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TMI Blog1984 (4) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... installed new furnace, new transformer and some new motors. On these facts, it was urged that new industrial undertaking has come into existence and the assessee is entitled for section 80J relief. The ITO disallowed the claim. He held that no new industrial undertaking at all has come into existence to enable the assessee to claim section 80J relief. It is only old assets which are employed as capital. A new undertaking must be a new and identifiable undertaking separate and distinct from the existing business and this test has not been satisfied in the assessee's case. All that has been done is that only a new transformer and furnace have been put to use and in this process production capacity has increased. It is the same old steel wire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions. In our view, no new industrial undertaking has come into existence. All that the assessee has done is that a new transformer, furnace and motor were installed on account of which the production capacity has increased. It is in the same old building they have been installed. It is the same old steel wire and rods which has been manufactured. No separate and distinct identifiable industrial undertaking has come into existence. It is only reconstruction of the existing business. Thus, no new industrial undertaking has come into existence. In Textile Machinery Corpn. Ltd. v. CIT [1977] 107 ITR 195 the Supreme Court held that the test should be whether it is all the same new and identifiable undertaking separate and distinct from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew industrial undertaking on account of which the assessee claims exemption under section 15C. No hard and fast rule can be laid down. Trade and industry do not run in earmarked channels and particularly so in view of manifold scientific and technological developments. There is great scope for expansion of trade and industry. The fact that an assessee by establishment of a new industrial undertaking expands his existing business, which he certainly does, would not, on that score deprive him of the benefit under section 15C. Every new creation in business is some kind of expansion and advancement. The true test is not whether the new industrial undertaking connotes expansion of the existing business of the assessee but whether it is all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the old business. Now, in the instant case, there is no formation of any industrial undertaking out of the existing business since that can take place only when the assets of the old business are transferred substantially to the new undertaking. There is no such transfer of assets in the two cases with which we are concerned. " It is clear from the above decision that the test to be applied is whether it is a new and identifiable undertaking separate and distinct from the existing business. Applying the above test to the facts of the instant case, we hold that a new and identifiable undertaking separate and distinct from the existing business has not come into existence. All that the assessee has done is to instal a new transformer, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness of the assessee and, hence, the assessee is entitled to depreciation and development rebate on the cost of digging well. This decision was again followed by the same Court in CIT v. Warner Hindustan Ltd. [1979] 117 ITR 68 (AP). In CIT v. Caltex Oil Refining (India) Ltd. [1979] 116 ITR 404 the Bombay High Court held that the fencing round the refinery processing units constituted 'plant' so as to be entitled to depreciation and development rebate. In Indian Aluminium Co. Ltd. v. CIT [1983] 140 ITR 114 the Calcutta High Court held that the water storage tank would be entitled for depreciation as plant and machinery. In the above decisions it is held that the sanitary and pipeline fittings, wire fencing, water storage tank and well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered the rival submissions. In CIT v. West India Steel Co. Ltd. [1977] 108 ITR 601 (Ker.) (FB) item 1 of the Fifth Schedule came up for consideration. It was held therein that M.S. rods and steel sections are basically 'iron and steel (metal)' within the meaning of item II of the Fifth Schedule and the assessee was entitled to the higher rate of development rebate. This decision was followed by the Madras High Court in Addl. CIT v. Trichy, Steel Rolling Mills Ltd. [1979] 118 ITR 39. Similar view was taken by the Allahabad High Court in Singh Engg. Works (P.) Ltd. v. CIT [1979] 119 ITR 891 and also by the Punjab High Court in CIT v. Krishna Copper & Steel Rolling Mills [1979] 119 ITR 256. A contrary view has been taken by the Calcutt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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