TaxTMI 
TaxTMI 
1997 (3) TMI 142
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....peal, the learned counsel for the (sic) contended that the boiler as well as tube-wells were used for the generation of the steam which had been used in the distillery division as well as malted milkfood division. The learned CIT(A) observed that on the basis of steam consumption chart prepared by the assessee-company, it had been claimed that 72 per cent of steam had been consumed by the distillery division and the balance 28 per cent by the malted milkfood division. He further observed that the learned counsel conceded that the boiler and tubewells installed during the year had been used for the distillery division and that the assessee is not entitled to investment allowance in view of item No. 1 in the 11th Schedule The learned CIT(A) noted that the learned counsel, however, contended that the claim may be allowed to the extent that steam had been used for the malted milkfood division. The learned CIT(A) did not accept this contention. In the process, he observed that the machinery installed by the assessee during the year had been primarily intended for liquor division and has been used for the manufacture of liquor. He also observed that merely because a part of the steam had....
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....ich had been used in both the distillery division as also the malted milkfood division. He also submitted that malt is a common product for liquor as also for milkfood. He further submitted that it is not in dispute that the administrative division of the assessee is a separate unit. The contentions of the learned counsel were mainly to the following effect, namely: (a) That steam is an independent product and it is not necessary to examine as to how the steam is used in the manufacture of other products; (b) That the steam generated is being used in malted milkfood division and also the liquor division; and (c) That the real controversy is with reference to the interpretation of the word "mainly" as used in s. 32A(2A). 3.1 In support of the proposition that steam being generated is an independent product, the learned counsel relied heavily on the decision of the Hon'ble Gujarat High Court in the case of Ambalal Sarabhai Enterprises Ltd. vs. Union of India 1991 (54) ELT 30 (Guj) wherein it has been held that steam is to be considered as "goods" being known in the market as a source of power. It is further observed in the said decision that if gas is considered as goods,....
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....y it would have bought the same from outside parties, and that the activity was thus a different activity and did not come under Sch. 11. The learned CIT(A) observed that the AO had not examined the issue from this angle while refusing investment allowance. The learned CIT(A), therefore, restored the matter to the file of the AO for reconsideration. He also observed that in case the assessee was engaged in generating electricity, then on the basis of the decisions relied upon by the assessee, it was entitled to investment allowance on the unit engaged in generation of electricity. In view of the foregoing, the learned counsel urged that though a new argument has been taken but no investigation of new facts is involved and, therefore, the Tribunal which has a wider jurisdiction can decide the issue in the light of the aforesaid decision of the Hon'ble Gujarat High Court reported in 1991 (54) ELT 30. He also mentioned that no fresh additional evidence was required for deciding the issue. The learned counsel, however, further submitted that he has no objection if the matter is examined afresh by the AO in the light of the new arguments now taken before the Tribunal. 3.2 The learned....
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....production of any article or thing, not being an article or thing specified in the 11th Schedule, by reason only that such machinery or plant is also used for the purposes of production of any article or thing specified in the said list. He submitted that the main activity related to production of malt and malt products and, therefore, in terms of the said provisions of sub-s. (2A), the investment allowance should not be denied to the assessee. In this connection, he also referred to the para 30.3 of CBDT Circular reported in (1978) 111 ITR 20 (st), which clarifies the provisions of new s. (2A). It is mentioned therein that "As investment allowance is not intended to be denied in such cases, a new sub-s. (2A) has been inserted in s. 32A to provide that investment allowance will not be denied by reason only that machinery or plant installed or used mainly for the purposes of production of any article or thing not specified in the list in the 11th Schedule is also used for purposes of manufacture or production of any article or thing specified in the said list". In view of the foregoing, he submitted that the tax authorities have erred in comparing the figures of turnover of malt and....
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....tjit Industries Ltd., Hamira, had manufactured and cleared for captive use in the factory certain quantity of steam for the period from1st March, 1986, to12th March, 1986, valued at Rs. 66,91,104. He further referred to page 17 of the annual report in the case of the assessee and submitted that the figures of sales in the case of liquor are much more than in the case of malt and malt products. He further submitted that under the provisions of s. 32A(2A) only a minor concession is made if the main activity is with reference to items other than prohibited items. He also submitted that the assessee has not raised any ground with reference to the setting aside of the matter to the AO and that plea now taken by the assessee with reference to new arguments may not be taken into account for the purposes of restoring the matter to the file of the AO. 5. We have carefully considered the rival submissions on this issue and have also perused the orders of the tax authorities and other relevant record to which our attention was drawn during the course of hearing. We have also seen the case law relied upon by both the parties. It is observed that in view of the decision of the Hon'ble Gujara....
