2005 (10) TMI 53

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....nvestment allowance in respect of plant and machinery installed and put to use in the year under consideration for the manufacture of various products like bread, biscuits and cakes?" The assessment year is 1988-89 and the relevant accounting period is year ended on May 31,1987. The assessee claimed investment allowance of Rs. 1,30,037. However, the Assessing Officer disallowed the same holding that running a bakery and preparation of food articles does not constitute manufacture or production. He also recorded that the statutory reserve had not been created by the assessee. The assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals), who vide order dated November 20,1989, confirmed the assessment order on t....

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....read with Circular No. 305, dated June 12, 1981 (see [1981] 131 ITR (St.) 72) as well as amendment to section 32A(4)(ii) of the Act by the Finance Act, 1990, with retrospective effect from April 1, 1976. The Tribunal, therefore, granted investment allowance to the assessee. Mr. T.U. Bhatt on behalf of Mr. B.B. Naik, learned standing counsel for the applicant-Revenue, submitted that whether the assessee is carrying on business of manufacturing or producing articles or things has to be considered for the purpose of deciding whether the assessee is entitled to investment allowance. He submitted that an assessee who is carrying on trading business cannot be termed to be an assessee fulfilling the condition necessary for grant of investment a....

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....disputed fact that the assessee is not a trader. The only question that survives thereafter is as to whether it can be stated that the assessee has satisfied the conditions of section 32A(1) read with section 32A(2)(b)(ii) of the Act. It has been found by the Tribunal that all other conditions prescribed by this section are satisfied and the only dispute between the parties is as to whether the assessee is carrying on business of manufacture or production of an article or thing not specified in the List in the Eleventh Schedule. In the case of Deputy CST v. Pio Food Packers [1980] 46 STC 63 (SC), the following tests have been formulated by the apex court: "The goods purchased should be consumed, the consumption should be in the proces....