assessing Officer to indicate nature of business of assessee. In said column, Assessing Officer has indicated nature of asscssee's business as 'Manufacturing of various kinds of pan masala'. Thus, t h e Assessing Officer proceeded to complete assessment and allow deduction under section 80-I on assumption that assessee was deriving its income from manufacturing of various kinds of pan masala. fact that assessee was manufacturer of Gutkha seems to have escaped his attention. It is on this assumption that he allowed deduction at rate of 30 per cent of profits derived from manufacturing activities of various kinds of pan masala. Thus, Assessing Officer has completely lost sight of fact that assessee is manufacturer of Gutkha also. He has granted deduction under section 80-I of Income-tax Act without taking note of most crucial aspect of case, i.e., that assessee is manufacturing Gutkha also and thereby allowed deduction at rate of 30 per cent on whole of profit assuming it to be profit derived from manufacturing activities of pan masala only. assumptions made by Assessing Officer regarding nature of business of assessee and profits arising from them are completely incorrect and therefore, erroneous and prejudicial to interests of revenue. They also reflect his total non-application of mind to relevant aspects of case. It is case where Assessing Officer has mechanically accepted what assessee wanted him to accept without any application of mind or enquiry. It is because of such non-consideration of relevant issues on part of Assessing Officer that deduction claimed by assessee under section 80-I stood automatically allowed without any scrutiny and on erroneous presumption that profit on which deduction was being claimed was from manufacturing of various kinds of pan masala. assessment order placed before us is clearly erroneous and prejudicial to interest of revenue, as it has been passed without proper examination or enquiry or verification or objective consideration of relevant issues. Assessing Officer has completely omitted relevant issue, namely, whether gutkha manufactured by assessee falls under 'tobacco preparation' and 'chewing tobacco' so as to deprive assessee from claiming deduction under section 80-I. It is not case where Assessing Officer has taken possible view as he could have taken possible view only if he had examined relevant issues. It is thus case of total non-application of mind on part of Assessing Officer while passing assessment order. 62. We are well aware that section 263 cannot be invoked to correct each n d every type of error or mistake committed by Assessing Officer. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, Hon'ble Supreme Court has held as under:- "There can be no doubt that provision cannot be invoked to correct each and every type of mistake or error committed by Assessing Officer, it is only when order is erroneous that section will be attracted. incorrect assumption of facts or incorrect application of law will satisfy requirement of order being erroneous. In same category fall orders passed without applying principles of natural justice or without application of mind." 63. Turning to facts of present case, it is seen that Assessing Officer has passed highly cryptic order without any conscious consideration of issue as to admissibility of claim made by assessee under section 80-I of Income-tax Act in light of conditions prescribed in statute. Perusal of assessment order does not show any conscious or judicial application of mind by Assessing Officer in matter. In our view, assessment order revised by learned Commissioner suffers from (i) incorrect assumption of facts by Assessing Officer with regard to nature of business and consequently granting deduction under section 80-I on basis of such incorrect assumptions; (ii) non-application of mind to vital aspects of such incorrect assumptions; (ii) non-application of mind to vital aspects of case; and (iii) being stereotyped order in which Assessing Officer has merely accepted what assessee wanted him to accept without any application of mind. aforesaid observations made in Malabar Industrial Co. Ltd.'s case (supra) squarely apply to facts of case. Respectfully following them, we hold on facts of case that assessment order passed by Assessing Officer has rightly been held by learned Commissioner to be erroneous and prejudicial to interest of revenue. 64. In taking aforesaid view, we are also supported by decision in Arvee International v. Addl. CIT [2007] 290 ITR (AT) 8 (Mum.) in which aforesaid principles laid down in Malabar Industrial Co. Ltd.'s case (supra) have been reiterated. We are in agreement with principles laid down in that decision. 65. Next issue that arises for consideration is whether finding recorded by learned Commissioner that Gutkha is 'tobacco preparation' is correct. We have taken view and held in this Order that Gutkha manufactured by assessee falls under expression 'tobacco preparation' and also under expression 'chewing tobacco' within meaning of Item No. 2 of Eleventh Schedule in Income-tax Act. We are, therefore, in agreement with view taken by learned Commissioner in this behalf in his Order under section 263. 66. In view of foregoing, appeal filed by assessee is dismissed. *** DHARIWAL INDUSTRIES LTD. v. ASSISTANT COMMISSIONER OF INCOME TAX (INVESTIGATION)