TaxTMI 
TaxTMI 
2018 (6) TMI 1470
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....ion of law arising out of such order and, subject to the other provisions contained in this section, the Appellate Tribunal shall, within one hundred and twenty days of the receipt of such application, draw up a statement of the case and refer it to the High Court : Provided that the Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the period hereinbefore specified, allow it to be presented within a further period not exceeding thirty days. (2) If, on an application made under sub-section (1), the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may, within six months from the date on which he is served with notice of such refusal, apply to the High Court, and the High Court may, if it is not satisfied with the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it, and on receipt of any such requisition, the Appellate Tribunal shall state the case and refer it accordingly. (2A) The High Court may admit an applic....
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.... of Chowgule and Co. Pvt. Ltd. has been considered by the Calcutta High Court and thereafter the controversy is decided against the assessee, where it was held that blending amounts to processing, but not manufacture or production of an article and input and output remains tea only and no commercially new and distinct commodity was brought existence. Apart from this, the basis on which the Assessing Officer did not grant Investment Allowance on certain machinery is find that those machinery were not directly engaged in the production and this finding is not in any way rebutted by bringing to our notice appropriate material. Even before the CIT (Appeals) similar was the position and that is why he observed that there was no satisfactory explanation. We are, therefore, not inclined to interfere with the appellate order." The applicant/assessee made an application before the tribunal (RA 659/CAL/1997) under Section 256(1) of the said Act, for reference of, inter alia, the following questions of law to this Court: "iii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the blending of tea or coffee does not amount to manuf....
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.... approach by following the view of this Court in the case of Apeejay Pvt. LTd. Vs. CIT (Cal) reported in 206 ITR 367 that blending of tea was not manufacture or production, even after being shown the case of Chowgule & Co. Pvt. Ltd. & Anr Vs. Union of India & Others (SC) reported in 47 STC 124, which held the contrary. When the above decision of the Supreme Court supported the finding of the tribunal in the previous years, it ought not to have departed from it, by its order dated 20th October, 1997 for the assessment year 1983-1984 in ITA 2189 (Cal) of 1991. Therefore, the tribunal ought to have proceeded on the footing that blending of tea and coffee amounted to manufacture and production. Now, the next question to be answered by this Court is whether under Section 32A(2) (b) (iii) of the said Act weighing machines, computers, electrical appliances, etc. installed after 31st March, 1976 are machinery or plant 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 of the said Act. The material parts of Section 32A are inserted below: "Section 32A.:- Investment ....
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....ness 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:] Provided that nothing contained in clauses (a) and (b) shall apply in relation to - (i) a new ship or new aircraft acquired, or (ii) any new machinery or plant installed, after the 31st day of March, 1987 but before the 1st day of April, 1988 , unless such ship or aircraft is acquired or such machinery or plant is installed in the circumstances specified in clause (a) of sub- section (8B) and the assessee furnishes evidence to the satisfaction of the Assessing Officer as specified in that clause;]" One of the earliest decisions, if not the earliest, trying to give a definition of the expression "plant" was rendered by Lord Lindley in Yarmouth v. France [1887] 19 QBD 647. The Court was defining Section 1(....
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....include every article used in connection with manufacture or production not being stock-in-trade, whether employed directly or indirectly. On the mistaken notion that in order to qualify as plant a machinery had to be directly used in the manufacture of an article or thing, the tribunal has upheld the order of the authorities below refusing grant of investment allowance on weighing machines, computers and electrical appliances, etc. In any opinion they are eligible for this allowance. The questions mentioned in the statement of the case are answered accordingly. We direct the Registrar General of this Court to send a copy of this Order to the Tribunal which shall pass the necessary orders to dispose of the case being ITA 2189 (Cal) 1991 for the assessment year 1983-1984 decided by it on 20th October, 1997, in accordance with the above observations resulting in answering the reference on the said points in favour of the assessee. The said part of the Order of the tribunal dealing with the Section 32A allowance is set aside. We request the tribunal to dispose of the appeal within three months of communication of this order. Amrita Sinha, J.:- (1) This is a Reference Ap....
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....n. (5) The assessee challenged the order of the Inspecting Assistant Commissioner before the Commissioner of Income Tax (Appeals - II, Calcutta). The Commissioner of Income Tax vide order dated 08-02- 1991 did not interfere with the assessment order. The assessee preferred an appeal before the Income Tax Appellate Tribunal, "B" Bench Calcutta, who vide its order dated 20-10-1997 refused to interfere with the appellate order. (6) Aggrieved by the order of the Tribunal dated 20-10-1997, the assessee filed an application under S. 256(1) of the Income Tax Act, 1961 before the Income Tax Appellate Tribunal: 'B' Bench, Calcutta and sought its reference of five questions of law for decision before the Hon'ble High Court at Calcutta. In response to the said reference application, the Income Tax Appellate Tribunal referred the aforesaid three out of five questions, after modifying the same slightly, for consideration by this Hon'ble High Court. (7) At the time of hearing, it has been strenuously contended by the Learned Senior advocate representing the appellant that the assessee company was entitled to the benefit of investment allowance on weighing machines, electrical equipments....
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....sions of section 32 A, it was clear that it was not necessary that each individual machine should manufacture or produce any article or thing. A machinery or equipment can be used directly for the manufacturing process, yet for running such a machine, certain accessories may be required. The expression 'for the purpose of business of manufacture or production' was much wider in scope than the expression 'for the purpose of manufacture'. The Court held that every new machinery installed in a business of manufacture or production of any article or thing qualifies for deduction under section 32 A unless it falls under any of the exceptions mentioned therein. (11) In Associated Bearing Company Ltd. vs.Commissioner of Income Tax (supra), it has been held that it is well settled that the word 'plant' must be given a very wide meaning, as held by the Supreme Court in a catena of cases. It was further held that the Act nowhere provided that each item of the plant should be linked with manufacture or production. It was sufficient that the plant is for the purpose of business and the business must be ofmanufacture or production of some article. In arriving at the aforesaid conclusion the ....
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....r the blending of tea/coffee amounted to manufacture and/or production never fell for consideration before the Tribunal. The lower authorities never had an occasion to deal with the said issue and the Tribunal exceeded its jurisdiction in framing a new issue and deciding the same. The jurisdiction or the Tribunal was totally confined to the subject matter of the appeal only and the Tribunal exceeded its jurisdiction in raising fresh issues not raised in the memorandum or the grounds of appeal. Accordingly the question number 1 is answered in favour of the assessee accompany and against the Revenue. (18) From the judgements cited herein above, it is well settled that as per provisions of section 32 A Income Tax Act, weighing machines, electrical equipments and other machineries, though not directly used in the production/manufacture of the finished goods, even then these articles are accessories which are integral to the business and without which it may not be possible for effective production/manufacture of the final products. The articles in question, namely, the weighing machine, the electrical equipments, other machineries are such that without the same the manufacturing con....