Tax Tribunal Rulings: Weighted Deduction, Investment Allowance, Refinery Units Qualify

In I.T.R. No. 113 of 1987, the issue of weighted deduction on bank interest on packing credit was decided in favor of the Revenue. In I.T.R. No. 111 of 1987, the Tribunal's decision on extra shift allowance on electrical installations/cooling tower was remanded for fresh adjudication. The Tribunal's decision on investment allowance on electrical installations in the head office was also remanded for further examination. However, the Tribunal's decision to allow deduction of the amount due on account of leave with wages was upheld. In I.T.R. No. 112 of 1987, the Tribunal held that refinery units qualify as industrial undertakings for investment allowance and deduction u/s 80J, in line with relevant case law.

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Issues Involved:
1. Weighted deduction on bank interest on packing credit.
2. Extra shift allowance on electric installations/cooling tower.
3. Investment allowance on electric installation in the head office.
4. Deduction of the amount due on account of leave with wages.
5. Classification of refinery units as industrial undertakings for investment allowance and deduction u/s 80J.

Summary:

I.T.R. No. 113 of 1987:
The issue of weighted deduction on bank interest on packing credit was previously decided in favor of the Revenue for the assessment year 1978-79. Consequently, the question for this year is also answered in favor of the Revenue and against the assessee.

I.T.R. No. 111 of 1987:

Question No. 1:
The Tribunal allowed the assessee's claim for extra shift allowance on electrical installations/cooling tower based on a similar allowance in the previous year. However, the Tribunal's finding was factually incorrect as the claim had been disallowed in the previous year and not challenged further. The Tribunal's justification that the electrical machinery had become part of the plant was not relevant. The matter is remanded back to the Tribunal for fresh adjudication, considering the specific exclusions in Appendix I of the Income-tax Rules, 1962.

Question No. 2:
The Tribunal allowed investment allowance on electrical installations in the head office, reasoning that the machinery installed in a manufacturing unit qualifies for deduction u/s 32A. However, the Tribunal did not examine the details to ensure they did not fall under the exceptions in section 32A. The matter is remanded back to the Tribunal for fresh adjudication with necessary details.

Question No. 3:
The Tribunal's decision to allow the assessee's claim for deduction of the amount due on account of leave with wages is upheld, as it is concluded against the Revenue by the decision in CIT v. Oswal Woollen Mills Ltd. [2002] 254 ITR 666.

I.T.R. No. 112 of 1987:
The Tribunal affirmed the findings that the refinery units at Ludhiana and Madras qualify as industrial undertakings for investment allowance and deduction u/s 80J. The conversion of crude oil into refined oil involves manufacturing, as it results in a new marketable commodity. The Tribunal's view is in conformity with the Supreme Court's decision in Union of India v. Delhi Cloth and General Mills Co. Ltd., AIR 1963 SC 791. The question is answered in favor of the assessee and against the Revenue.

The petitions are disposed of in the above terms, with each party bearing its own costs.

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