TMI Blog1995 (11) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... right in law in holding that the payment of $ 13,500 regarding process know-how as revenue expenditure ? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in upholding the order of the Commissioner of Income-tax (Appeals) who allowed the investment allowance on the plant and machinery installed in the hatchery division of the assessee-company ? and 4. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the assessee is an industrial company even though the activities of the company do not amount to manufacture ? " The respondent-assessee runs the business of hatchery and manufacture of poultry-related commodities including vaccine. It has a hatchery at Saroornagar at Hyderabad and another hatchery at Pune. Inter alia, it imports one day old chicks from foreign countries and rears them up in its hatcheries treating them as grand-parent birds. Eggs of such grand-parent birds are also reared in hatcheries as parent birds and those parent birds are reared to produce commercial chicks. These facts, we get from the assessment order. The dispute in the present case relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. " It is not disputed that the Supreme Court as well as the various High Courts in the country have taken a consistent view that where there is no creation of a new capital asset but only an improvement or maintenance of the asset is involved, the expenditure is a permissible deduction. In fact, the observations in the above decision of the Supreme Court makes this position fairly clear. We have, therefore, no hesitation in answering the first question supra against the Revenue and in favour of the assessee. We do not also find any substance in the second question raised by the Revenue. During the assessment year, the respondent had started biovaccine unit and in connection with that, it had entered into a collaboration agreement with a foreign company. According to this agreement, the assessee had to pay $ 50,000 to the foreign company. Out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture or production of an article or a thing has to be understood in a normal sense and in the manner in which it is generally understood in commercial circles. The dictionary meanings cannot always be taken as safe guides and the words occurring in the said sub-clause should be construed in the context and setting in which they are used. The Supreme Court referred to the legislative history and held that the words "article or thing" have reference to movable objects but not immovable property. It was further pointed out that in ordinary parlance, no one would say that a dam or bridge was produced. The reasoning does not, in our view, hold good in the case of production of chicks. That the chicks have been produced by the use of plant and machinery cannot be seriously doubted and the argument of learned standing counsel mainly concentrated itself on the connotation to be given to the words "article or thing". It is contended that chicks are neither articles nor goods. Having regard to the judgment of the Supreme Court, it is pointed out that wider construction cannot be placed on the said words, as has been done by the Division Bench in Sri Venkateswara Hatcheries' case [1988] 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (AP), the question that arose was whether the expression "goods" in clause (12) of article 366 comprehends chicks. It was answered in the affirmative. Lakshmana Rao J., as he then was, speaking for the Division Bench, observed that "chicks being the tangible movable things produced by the petitioners for the purpose of sale, the law authorising levy of tax on the sale or purchase of such goods is quite legal and valid." The learned judges referred to the decision in K. Srinivasulu v. Deputy Commercial Tax Officer [1975] 35 STC 262 (AP), wherein Lakshmaiah J., took the view that the expression "all kinds of movable property" is comprehensive enough to include within its ambit both animate as well as inanimate kinds of movable properties. He came to the conclusion that livestock is movable property and, therefore, comes within the expression of "goods" as defined in the A. P. General Sales Tax Act as well as article 366(12) of the Constitution. Thus, the usage in commercial or normal sense as well as the judicial decisions reinforce our view that there is no difficulty in bringing chicks within the sweep and ambit of the dual expression "articles or things" occurring in sub-clause (i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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