1992 (5) TMI 48

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....stment allowance on machinery and plant employed by it including Leaf Carrying Basket Trailers (hereinafter referred to as ' Trailers '). There is no discussion in the assessment order regarding disallowance but before the CIT (Appeals) it was stated that " presumed reason for the disallowance " was that the Trailers were considered transport vehicles. 3. In appeal before the CIT (Appeals) it was contended that the Trailers were not intended for transport of goods or passengers from one point to another on road. The Trailers were used for carrying green leaves from garden to factory where they were processed and manufactured to have marketable tea. It was stated that without use of Trailers process of manufacture of tea would be incomple....

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....ri Sanyal further relied on Rule 8 of the Income-Tax Rules, 1962 providing for computation of income derived from sale of tea grown and manufactured as if it was income from business. It was accordingly contended that carriage of green leaves to factory was an integral part of a single activity involved in sale of tea grown and manufactured. The departmental representative, on the other hand, relied on the order of the CIT (Appeals) on this point. 5. Having considered the rival submissions of the parties, we are of the view that the assessee is entitled to investment allowance on the Trailers. Similar allowance has been granted to the assessee on other items and there is no controversy about the assessee being an " industrial undertaking....

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....ed. Income from sale of tea grown and manufactured consists of two components : (i) Tea Grown and (ii) Tea Manufactured. The deeming provision of rule 8(1) takes integrated income of both the activities as business income. There is prohibition on account of fiction in sub-rule (1) of Rule 8 to single out any activity of integrated income and consider it separately. 7. It is accepted and established rule of construction of deeming provision that legal fiction created has to be carried to its logical conclusion. The legal proposition we are referring to is best illustrated in the following oft-quoted observations of Lord Asquith in East End Dwellings Co. Ltd. v. Vinsbury Borough Council [1952] AC 109 : " If you are bidden to treat an im....