TMI Blog1991 (4) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled in the present years to the grant of depreciation allowance under section 32 in respect of the assets whose cost has been allowed to be deducted in full in the earlier years in terms of section 35(1)(iv)/section 35(2)(ia) of the Income-tax Act, 1961 ? 2. If the answer to the above question is in the affirmative, whether such depreciation allowance should be computed on the basis of the actual cost of the assets without applying Explanation 1 to section 43(1) of the Income-tax Act, 1961 ? 3. Whether, on the facts and in the circumstances of the case, it can be said that the assessee-company carried on the business of manufacture of sugar and tea machinery? 4. Whether, on the facts and in the circumstances of the case, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t does not bind itself regarding the quality, standard and performance of the machines. The assessee-company binds itself regarding the proper functioning of the machines and gives guarantee for its proper performance for the stipulated period. If the machine is found defective or unserviceable for any reason, it is the assessee-company which has to bear the consequences." The Tribunal, observing that, in the absence of a factory or manufacturing facilities of its own, the assessee-company utilises the manufacturing facilities of Turner Hoare on payment, held that this fact by itself did not make any difference and the assessee was engaged in the manufacturing activity, that is, of manufacturing sugar and tea machinery. Accordingly, the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, on the other hand, placed reliance on our High Court decision in the case of CIT v. Acrow India Ltd. [1991] 188 ITR 485, which was incidentally relied upon by Dr. Balasubramanian also, and the other decision of our High Court in the case of CIT v. Neo Pharma Pvt. Ltd. [1982] 137 ITR 879. It cannot perhaps be disputed on the basis of the decisions relied upon that the expression " engaged in manufacture " indicates that the assessee should be directly involved in the manufacturing process and it will not include cases where he gets the goods manufactured totally by an outside agency. Incidentally, the Madras High Court, in its decision in Addl. CIT v. Chillies Export House Ltd. [1978] 115 ITR 73 referred to the Allahabad High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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