TMI Blog1993 (12) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ht in rejecting the assessee's claim of development rebate ? " The relevant facts, as found by the Tribunal, are as follows : A partnership firm known as Empire Estates was the owner of a piece of land on which it was in the process of constructing a building-cum-cinema theatre along with a preview theatre and a restaurant. In respect of this project, Messrs. Empire Estates had placed an order for machinery and other equipment prior to December 1, 1973. The machinery so ordered consisted, inter alia, of a projector of the value of Rs. 8,75,000, an air-conditioning plant and also chairs worth Rs. 4,28,400. Messrs. Empire Estates entered into an agreement of sale dated January 9, 1974, with Messrs. S. P. Builders under which it transferred, inter alia, the cinema theatre along with the pending contract of purchase of plant and machinery to Messrs. S. P. Builders. Messrs. S. P. Builders were also a partnership firm. The partners of Messrs. S. P. Builders, however, are distinct from the partners of Messrs. Empire Estates. The plant and machinery in question has been installed after May 31, 1974. The assessee-company was incorporated on September 27, 1974. Under the memorandum and art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this section shall not be allowed in respect, inter alia, of machinery or plant installed after a date which may be specified in the notification, which may not be earlier than three years from the date of such notification. At the relevant time, in exercise of this power under section 33(5), the Central Government had issued a notification dated May 28, 1971, under which it was notified that the deduction in respect of development rebate shall not be allowed, inter alia, in respect of machinery or plant installed after May 31, 1974. Therefore, as a result of this Notification, the machinery in question in the present case, which had been installed after May 31, 1974, would not have been entitled to any development rebate. Under the Finance Act, 1974, however, the Government of India provided, by reason of section 16(c), for continuance of development rebate in certain cases. This appears to have been done in view of the representations made by entrepreneurs in several cases that they were not able to obtain timely delivery of machinery or plant for reasons beyond their control. (The reasons for incorporation of section 16(c) in the Finance Act, 1974, are set out in Circular No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts as found by the Tribunal, it is clear that the plant and machinery have been installed after May 31, 1974, but before June 1, 1975. There is no dispute on this factual aspect. It is, however, the contention of the Revenue that the machinery, in the present case, has not been installed by the assessee-company. The machinery was installed by Messrs. S. P. Builders prior to the incorporation of the assessee-company. It has been transferred thereafter by Messrs. S. P. Builders to the assessee-company. Mr. Jetley, learned advocate for the Revenue, has, therefore, submitted that the assessee-company not having installed the machinery in question, cannot claim the benefit of section 16(c) of the Finance Act, 1974. Mrs. Patel, learned counsel for the assessee-company, has, however, submitted that section 16(c) should be liberally construed to include as the installing party not merely the assessee seeking development rebate, but also any assessee. So that even when the machinery has been installed by somebody else, if the assessee has become the owner of that machinery in the previous year in question and he is claiming development rebate for the first time on that machinery, suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this connection. Although the memorandum and articles of association of the assessee set out that one of the objects for which the assessee-company was incorporated was to obtain by transfer from Messrs. S. P. Builders, the said theatre as well as its plant and machinery, the memorandum is signed by two persons only, one of whom was a partner of Messrs. S. P. Builders. Messrs. S. P. Builders were a partnership firm consisting of four partners. There is no material to show that this firm of four partners acted as promoters of the assessee-company. Halsbury's Laws of England, Fourth edition, Volume 7, in paragraph 34, discusses the meaning of the term " promoter ". It is stated therein that the term " promoter " is not defined in the English Companies Act, 1948, except in connection with the liability for statements in prospectus or offer for sale. The same is the position in our Companies Act where section 62 provides for similar liability of a promoter in respect of statements made in the prospectus. It is further stated in Halsbury, Vol. 7, in paragraph 34, that the term " promoter " is not a term of law, but of business. It is a short and convenient way of designating those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Income-tax(Appeals). It is signed by only one partner--the same partner who is a signatory to the memorandum and articles of association of the assessee-company. The Tribunal has not accepted this evidence as sufficient for establishing that Messrs. S. P. Builders were the promoters of the assessee-company. We do not see why this finding of fact should not be binding on us. The terms of the various agreements are before us. In none of the agreements is there any reference to Messrs. S. P. Builders acting as promoters for the assessee-company. We cannot go behind the facts as found by the Tribunal. And in view of the finding of the Tribunal that Messrs. S. P. Builders were not the promoters of the assessee-company, it is not possible for us to equate the machinery which was purchased and installed by Messrs. S. P. Builders as machinery installed by the assessee-company, which company was incorporated after the machinery was installed and which took over the plant and machinery from Messrs. S. P. Builders under an agreement of December 6, 1974. This bring us to the second condition which the assessee must fulfil under section 16(c) of the Finance Act, 1974, namely, that befor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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