R.M. Mehta, Accountant Member - (1.) ALL these appeals have been heard together and as common points are involved they are disposed of by a consolidated order for the sake of convenience.
(2.) The first common ground is regarding the claim of investment allowance in respect of the 'electrical installations'. The ITO in the course of the assessment proceedings observed that the assessee had claimed investment allowance on 'electrical installations' in addition to plant and machinery. According to the ITO investment allowance under the provisions of Section 32A of the Income-tax Act, 1961 ('the Act') was allowable only on plant and machinery owned by the assessee and used for purposes of business. The ITO was further of the opinion that 'electrical installations' were not included in the definition of 'plant' as defined in Section 43 of the Act. He accordingly proceeded to disallow the claim. In the course of the hearing of the first appeal, the learned counsel for the assessee made detailed submissions and a perusal of the order of the Commissioner (Appeals) further shows that written arguments were also filed. In the course of the hearing before the Commissioner (Appeals) the assessee sought to support his claim in respect of investment allowance and in doing so not only brought on record its manufacturing process but also sought to support its contention by referring to various judgments not only of various High Courts but the Supreme Court as well. The narration of facts, the arguments of the assessee, and the reference to various decisions runs to nearly 4 typed pages. The decision of the Commissioner (Appeals), however.'' is contained in one short paragraph which runs as under : I have considered the submission very carefully but I am unable to agree with the views of the learned counsel for the simple reason that no investment allowance is admissible as per the provisions of the law on account of electric installations installed during the year under consideration. The Income-tax Officer has considered this fact carefully and has brought out all the relevant facts as per his assessment order and it is not necessary here to repeat the same but to mention that I fully agree with the findings of the Income-tax Officer that the assessee is not entitled to investment allowance for all the years under consideration on electric installations. From the definitions as made out under Section 43 of the Income-tax Act, 1961, the assessee is clearly not entitled to any investment allowance on electric installations made during the year. The assessee's claim for the same is rejected. 3. We before proceeding further would straightaway like to observe that the Commissioner (Appeals) has disposed of the matter in a very light and cursory manner without considering the arguments of the assessee or in giving his own views. According to the Commissioner (Appeals) 'the ITO has brought out all the relevant facts'. We regretfully observe that this is not so.
(3.) IN the course of the arguments before us the learned counsel for the assessee sought to support his claim by arguing more or less on the same lines as had been done before the Commissioner (Appeals). He not only referred to the relevant portions of the order of the Commissioner (Appeals) to bring out the facts but also sought to explain the manufacturing process which the assessee was engaged in, and on the basis of which its contention was that the 'electrical installations' in its case formed part of the 'plant'. To summaries the various arguments, we first of all refer to the manufacturing process which is as follows : (i) The assessee is engaged in the manufacture of mischmetal used as a component of flints for lighters. (ii) The process of manufacture involves passing electrical energy through 'mixed rare earth chloride', a principal raw material, in specially fabricated electricity cells. The interaction of electricity with the raw material charges the ultimate product through cathodes and anodes, without which process, the raw material does not get converted into the finished marketable product. (iii) Because of this process of rectification and conversion of raw materials using electricity generated and passed through a complex electrical equipments and installations this industry is known as an 'Electrometallurgical INdustry'. (iv) IN other words, electricity is itself an item of raw material or stores acting as an agent to convert the basic raw material into a finished product. (v) Unlike the other industries, where electricity is merely used as a power to run the machines, which could be done by alternative means also, in this industry electrical energy after duly converting the same as D.C. from A.C. supply is a media for manufacturing process itself. (vi) IN order to use electricity for aforesaid purpose, the appellant company set up a complex electrical equipment and installations the cost of which included cost for specially fabricated cells, air-circulations, capacitors, electric motors, air circuit breakers, aluminum armored cables, starters, copper conductors, PVC tubing's and meters, etc. This composite structure of electrical equipments is the main tool to make available the requisite process of interaction of the energy with raw materials.;