2001 (1) TMI 39

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.... that the assessee was entitled to initial depreciation under section 32(1)(vi) on the written down value of the plant and machinery amounting to Rs. 3,18,500 which was used for manufacturing of steel wires?" The dispute relates to the assessment year 1976-77. The factual position in a nutshell is as follows. The assessee-company at the relevant point of time was engaged in the manufacture and sale of steel wires and other types of wires which are used in connection with the manufacturing of A.C.S.R. conductors required in connection with transmission and distribution of electricity. The basic raw material for manufacturing the steel wire is wire rod. As a result of the process of drawing, the diameter of the wire rod reduces but the bas....

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....] 17 STC 313 (SC) that "iron and steel (metal)" falls within the meaning of item No. 1 of the Ninth Schedule. It was also noticed that the Madras High Court has followed the decision of the Kerala High Court in Addl. CIT v. Trichy Steel Rolling Mills Ltd. [1979] 118 ITR 39. The view expressed by the Calcutta High Court in Indian Steel and Wire Products Ltd.'s case [1977] 108 ITR 802 was not followed. Placing reliance on the decision of the Supreme Court in CED v. R. Kanakasabai [1973] 89 ITR 251 it was observed by the Tribunal that since there was divergence of views, one that helps the assessee is to be adopted. Accordingly, the direction given by the Commissioner of Income-tax (Appeals) to the Income-tax Officer to allow initial depreciat....

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.... scope and ambit to the entry. There was no justification for qualifying item No. 1 by insisting that the articles produced or manufactured or constructed for the purpose of the business of the assessee-company must be those produced, manufactured or constructed from materials which were not iron and steel. The Kerala High Court relied on the judgment in State of Madhya Bharat v. Hiralal [1966] 17 STC 313 (SC). This judgment of the Kerala High Court was considered by a Full Bench of the same High Court in CIT v. West India Steel Co. Ltd. [1977] 108 ITR 601 and it was held that the M. S. rods and steel sections are basically 'iron and steel (metal)' within the meaning of item No. 1 in the Fifth Schedule to the Income-tax Act, 1961. The judgm....