TaxTMI 
TaxTMI 
2010 (7) TMI 208
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....y being used for the purpose of the business carried on by him in any industrial undertaking and for the purpose of business of construction and manufacture or production of any article or thing not being an article or thing specified in the list in the Eleventh Schedule. Item 1 of the Eleventh Schedule reads as under : "Beer, wine and other alcoholic spirits" 4. The assessee is dealing both in industrial spirits as well as items like Indian Made Foreign Liquor (IMFL), country liquor, etc. As per the details furnished by the assessee, the Assessing Officer confirmed that the sale of denatured spirit during the year amounted to Rs. 68,76,322 only whereas in respect of rectified spirit and country spirit, the sale amounted to Rs.61,29,630 and Rs. 65,92,665 respectively. The Assessing Officer was of the view that since the assessee was manufacturing rectified spirit and country spirit, i.e., IMFL, its case was fully covered by item 1 of the Eleventh Schedule and on that basis he disallowed the claim of the asses-see for investment allowance. The Commissioner of Income-tax (Appeals) sustained the order of the Assessing Officer. However, the Income-tax Appellate Tribunal, in furth....
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....uring of industrial spirit would come with the ambit of the aforesaid item. 7. The learned counsel for the assessee has argued that the words "other alcoholic spirits" have to take colour from the preceding expression used in the item, namely, "beer and wine". He submitted that "beer and wine" are meant for human consumption and, therefore, applying the maxim noscitur a sociis, the expression "other alcoholic spirits" is to be interpreted. When interpretation is given effect in this manner, it is only those alcoholic spirits which are meant for the human consumption that would qualify to be included in entry 1 of the Eleventh Schedule. To buttress this submission, learned counsel relied upon the judgment of the Punjab and Haryana High Court in the case of CIT v. Sangrur Vanaspati Mills Ltd. [2009] 311 ITR 345. 8. We are in agreement with the aforesaid submissions of learned counsel for the respondent. The assessee is manufacturing spirits as well as IMFL spirits. The Legislature, while adding entry 1 to the Eleventh Schedule never contemplated inclusion of industrial spirits. It is well known that industrial spirits are mainly used for manufacturing purposes and are not meant....
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.... purposes which are specified in sub-section (2) thereof. However, at the same time, it also stipulates that where plant and machinery is used for the purposes mentioned in Schedule 11, such investment allowance would not be admissible. In the present case, the plant and machinery is used for manufacturing of IMFL which is one of the activities specified in item 1 of the Eleventh Schedule. At this juncture, one has to take note of sub-section (2A) of section 32A as it relaxes the bar contained in the Eleventh Schedule to some extent. It reads as under : "(2A). The deduction under sub-section (1) shall not be denied in respect of any machinery or plant installed and used mainly for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule, by reason only that such machinery or plant is also used for the purposes of business of construction, manufacture or production of any article or thing specified in the said list." 12. It is clear from the reading of the aforesaid provision that the deduction admissible under sub-section (1) of section 32A of the Act is not to be ....
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....t certain articles or things of low priority specified in the list in the new Eleventh Schedule inserted in the Income-tax Act by section 28 of the Finance (No. 2) Act, 1977. The list of articles or things contained in the new Eleventh Schedule is given in annexure II to this circular. The disqualification arising from the installation of machinery or plant for the purposes of business of manufacture or production of any article or thing specified in the list in the Eleventh Schedule will, however, not apply in respect of machinery or plant installed in small scale industrial undertakings, and such machinery or plant will be eligible for investment allowance even though it used for purposes of business of manufacture or production of any article or thing specified in the said list. 13.2 Under new sub-section (8A) inserted in section 32A, the Central Government has been empowered to delete, by notification in the Official Gazette, any article or thing from the list of articles or things specified in the new Eleventh Schedule, if it considers necessary or expedient so to do. 13.3. Sometimes, a machinery or plant installed and used mainly for the purposes of business of construc....