1997 (1) TMI 531

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.... 3,10,290. This claim was denied by the Assessing Officer with the following observations : "The assessee has claimed investment allowance of Rs. 3,10,290 and shown in the Appropriation A/c. According to section 32A of the Income-tax Act, investment allowance can be allowed only to those plants and machineries installed for the purpose of business of manufacture or production of any article or thing other than those included in the 11th Schedule. As the assessee-company was, during the previous year relevant to assessment year 1986-87, engaged in the business of processing of grey cloth and not in manufacture or production of any article or thing, the assessee is not entitled to any investment allowance for non-fulfilment of specific con....

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....the textiles and, as such, it could not be said that by merely carrying out the process of dyeing or printing on grey cloth manufactured or produced by others, the assessee manufactured or produced textiles to comply with the requirements of section 32(1)(vi) of the Act read with the said item No. 21. Thus the assessee's claim for initial depreciation was disallowed. On the strength of this decision, it was contended that the assessee is not entitled to the investment allowance and the CIT (Appeals) has erred in accepting the assessee's claim. The learned departmental representative has also cited the decision of the Madras High Court in CIT v. S.S.M. Finishing Centre [1985] 155 ITR 791 . In that case, the assessee purchased cloth manufactu....

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....'s case (supra), the decision of the High Court is per incurium and is not binding and need not be followed. 6. We have considered the submissions advanced before us as also the decisions cited at the Bar. The decision in the case of Fashion Prints Ltd. (supra) rendered by the jurisdictional High Court clearly lays down that the process of dyeing or printing carried out by the assessee on the grey cloth manufactured or produced by others, would not amount to a manufacturing activity carried on by the assessee. This decision squarely covers the point involved in the instant appeal. The contention of the assessee that this decision is contrary to the decision of the Supreme Court in the case of Empire Industries Ltd. (supra) cannot be acce....

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.... that it does not purport to be an order, direction or instruction of the Central Board of Direct Taxes as such. It is a letter from the Chairman of the Board addressed to some person, whose name is not known to us. It only speaks that the Commissioner of Income-tax, Surat, has been informed of the opinion of the Ministry of Law and ASG on the point referred to in the letter for necessary action accordingly. In the circumstances, it cannot be treated as an instruction, order or direction within the meaning of section 119 of the Income-tax Act. We are fortified in this view from the decision of the Allahabad High Court in Janta Metal Works v. ITO [1990] 186 ITR 458. 9. There is yet another reason for coming to the same conclusion. While c....