TMI Blog1996 (4) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... the assets at the end of the hire-purchase period. During the previous year 1-7-1984 to 30-6-1985 relevant for the assessment year 1986-87, it is stated that there was only one hire purchase transaction and the rest were only leases. 3. The assessee claimed extra shift allowance of ₹ 11,87,166 in respect of the machinery given on lease basis and ₹ 66,572 in respect of the machinery given on hire purchase basis. It is claimed the parties who had taken these machineries on lease and on hire purchase basis had used them for extra shifts and the assessee also filed certificates from the concerned parties to this effect before the Assessing Officer. The Assessing Officer, however, rejected the claim on the ground that it is not possible to verify whether the plant and machinery in question were actually worked extra shift under rule 5 and item III(iv) of Appendix I to IT Rules. The CIT (Appeals) confirmed the disallowance on the ground that the claim for extra shift allowance has to be made by the concern in question and in the present case, it is the lessee who have worked extra shifts and not the assessee and therefore, the assessee is not entitled for extra shift allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extra shift allowance can be granted only to a concern which claims such allowance on account of working multiple shifts and establishes that it has worked multiple shifts. The contention of the learned counsel for the assessee is that the lessee concerns have given certificates of working multiple shifts and so it should be deemed that the assessee has also worked multiple shifts. In the alternative, it is pleaded that as the agreements with the lessees do not place any prohibition against the continuous user of the assets, it should be deemed that the assessee-concern has worked triple shifts. We find that the argument goes against the entire scheme of the IT Act. Under the scheme of the IT Act, the assessee is one whose income is being taxed and it is that assessee who is to prove its income and its claims on the basis of its records and its functioning. It cannot base its claim for any allowance or deduction like the extra shift allowance as in the present case on the basis of the records and functioning of altogether different parties like the lessees. The lessees are not before the Assessing Officer and they are not subject to scrutiny unless a proceeding is pending against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of the lessees. The only dispute centered around the issue is whether the assessee is entitled for the investment allowance on the basis of the user of the relevant plant and machinery in the manufacturing business of the lessees and the hire purchasers. We have already referred to the decision of the Apex Court and the Delhi High Court on which the learned D.R. relied for the proposition that the assessee is not entitled for the benefits like extra shift allowance and investment allowance. The learned counsel for the assessee has cited the following decisions in support of his claims : ACIT v. Nuchem Investments (P.) Ltd. [1993] 45 ITD 294 (Delhi), CIT v. Shaan Finance (P.) Ltd. [1993] 199 ITR 409 (Kar.), and CIT v. First Leasing Co. of India Ltd. [1995] 216 ITR 455/ 82 Taxman 536 (Mad.). 13. We find that neither the Hon ble Madras High Court nor the Hon ble Karnataka High Court had occasion to consider the decision of the Apex Court in the case of Mahabir Cold Storage (supra), whereas the Hon ble Delhi High Court in the case of Northern India Iron Steel Co. Ltd. (supra) based its decision on the judgment of the Apex Court. The Tribunal, Delhi Bench in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as follows :- Admittedly, the machinery in respect of which the rebate is claimed under section 33 of the Act, was purchased by the assessee and installed in the leased factory, after the grant of the lease. Learned counsel for the assessee contended that if the income derived by the assessee after the lease, is its business income, it follows that the said income was derived by using the machinery owned by the assessee. This was also the view taken by the Appellate Tribunal. We cannot agree. To attract section 33 of the Income-tax Act, 1961 at least two conditions should be satisfied - (i) the machinery or plant in question should be owned by the assessee; and (ii) it is wholly used for the purposes of the business carried on by him. In the instant case, the machinery was leased; the lessee had control over the use of the machinery; the assessee had no control over its user. The machinery, as a fact, was used by the lessee. By the mere lease of the machinery, even if it is to be assumed as a mode of using the machinery to derive the business income, it cannot be held that the machinery was wholly used for the business of the lessee. The machinery was also used f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fic reference to the assessee s business premises where the machinery is to be installed. So, it has found that the investment allowance can be granted to an assessee in the leasing business even though the machinery is installed in the premises of a lessee, who is carrying on a manufacturing process. The Tribunal, Delhi Bench also found that the language of section 32A is not pari materia with the language of section 33 and so, it has come to the conclusion that even if development rebate cannot be granted in the light of the decision of the Apex Court cited supra, an assessee in the leasing business can claim investment allowance under section 32A so long as the machinery is utilised for manufacture or production of an article or thing within the meaning of section 32A(2)(b). 18. We find that the claim for investment allowance by the assessee is supported by the above-mentioned decisions. However, except for the decision of the Delhi Bench of the Tribunal in the case of Nuchem Investments (P.) Ltd. (supra) there is no other decision which has taken into account the observations of the Apex Court in the context of the grant of development rebate and has decided the issue. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. We also find that all the decisions cited by the learned counsel for the assessee in support of his claim have analysed the language of sections 32A(2)(a), 32A(2)( b), 33(1)(b)( B)(ii) and 33(1)(b)(B )(iii) whereas it appears that the ratio of the Apex Court cited supra proceeded on the basis whether the plant and machinery in question was wholly used for the business of the assessee or not. The words wholly used figure both in sections 32A(1) and 33(1)(a). To this extent, both the sections are pari materia. Both development rebate and investment allowance are granted only when the assets are owned by the assessee and they are wholly used for the purposes of the business carried on by the assessee. The Apex Court found that in a leasing business, there is a separation of ownership and user in the business. This view is also affirmed by the Hon ble Delhi High Court as is evident from the observations of the two courts are reproduced by us hereinbefore. An analogous view is also taken by the Bombay High Court in the case cited supra. 21. We also find that for the grant of depreciation under section 32, the requirement is slightly diluted. In section 32(1), the word that figur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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