TMI Blog1987 (1) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... n the definition of plant as defined in section 43 of the Act. He accordingly proceeded to disallow the claim, In the course of the hearing of the First appeal, the learned counsel for the assessee made detailed submissions and a perusal of the order of the Commissioner (Appeals) further shows that written arguments were also filed. In the course of the hearing before the Commissioner (Appeals) the assessee sought to support his claim in respect of investment allowance and in doing so not only brought on record its manufacturing process but also sought to support its contention by referring to various judgments not only of various High Courts but the Supreme Court as well. The narration of facts, the arguments of the assessee, and the reference to various decisions runs to nearly 4 typed pages. The decision of the Commissioner (Appeals), however, is contained in one short paragraph which runs as under : 3. I have considered the submission very carefully but I am unable to agree with the views of the learned counsel for the simple reason that no investment allowance is admissible as per the provisions of the law on account of electric installations installed during the year u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ';. (iv) In other words, electricity is itself an item of raw material or stores acting as an agent to convert the basic raw material into a finished product. (v) Unlike the other industries, where electricity is merely used as a power to run the machines, which could be done by alternative means also, in this industry electrical energy after duly converting the same as D.C. from A.C. supply is a media for manufacturing process itself. (vi) In order to use electricity for aforesaid purpose, the appellant company set up a complex electrical equipment and installations the cost of which included cost for specially fabricated cells, air-circulations, capacitors, electric motors, air circuit breakers, aluminium armoured cables, starters, copper conductors, PVC tubings and meters, etc. This composite structure of electrical equipments is the main tool to make available the requisite process of interaction of the energy with raw materials. 5. It was further contended that in the case of the assessee- company the process of manufacture involved interaction of the raw material with electrical energy generated through the electrical installations. It was also contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. (1985) 151 ITR 75(Guj.) and CIT v. Taj Mahal Hotel (1971) 82 ITR 44(SC). The learned departmental representative, on the other hand, sought to support the orders of the ITO and the Commissioner (Appeals). 6. We have examined the rival contentions and have also perused the case law cited by the learned counsel. It is seen that the only basis on which the lower authorities have rejected the contention is that the definition of plant as contained in section 43 does not include electrical installations';. According to us this is a narrow approach adopted by the revenue specially when the term plant has now been made so exhaustive that it includes practically every type of equipment and item which can be envisaged and which can come into use for business purposes. For this purpose, we refer to the depreciation table marked Appendix I, Part P forming part of the Income-tax Rules, 1962. In item III the items categorised under the head Machinery and plant are so exhaustive that they include cycles, motor cars, cinematograph films and bulbs of studio lights. The list is so long that one can find every type of equipment classified as machinery and plant. 7. We would als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he three years. 12. The third common ground for all the three years pertains to the disallowance made by the ITO under the provisions of section 40A(5) of the Act. The ITO was of the opinion that the perquisites to the technical adviser exceeded the statutory limit as compared to the salary of the technical adviser. The ITO accordingly proceeded to make the disallowances in all the three years which came to ₹ 437, ₹ 855 and ₹ 2,809, respectively. The assessee s case before the ITO was that the definition of the term salary under section 17 of the Act was wide enough to include all types of payments to an employee. The assessee s contention was that royalty paid to the technical adviser was part of his salary. The rejection of the claim by the ITO was upheld by the Commissioner (Appeals). In the course of the hearing before us the learned counsel for the assessee contended that in case the royalty paid to the technical adviser for all the three years is treated as part of his salary then the perquisite provided to him in all the three years would be within the statutory limit envisaged by section 40A(5). The learned departmental representative, on the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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