TMI Blog1996 (8) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... are concerned, the order of the Tribunal dated 26th April, 1994 stands. Ground No. 4 : 2. We have heard the counsel for the assessee as well as the ld. D.R., but before considering their submissions, we would like to narrate brief facts of the case which are as under : 2.1 The assessee s business is that of dyeing, bleaching and printing of unbleached grey cloth. During the assessment year under consideration, the assessee added new plant and machinery for the purpose of carrying on the activities of dyeing, bleaching and printing, etc., worth ₹ 18,14,877 which was inclusive of capitalised amount of interest of ₹ 4,36,250. The assessee claimed investment allowance of ₹ 4,53,718 on addition to Plant and Machinery but the Assessing Officer rejected the assessee s claim as per his observation at para 10 of the assessment order re-produced as under : 10. The assessee has claimed investment allowance of ₹ 4,53,718 on addition to Plant Machinery of ₹ 18,14,877. It is seen that the amount of ₹ 18,14,877 including capitalised interest of ₹ 4,36,250 paid to IDBI which is not to be considered for allowing investment allowance. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mainly of cotton. But, in the instant case, the feed-in material was cloth and the resultant product, after the operations on the cloth were done by the assessee was again cloth, probably neater and more presentable cloth. Consequently, the assessee could not be said to be engaged in the business of manufacture or production of textiles. 2.3 In the light of the facts and circumstances of the case narrated in the order of the lower authorities as well as available on record, the counsel for the assessee submitted that for admissibility of investment allowance, the assessee is to prove that the machinery or Plant (i) is owned by the assessee, (ii) is wholly used for the purpose of business carried on by the assessee, (iii) the Machinery or Plant specified in sub-section (2) of section 32A should be new machine installed in the industrial undertaking for the purpose of manufacture or production of article or thing, and (iv) the assessee's case be a case of small scale industrial undertaking. Analysing the requirement for admissibility of investment allowance, the counsel for the assessee submitted that as far as requirement Nos. (i), (ii) and (iv) are concerned, there is no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aft or machinery or plant specified in sub-section (2), which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance equal to twenty-five per cent of the actual cost of the ship, aircraft, machinery or plant to the assessee : [Provided that in respect of a ship or an aircraft or machinery or plant specified in sub-section (8B), this sub-section shall have effect as if for the words twenty-five per cent , the words twenty per cent had been substituted :] Provided (further) that no deduction shall be allowed under this section in respect of - (d)any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion in this appeal, is whether machinery or plant installed by the assessee, having been installed for carrying on processes of dyeing, printing, bleaching and sentering can be said to have been installed and used for the purpose of business of manufacture or production or any article or thing not being an article or thing specified in the list of Eleventh Schedule. In other words, the issue revolves around the proposition as to whether as a result of activities in the nature of dyeing, bleaching, printing, etc., carried on by the assessee on the grey cloth, some article or thing is manufactured or produced and if it is so, then the assessee is definitely entitled to investment allowance. 5. To resolve this controversy, we would like to consider as to what for the words manufacture , production , article and thing stand for and for that purpose it is necessary to consider their meanings : (i) Manufacture : The word manufacture as understood in common parlances as well as meant in various dictionaries conveys a system of manufacturing something made from raw-material by hand or by machinery. According to Black's Law Dictionary (Sixth Edition) manufacture means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction or produce , article and thing used under the Act in section 32A and section 80HH of the Act came up for interpretation before the Supreme Court in CIT v. N.C. Budharaja Co. (1993) 204 ITR 412/70 Taxman 312and the Supreme Court held that : The word production has a wider connotation than the word manufacture . While every manufacture can be characterised as production, every production need not amount to manufacture . . . . The word production or produce when used in juxtaposition with the word manufacture takes in bringing into existence new goods by a process which may or may not amount to manufacture. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods. The next word to be considered is the article occurring in the said clause. What does it mean ? The word ( article ) is not defined in the Act or the Rules. It must, therefore, be understood in its normal connotation. The sense in which it is understood in the commercial world. It is equally well to keep in mind the context, since the word takes its colour from the context . . . . The expression manufacture and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry has been used for manufacturing and production of article and thing. Consequently the assessee is entitled to the investment allowance. Our view is further supported by the decision of Hon ble Supreme Court in the case of Empire Industries Ltd. (supra), decision of Rajasthan High Court in the case of CIT v. Trinity Hospital (1996) 87 Taxman 127and Tribunal's decisions relied upon by the assessee (supra). 7. Before parting with the matter, we would like to state with due regards respect to the Hon ble Mumbai High Court that the decision in the case of Fashion Prints Ltd. (supra) on which the ld. D.R. has placed strong reliance is not applicable to the facts and circumstances of this case, because, in that case, the issue for the consideration of the Hon ble High Court was as to whether activities of the assessee, i.e., dyeing, printing and processing grey cloth produced by others amounted to manufacture or production of textile as specified, under item No. 21 of the List in the Ninth Schedule of I.T. Act, 1961 so as to entitle the assessee to additional depreciation under section 32(1)(vi) of the I.T. Act, 1961 as is clear from the question referred for the opinion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the list of articles or things mentioned in the Ninth Schedule to the Act, in the present case, to be entitled to initial depreciation allowance, the assessee was required to manufacture or produce textiles including those dyed, printed or otherwise processed made wholly or mainly of cotton including cotton yarn, hosiery and rope. Admittedly, it is not the case of the assessee that the assessee manufactured or produced grey cloth on which the process of dyeing or printing was carried out by the assessee. Textiles in the form of grey cloth were already manufactured or produced by some person other than the assessee before the process of dyeing or printing was carried out thereon by the assessee. By the process of dyeing or printing carried out by the assessee on the grey cloth already manufactured or produced by others, the grey cloth did not cease to be a textile. By the process of dyeing or printing carried out by the assessee on grey cloth manufactured or produced by others, such grey cloth did undergo some chemical changes but it retained the characteristics and/or property of the textiles and, as such, it cannot be said that by merely carrying out the process of dyeing or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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