TaxTMI 
TaxTMI 
2013 (10) TMI 1080
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....sing the income under section 143(3) of the Income-tax Act, 1961 (the Act) allowed the deduction under section 32A of the Act. The Commissioner of Income-tax, Visakhapatnam (CIT) suo motu undertook revision under section 263 of the Act. By order dated March 23, 1988, the assessment was set aside holding that the assessee is not entitled to any investment allowance for the year 1983-84. Being aggrieved, the assessee preferred an appeal before the Income-tax Appellate Tribunal, Hyderabad (the Appellate Tribunal). Following the assessee's cases for the assessment years 1981-82 and 1982-83 being I. T. Nos. 924 and 925 of 1987, the Appellate Tribunal set aside the order of Commissioner of Income-tax. The Revenue filed an application under secti....
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.... designed machinery and, therefore, there is process of manufacturing undertaken by the assessee. He would rely on A. Hajee Abdul Shukoor and Co. v. State of Madras, AIR 1964 SC 1729 ; [1964] 15 STC 719 (SC), Idandas v. Anant Ramchandra Phadke, AIR 1982 SC 127 and Aspinwall and Co. Ltd. v. CIT [2001] 251 ITR 323 (SC) ; [2001] 7 SCC 525. Section 32A of the Act permits an assessee a deduction equal to 25 per cent. to the actual cost of the machinery by way of investment allowance. This is, however, subject to certain conditions as contemplated in sub-section (2) thereof. For ready reference, we quote hereunder section 32A(1) and (2) of the Act. "32A. Investment allowance.-(1) In r....
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....chedule : (proviso and the Explanation are omitted herein as not relevant)." A plain reading of sub-section (2) of section 32A of the Act would show that the investment allowance on new machinery and plant would be available only when such machinery and plant, inter alia, are used for the purpose of business of manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule. The machinery purchased or plant installed, has to be used for the purpose of business of manufacture or production of any article. Then only the assessee would be eligible to claim investment allowance as a deduction. Having regard to the word "or" used in section 32A(2)(ii) and (iii), if an assessee ins....
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....levy of 2 per cent. tax is discriminatory. The plea was that the relevant provisions create discrimination between the case of a local merchant selling locally processed hides and skins ; and the case where the dealer, who is the first seller in the State who purchases and sells only dressed hides and skins outside the State. In his case, he had not purchased such hides and skins in the tanned condition, and, therefore, not liable to be assessed under section 2(1). The plea was rejected by the Supreme Court. It was held that : "............. raw hides and skins and dressed hides and skins constitute different commodities of merchandise and they could, therefore, be treated as dif....
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....at happened was that wheat was transformed, by the manufacturing process which involved both labour and machinery, into flour. The commodity before manufacture was wheat which could not be consumed by any human being but would be used only for cattles or medicine or other similar purposes. The end product would be flour which was fit for human consumption and is used by all persons and its complexion has been completely changed. The name of the commodity after the product came into existence is atta and not gehun (wheat). Thus, in the instant case, all the three tests have been fully satisfied. This being the position the irresistible inference and the inescapable conclusion would be that the present lease was one for manufacturing purposes....