TMI Blog2018 (6) TMI 1470X X X X Extracts X X X X X X X X Extracts X X X X ..... beral interpretation so as to include every article used in connection with manufacture or production not being stock-in-trade, whether employed directly or indirectly. On the mistaken notion that in order to qualify as plant a machinery had to be directly used in the manufacture of an article or thing, the tribunal has upheld the order of the authorities below refusing grant of investment allowance on weighing machines, computers and electrical appliances, etc. In any opinion they are eligible for this allowance. - decided in favour of assessee - ITR No. 8 of 2000 - - - Dated:- 18-6-2018 - Hon ble Mr. Justice I. P. Mukerji Hon ble Mrs. Justice Amrita Sinha For the Appellant : Mr. P. Pardiwalla, Sr. Adv Mr. Somak Basu For the Respondent : Ms. Smita Das De ORDER I. P. Mukerji, J. I have had the privilege to go through the draft judgment prepared by my sister Justice Amrita Sinha. I wholeheartedly agree with it. I would like to add a few observations of my own. This is a reference under Section 256(1) of the Income Tax Act, 1961. The Section is as follows: Section-256. Statement of case to the High Court.- (1) The assessee or the Commissioner may, wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29,05,913/-. On verification of the details the Assessing Officer found that the assessee had claimed Investment Allowance on weighing machines and other machinery which were not directly engaged in the production and so was the case with regard to computer. The CIT (Appeals) confirmed the assessment order after observing that no satisfactory explanation was given by the assessee as to why the claim should be accepted. At the time of hearing before us, it was submitted that the assessee was engaged in the manufacturing of packet tea, coffee, instant coffee, etc, and this was concluded by the Tribunal s Order as also by the jurisdictional High Court at Calcutta in assessment years 1981-82 and 1982-83. It is further submitted that even in assessment year 1983-84 when revision took place under Section 263 the matter was carried before the Tribunal and the point was decided in favour of the assessee. The learned Departmental Representative submitted that now the Calcutta High Court in 206 I.T.R 367 in the case of Apeejay Pvt. Ltd Vs. CIT (Cal) had decided the controversy against the assessee. Faced with this situation, the learned counsel for the assessee Dr. D. Pal only subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tea coffee amounts to manufacture and/or production and deciding the questions against the assessee. ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that blending of tea and/or coffee does not amount to manufacture or production of an article or thing and in that view in upholding the order of the lower authorities not granting investment allowance on weighing machines, computers and electrical appliances, etc.? iii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding the order of the lower authorities in not granting investment allowance on weighing machines, computers and electrical appliances, etc. also on the ground that these items of plants and machineries were not directly engaged in the production of an article or thing? They were referred to this Court by its Order dated 7th January, 2000. At the outset I would like to state that the tribunal had no jurisdiction to reopen the closed issue that blending of tea was equivalent to manufacture or production of an article, which was finally decided by it in the affirmative in favour of the assessee by its order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the words twenty per cent had been substituted:] Provided further that no deduction shall be allowed under this section in respect of- (a) any machinery or plant installed in any office premises or an residential accommodation, including any accommodation in the nature of a guest house; (b) any office appliances or road transport vehicles; (c) any ship, machinery or plant in respect of which the deduction by way of development rebate is allowable under section 33; and (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 head Profits and gains of business or profession of any one previous year. [Explanation.- For the purposes of this sub- section, actual cost means the actual cost of the ship, aircraft, machinery or plant to the assessee as reduced by that part of such cost which has been met out of the amount released to the assessee under sub- section (6) of section 32AB.] (2) The ship or aircraft or machinery or plant referred to in, sub-section (1) shall be the following, namely:- (a) a new ship or new ai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the tube- well and weighing machines do not fall within the meaning of plant. Following the above ratio a division bench of the Bombay High Court presided over by Mr. Justice V. C. Daga observed that calculators were part of the plant and machinery. So were water coolers, as held in Associated Bearing Co. Ltd Vs. Commissioner of Income-Tax reported in (2006) 286 ITR 341 (Bom). The above ratio was followed by a Division Bench of the Punjab and Haryana High Court in Commissioner of Income-Tax Vs. Oswal Woollen Mills Ltd. (No.1) reported in (2002) 257 ITR 737, and a Division Bench of the High Court of Karnataka in Commissioner of Income Tax Vs. Electronics Research Industries Pvt. Ltd. reported in 192 ITR page 20. In this case the internal telephone system of the assessee engaged in the manufacture of electric equipments was treated as plant. The wording of Section 32(A) (2) (b) (iii) is also very important. It refers to any new machinery or plant installed for the purpose of manufacture or production of any article or thing. The phrase for the purpose of has to be given some meaning. It does not always refer to an article or thing used directly in manufacture, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal was right in holding that blending of tea and/or coffee does not amount to manufacture or production of an article or thing and in that view in upholding the order of the lower authorities not granting investment allowance on weighing machines, computers and electrical appliances, etc. ? iii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding the order of the lower authorities in not granting investment allowance on weighing machines, computers and electrical appliances, etc. also on the ground that these items of plants and machineries were not directly engaged in the production of an article or things? (3) The assessee is a Company where public are substantially interested. It is a blender and packer of finished tea and coffee. It also manufactures and processes tin meat and marine products. The assessee has claimed for investment allowance under section 32 A of the Income Tax Act on weighing machines, electrical equipments, other machineries and computers. (4) The Inspecting Assistant Commissioner, Assessment, Range II, Calcutta vide order dated 18-03-1987, rejected the claim of the Assessee company for investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollen Mills Ltd. (No.1) [257 ITR 737] iii) Associated Bearing Company Ltd vs- Commissioner of Income Tax [ 286 ITR 341] iv) Tribeni Tissues Ltd. vs Commissioner of Income Tax [190 ITR 487] v) R.L. Rajgharia vs Income Tax Officer and Ors. [107 ITR 347] vi) Income Tax Officer, A Ward, District (A) and Ors. vs R.L. Rajghoria. [119 ITR 872] (9) In Commissioner of Income Tax vs. Electronic Research Industries Pvt. Ltd. (supra) the question that arose for consideration was whether the internal telephone system should be considered as plant of the assessee factory and investment allowance u/s 32 A Income tax Act 1961 to be granted. While deciding the issue, the court referred to the decision passed by the Supreme Court of India in Taj Mahal Hotel s case, 82 ITR 44 wherein the Supreme Court had observed that the word plant will have to be liberally understood. The court held that the definition of plant , being an inclusive one, will include articles like books etc. It further held that the concept of plant would be the same whether it fell under section 32 A or 33(1) and that the principles applicable under section 33 would be equally applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13) In R.L. Rajghariavs. Income Tax Officer and ors. (supra) it was held that the Tribunal was not entitled and not competent to enlarge the controversy and decide the issue not before it. (14) An appeal carried against the aforesaid order had been decided in the case of Income Tax Officer and ors. vs. R.L. Rajgharia, (supra)wherein the Hon ble division bench held that the jurisdiction of the Tribunal is only confined to the subject matter of the appeal. (15) Per contra the Ld. Advocate appearing on behalf of the Revenue contended that the Tribunal had rightly upheld the order of the lower authorities by not granting investment allowance on weighing machines, electrical appliances and other machineries and not allowing deduction on computers on the ground that these items were not directly engaged in production and/or manufacture of any article or thing. It was further submitted that the Tribunal was justified in raising the issue whether the blending of tea/coffee amounted to manufacture or production. (16) After hearing the submissions made on behalf of both the parties and upon perusal of the materials on record, we find that the matter has not been rightly adjudicated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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