TMI Blog1996 (1) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... e as follows : The assessee is a partnership-firm deriving income from business of running a cold storage and ice factory. In the course of assessment proceedings, it claimed an investment allowance under section 32A of the Act on the plant and machineries installed in the cold storage plant. This was allowed by the Income-tax Officer. The assessee also claimed relief under section 80J of the Act in respect of the cold storage. The Income-tax Officer also allowed relief under section 80J of the Act. Since there was not enough profit during the years under consideration for allowing the relief under section 80J, the Income-tax Officer recorded a finding that the relief under section 80J admissible to the assessee during the years under consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e law. Now, coming to the question whether the assessee is entitled to investment allowance on the cold storage or not, the reasoning given by the Tribunal for permitting the investment allowance on the cold storage with reference to the definition given in the Factories Act is that since cold storage is a "factory" and is, therefore, a manufacturing unit, the assessee is entitled to the benefit of investment allowance. This reason on the face of it appears to be erroneous. The definition of "factory" given in the Factories Act is given in a different context and the same cannot be used for the purpose of finding out whether the unit is a manufacturing unit under the Income-tax Act. This was totally an erroneous approach on the part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to be given investment allowance under section 32A of the Act. Therefore, he has remitted the matter for investigation by the assessing authority and rightly so. It is true that when both the accounts are combined it is difficult to ascertain how much of the investment has been made on the ice plant so as to show the investment under section 32A of the Act distinctly. However, the Commissioner has already taken a view that ice plant is entitled to the benefit under section 32A of the Act being a manufacturing unit, therefore, he has left it open to the Assessing Officer to investigate into this specific aspect and allow the claim of the assessee keeping in view the above finding. This view of the Commissioner is also justified. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the Assessing Officer. Learned counsel for the Revenue has invited our attention to a decision of the Kerala High Court in CIT v. Travancore Rayons Ltd. [1987] 164 ITR 134 and submitted that where it is not possible to ascertain the facts from the joint accounts, then the benefit of section 80J may be denied to such units. It is observed in that case that no separate accounts are mai ntained and it becomes necessary to make an allocation of all the liabilities, apart from the liability directly related to the new unit. It is also observed that it is not possible to find out from the accounts, the profits the assessee has derived from the new establishment. In other words, the assessee itself has treated the new plant as forming part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of new entrepreneurs and it should be construed positively and, therefore, if it is possible to grant the benefit, the Tribunals and the courts should adopt a positive approach. It is,, therefore, open for the Income-tax Officer to ascertain whether segregation of accounts is possible and if it is possible the benefit of sections 80J of the Act should be given to the assessee subject to fulfilment of other conditions prescribed in that section. The Commissioner, therefore, observed that this exercise should be done by the Income-tax Officer and it is further observed that in case such segregation of accounts is not possible for allowing the relief, the relief allowed under section 80J of the Act should be withdrawn for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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