TMI Blog1992 (8) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... permanent foundation at the mill premises on 10-3-1986 under the supervision of M/s. Batliboi Co. Ltd. Nor is it in dispute that the comber engine was erected before 31-3-1986. The dispute is only on the limited issue whether these two machineries were put to use before 31-3-1986 so as to be eligible for depreciation and investment allowance. The learned Dy. CIT (Asst.) was of the view that the generator set was neither installed nor commissioned before 31-3-1986 on the basis of the enquiries conducted by her. Sri P.V. Wilson in his statement before the Inspector dated 26-11-1987 had stated with respect to the generator engine No. 25143985 pre-installation inspection of the engine was done on 8-5-1986 and on 12-5-1986 certain defects were pointed out to the customer and on 14-5-1986 New Engine Performance Inspection (NEPI in short) was prepared and the engine was commissioned after the completion of the installation [page 8(1) of the assessee's paper book]. The assessing authority had also noted that the appellant's General Manager in his letter dated 15-5-1987 to M/s. Palghat Diesel Sales and Service, Palghat (page 12 of the departmental paper book) had categorically stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d action under section 271(1)(c) of the Income-tax Act, 1961, for concealment of particulars of income. 3. As for LR High Speed Comber, the learned Dy. CIT (Asst.) found that the same was purchased in the month of March 1986. The erection work was carried out by M/s. Super Sales Agencies Ltd., Coimbatore, whose technicians have to submit weekly reports from the premises of the assessee to their headquarters and the assessing authority impounded those weekly reports and examined them. She noted that one P. Muthuswamy and R. Suresh were deputed for this job and started the work on 25-3-1986 and she gave the extract of the report as follows : 25-3-1986 - Reported Madras Spinners - Case opening checking. 26-3-1986 - Levelling complete - comb shaft. 27-3-1986 - Detaching roll head stock complete. 29-3-1986 - Table guide piece waste box. 31-3-1986 - Back side complete. Preparation of for trial run. 1-4-1986 - Waiting for motor go to LMW. 2-4-1986 - Trial run. 3-4-1986 - Waste checking. 4-4-1986 - Relieving. From the above she concluded that the trial run was carried out only on 2-4-1986, and the comber was worked on 3-4-1986 with good cotton. She rejected the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per photostat copy of the report filed by the technicians 31-3-1986 Back side complete - 31-3-1986 Back side complete - preparation of for preparation trial run -trial run. Brush motor shaft cut. Sri C. K. Nair vehemently contended that the report filed by the technicians is in favour of the assessee in that it spoke of the trial run on 31-3-1986. In the trial run the brush motor shaft was cut and, therefore, it had to be repaired and the second trial run was done on 2-4-1986. Therefore in the relevant previous year itself the first trial run was made and thus the machinery was put to use. We uphold the contention of the learned counsel for the assessee. There are no such words as 'of' and 'for' in between the words 'operation' and 'trial run' in the photostat copy of the progress report. What is mentioned there is 'preparation', 'trial run'. Therefore, it is reasonable to infer that on 31-3-1986 the machine was prepared and the trial run was taken out. In the trial run the brush motor shaft was cut. Therefore, the motor was to be sent to M/s. Lakshmi Machine Works Ltd., for repairs on 1-4-1986 and the further trial run was done on 2-4-1986. In the assessment order, the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 87. Sri Pushparaj had admitted that the approval from the Chief Electrical Inspector of Kerala Government was received only in the month of April 1986 (though the exact date was not immediately known) and the A Grade Contractor viz., M/s. Imperial Engineering Co., Ernakulam, did the electrification work of the impugned generator set in the month of June 1986. The following questions and answers are relevant :-- " Q. 3 : When the electrification itself has been done in the month of June 1986 can you say that the Diesel Gen. set was commissioned only in the month of June 1986 ? A. : This was done by our own men based on temporary connection on 14-3-1986. Q. 4 : I now show you (a) letter from your General Manager dated 15-5-1987, (b) letter from Batliboi Co. dated 22-5-1987, (c) the NEPI Report from M/s. Palghat Diesel Sales Services dated 19-6-1986, (d) Pre-Installation Report dated 8-5-1986 from the same concern, (e) Report dated 10-3-1986 from P.D.S. Services. All these documents go to prove that the engine was first commissioned beyond the accounting period ended 31-3-1986 and not prior to 1-4-1986. What do you say about this ? A. : We commissioned the Gen. set unaut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... user from the General Manager-in-charge of the factory. Further the log book was not suo motu produced by the assessee. Therefore, there is force in the contention of the learned counsel for the appellant that the General Manager was not previously informed of the Assessing Officer's visit to the factory and therefore it cannot be said that the General Manager had occasion to fabricate entries in the log book in anticipation of her visit. Therefore, a legal presumption can be drawn that the log books found with the appellant along with other books recovered and impounded in the course of survey or inspection by the governmental authorities were genuine and the entries therein represented the true state of affairs. The Electrical Engineer has emphatically stated that he is conversant with the work connected with the generator. The assessee is not the user of the generator for the first time. There was an old generator in use since 1983. It had its own panel boards for supply of electricity and other electrical installations and the appellant was generating power with the aid of these electrical installations. It is on record that there was break down of the generator of 1983 origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Note : Production as per Central Excise RG 1 record. From the comparative statement thus furnished, it is seen that in the second half of March the duration of power shedding and low voltage put together amounted to 31 hrs. 45 minutes as compared to 33 hrs. 25 minutes in the earlier period from 1-3-1986 to 15-3-1986. But the production was more in the latter half of March 1986 as compared to the first half of the month. Therefore, there is force in the contention of the learned counsel for the appellant that the first generator having failed, if the controversial generator was not brought to use, the production in the period from 16-3-1986 to 31-3-1986 should have naturally fallen in the context of low voltage and power shedding. The fact that it has not fallen, but has increased would lend support to the version of the appellant that in the place of the first generator, the controversial generator must have been used albeit unauthorisedly. Even if computation is made from 18-3-1986 the date on which the turbocharger of the old generator totally failed and due allowance is made for the average production between 16-3-1986 to 18-3-1986, we are satisfied that but for the working o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction has not fallen during the sickness of the old generator, it is reasonable to presume that the appellant has worked the impugned generator as a stop gap arrangement. Of course, the generator cannot be commissioned officially unless the clearance is obtained from the Inspector of Electricity attached to the Government of Kerala. Official clearance can be obtained only when there is pucca erection of the generator with permanent facilities and safety requirements for its operation. The warranty given by the suppliers will also commence only when pucca erection is made. This is evident from the warranty clauses issued by Kirloskar Cummins Limited (page 3 of the appellant's paper book) which are as follows :-- " This Warranty does not apply to-- (i) any engine that shall have been Any improper installation or application, subject to overspeeding, misuse, or any substitution of part not negligence or accident. manufactured or approved by us shall void all warranties, express or implied. (ii) any engine that shall have been We make no warranty as to normal repaired or altered outside of our wear and tear, nor do we agree to factory or by anyone who is not be liable for loss o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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