1998 (1) TMI 94

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....e claim of the assessee was rejected by the Assessing Officer on the ground that the value of assessee's plant & machinery exceeded the sum of Rs. 35,00,000 and so the assessee ceased to be a small scale industrial undertaking. While working out the value of the assessee's plant and machinery, the learned Assessing Officer included the value of vehicles, air conditioners, computer system, CCTV system, office equipment and EPBX system etc. for the purpose of business of the assessee's industrial undertaking. During the course of assessment proceedings, it was submitted before the Assessing Officer that actual cost of plant & machinery which was used by the assessee on the last date of the accounting year was Rs. 52,10,000. It was further sub....

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....arned CIT(A) accordingly concluded that the assessee's industrial undertaking was a small scale industrial undertaking within the meaning of section 80HHA r.w. Explanation (b) to section 80HHA and accordingly the assessee was entitled to deduction under section 80HHA. 4. The Revenue is in appeal before us against the above finding of the CIT(A). Shri G.M. Brahmbhatt, the learned D.R. submitted that the assessee's total investment in plant and machinery (including vehicles and office appliances) used for the purpose of business exceeded the limit prescribed under section 80HHA(b) of Rs. 35 lakhs. Accordingly to the learned D.R. the plant & machinery used for the purpose of business, including vehicles and office appliances are all covered....

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.... of accounting year, only the plant and machinery of Rs. 27,56,288 were connected with the production activity. No air conditioner has been installed in the factory. The main office building of the assessee is having the central air-conditioning system. Other items like EPBX, CCTV, office equipments, vehicles, computers, safe deposit vault etc. are not directly related to the production. In support of his contention the learned counsel relied on the decision of CIT v. Machinery Mfg. Corpn. Ltd. [1992] 198 ITR 559 (Cal.) where it was held that irrespective of nature of business one has to retain fire extinguisher and time office equipment, and these are not therefore plants installed for the purpose of business of the construction, manufactu....