TaxTMI 
TaxTMI 
TaxTMI 
2005 (9) TMI 62
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....ppeals) vide his order dated April 30, 1992, allowed the said claim upsetting the findings recorded by the Assessing Officer and the appeal preferred by the Revenue before the Income-tax Appellate Tribunal against the order of the Commissioner of Income-tax (Appeals) has been dismissed on May 20, 1999. Feeling aggrieved by the aforesaid orders, the present appeal has been filed by the Revenue. The facts relevant for the present controversy are that the assessee had maintained two sets of accounts in the relevant assessment year, wherein he carried on two businesses, namely, one that of tyres and the other of running an industry of printing on tin plates. The assessee had maintained two sets of account; one head office set styled M/s. Daljeet Tyres and the other branch set styled M/s. Satguru Metal Printers. The assessee claimed that his tin printing unit was an industry involved in a manufacturing process and therefore, was entitled to the benefit of investment allowance, which he claimed at Rs. 3,79,285.40 in the retUrn for which adequate reserve of Rs. 2,85,000 had also been credited in tne books of account. The investment allowance was claimed under section 32A of the Act. Th....
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....year, of a sum by way of investment allowance, equal to twenty-five per cent. of the actual cost of the ship, aircraft, machinery or plant to the assessee: Provided that.... (2) The ship or aircraft or machinery or plant referred to in subsection (1) shall be the following, namely: (a) a new ship or new aircraft acquired after the 31st day of March, 1976, by an assessee engaged in the business of operation of ships or aircraft; (b) any new machinery or plant installed after the 31st day of March, 1976,- (i) for the purposes of business of generation or distribution of electricity or any other form of power; or (ii) in a small-scale industrial undertaking for the purposes of business of manufacture or production of any article or thing; or (iii) in any other industrial undertaking 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:" In accordance with section 32A, sub-section (2)(b)(ii), the machinery or plant as specified under sub-section (2)(b) has to be installed by the assessee and has to be used wholly for the purpose of business by the small scale ....
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....hine, and it was coming in different sizes. Therefore, if the operation of the machine was taken into consideration along with the final product, it would be clear that the assessee was manufacturing an article with the machine." The Tribunal thus allowed the claim of investment allowance under section 32A. In the case of Asst. CIT v. Soni Photo Films P. Ltd. [2000] 245 ITR (AT) 11 (Delhi) [SB], the assessee was engaged in the business of developing and printing of photographs. The assessee filed his income-tax return for the first year of business along with the audited balance-sheets and profit and loss account showing "loss" income, and claimed investment allowance on purchase of photographic apparatus. The Assessing Officer disallowed the investment allowance on the ground that the activity of the assessee did not involve manufacture or production of an article or thing and also because the assessee had failed to create statutory reserve which was the sine qua non for claiming investment allowance. The Commissioner (Appeals) held that in the absence any statutory reserve the assessee could not be allowed investment allowance during the year, but in a subsequent year, if the a....
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....ts own identity, character and end-use. Therefore, what is involved while taking a photograph by a photographer is manufacture." The case of Asst. CIT v. Kohli Bros. Colour Lab. P. Ltd. decided by the Income-tax Appellate Tribunal, Allahabad Bench "A", Allahabad for the assessment year 1986-87 on March 17, 1999, is also placed before us, where it was the case of the Revenue that photographic apparatus and goods being articles or things listed in the Xlth Schedule, the assessee is not entitled to investment allowance under section 32A of the Income-tax Act on the imported computerized colour process machine. The Tribunal accepted the finding recorded by the Commissioner of Income-tax (Appeals), which said that the appellant was not correct in holding that the appellant was engaged in the business of manufacture of any of the items as specified in the Xlth Schedule and that the appellant was not manufacturing any photographic apparatus or equipment and relying upon the judgment of the Calcutta Bench "B" in the case of Amiya Kumar Tarfdar v. ITO referred to above, the assessee was granted the investment allowance. In the case of CIT v. Professional Information Systems and Management....
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....anufacture or production and was thus eligible for investment allowance under section 32A of the Act on the cost of computer. The apex court in the case of CIT v. Shaan Finance P. Ltd. [1998] 231 ITR 308 ; [1998] ; 3 SCC 605, had an occasion to consider the meaning, import and scope of section 32A. In the said case the claim of investment allowance was made by the assessees, which were financial companies. They were not themselves manufacturers of any article or thing. They purchased machinery and hired out the same to manufacturers under agreements of hire. The hirer-manufacturer in turn used the machinery for the purposes specified in section 32A(2)(b)(iii). The agreement of hire did not involve any element of sale. The High Courts of Karnataka and Madras held the respondent-assessees to be entitled to investment allowance under section 32A of the Act. The plea of the appellant-Revenue that investment allowance can be claimed by the assessee only in a case where the assessee is the owner of the machinery and also uses the machinery himself and not otherwise, was rejected by the Supreme Court. The court extracted the following conditions from section 32A to be satisfied for hav....