TMI Blog1990 (10) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... r reconstruction of a business already in existence or by transfer of machinery or plant previously used for any purposes within the meaning of section 80J of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the manufacturing of catechu is a chemical process and that the Income-tax Officer was justified in allowing depreciation at 10% as against the normal rate of 7% ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in quashing the order of the Commissioner of Income-tax passed under section 263 of the Income-tax Act, 1961 ?" The assessee is a registered firm. The assessment year concerned is 1969-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c saw machines, evaporating pans, chipping machines, wooden vats, electric meters, electrical installations, etc., etc. All these items were installed in the assessment year 1966-67 in the new premises at Kotla Road." On the above factual findings, the Tribunal held that the assessee's undertaking is not formed by reconstruction of a business already in existence nor is it formed by the transfer of machinery or plant previously used for any purpose within the meaning of subsection (4) of section 80J. The Tribunal also found that the process employed by the assessee is a manufacturing process. So far as the second question is concerned, the Tribunal referred to the meaning of the expressions "catechine", "catechu" and "chemical" from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1576. 4. Versed in chemistry 1615. 5. as sb. (esp. in pl) A substance obtained or used in chemical. operations 1747. 3. C. Affinity, attraction, etc. : see affinity, attraction, etc. The C. composition of plants Sir H. Davy of the atmosphere Huxley Chemically. adv.' This would indicate that the manufacturing of catechu is a chemical process and the Income-tax Officer rightly allowed depreciation on account of this." Thereupon, the Revenue applied for and obtained the present reference. So far as question No. 1 is concerned, we must state straightaway that there was material on record before the Tribunal justifying its finding. We have already referred to the finding of the Tribunal. A fresh piece of land was purchased, a new factory w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -------------------------------------------------------------------------------------------------------------------------------------------- Rate. Number on the basis of which the percentage is to be calculated " Class of asset on the written down value except Remarks where otherwise indicated in the case of ocean-going steamers. ------------------------------------------------------------------------------------------------------------------------------------------------ 1 2 3 ------------------------------------------------------------------------------------------------------------------------------------------------ (3) Chemical works: (a) Machinery and plant coming into contact with corrosive chemicals ... 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess do they convert the works into a chemical works. The Tribunal has further referred to the dictionary meaning of catechin and catechu. We have perused the Shorter Oxford Dictionary where the above expressions are defined. It appears that while "catechin" which substance is obtained from catechu after removal of tannin is described as a chemical, catechu is not described as a chemical. No authority is also cited for holding that catechu is a chemical. We make it clear that we should not be understood as expressing any opinion on the question whether catechu is a chemical or not. We are merely pointing the defect in the approach or the reasoning of the Tribunal. Since the very approach adopted by the Tribunal is wrong, we are inclined to r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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