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....ount of cash assistance was not pressed by the learned counsel. The same is, therefore, rejected. 7. Ground No. 3 urged by the assessee relates to disallowance of Rs. 1,08,860 towards provision for doubtful debts and doubtful advances. 7.1 The learned counsel was fair enough to mention that this ground may have to be decided against the assessee as the arbitration award was made in November, 1982. The said ground is, therefore, rejected. 8. Ground No. 4 urged by the assessee relates to disallowance of Rs. 14,212 on account of entertainment expenses incurred in the glass division of the company. 8.1 The AO treated the expenses of Rs. 14,212 debited in the glass unit as entertainment expenses and disallowed the same under s. 37(2A). 8.2 On first appeal, the learned CIT(A) observed that the said amount included, inter alia, an amount of Rs. 8,695 as payment to various clubs. He also observed that the said amount of Rs. 8,695 included membership fee paid to clubs amounting to Rs. 768 and sustained the balance amount of Rs. 7,927 as entertainment expenditure. He further observed that an amount of Rs. 4,375 had been spent by the company for providing refreshment to the sha....
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....td. (1991) 97 CTR (Kar) 117 : (1992) 194 ITR 159 (Kar), wherein it was held that replacement of moulds was not in the nature of replacement of capital machinery, but in the nature or replacing a part of the machinery and that no new asset of enduring nature came into existence and no extra capacity was added in the process. It was further held that though the initial expenditure on moulds was capitalised, the subsequent expenditure incurred on replacement of damaged moulds is revenue expenditure. The learned counsel submitted that the said decision of the Hon'ble Karnataka High Court was not before the Tribunal and that in the light of the said decision, the Tribunal may now provide relief to the assessee. 9.4 The learned Departmental Representative relied heavily on the order of the tax authorities. 9.5 We have carefully considered the rival submissions on this issue and have also seen the decision of the Hon'ble Karnataka High Court reported in (1992) 194 ITR 159 (Kar) and we feel that the submissions made by the learned counsel are supported by the said decision and that the expenditure on replacement of moulds has to be allowed as revenue expenditure. The AO, is, therefor....
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.... Tribunal (Delhi Bench 'B') dt.28th Oct., 1994in ITA No. 3883/Del/1991 in the case of Dalmia Cement is also against the assessee on this issue. It may be mentioned that the line of argument adopted by the learned CIT(A) for declining relief to the assessee is almost the same as of the Tribunal in the said decision. Accordingly, we see no reason to interfere with the order of the learned CIT(A) in this behalf. This ground is, therefore, rejected. 11. Ground No. 7 urged by the assessee relates to charging of interest under s. 216 of the IT Act. 11.1 The AO observed in the assessment order that interest under s. 216 may be charged. 11.2 On first appeal the learned counsel for the assessee submitted that the assessee was entitled to certain refund from the Deptt. and, therefore, the AO was not justified in charging interest under s. 216. He further submitted that the AO had not recorded any finding that there was underestimate of advancetax payable by the assessee. In this connection, he relied on the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Nagri Mills Ltd. (1965) 57 ITR 304 (Guj). The learned CIT(A) considered the submissions and observed that the as....
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....of s. 216 by the AO. The learned CIT(A), however, also observed that the first instalment had been paid on the basis of statement of advancetax and, therefore, s. 216 could not be invoked for computing interest with regard to the said instalment and that the interest was to be computed on the basis of the estimate filed in September, 1981, whereby the assessee had reduced the amount payable in that instalment. The learned CIT(A) also observed in the process that there was lecunae in the provisions of s. 216 as they could not be invoked with reference to the statement of advancetax. Regarding decision of the Hon'ble Gujarat High Court in (1965) 57 ITR 304, the learned CIT(A) observed that he had arrived at the conclusion regarding the applicability of s. 216 after hearing the learned counsel and carefully considering the relevant facts and circumstances of the case and that any irregularity committed by the AO in not recording a clear finding had been removed at the appellate stage. He, therefore, directed the AO to recompute the interest under s. 216 in the light of the observations mentioned above. 11.3 The learned counsel for the assessee invited our attention to pages 28-40 o....
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....n the manner laid down in s. 209 on the current income (which shall be estimated by the assessee) exceeds the amount of advance tax so payable by him by more than 33/1/3 per cent of the latter amount, he shall on or before the date on which the last instalment of advance tax is payable by him send to the AO an estimate of the current income and the advance tax payable by him on current income calculated in the manner laid down in s. 209. He shall also pay the amount of advance tax as accords with his estimate on the date applicable in his case under s. 211 as has not expired, by instalments which may be revised according to s. (5). It is further observed that sub-s. (5) specifies that the assessee may send a revised estimate of the advance tax payable by him on or before any of the dates specified under s. 211 and adjust any excess or deficiency in respect of any instalment already paid in a subsequent instalment or in subsequent instalments. In view of the foregoing provisions and the aforesaid judgment of the Hon'ble Calcutta High Court we feel that the assessee has substantially complied with the provisions and set aside the order of the learned CIT(A) and delete the interest le....