COMMISSIONER OF INCOME TAX Vs. TARUN COMMERCIAL MILLS LIMITED
LAWS(GJH)-1983-9-27
HIGH COURT OF GUJARAT
Decided on
September 21,1983
COMMISSIONER OF INCOME TAX
Appellant
VERSUS
TARUN COMMERCIAL MILLS LTD.
Respondents
Referred Judgements :-
G I T ANDHRA PRADESH VS. TAJ MAHAL HOTEL SECUNDERABAD [REFERRED TO]STAR RADIO ELECTRIC CO VS. COMMISSIONER OF SALES TAX GUJARAT [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. ELECON ENGINEERING COMPANY LIMITED [REFERRED TO]
ADDITIONAL COMMISSIONER OF INCOME TAX VS. RUSTAM JEHANGIR VAKIL MILLS LIMITED [REFERRED TO]
STATE OF GUJARAT VS. SUKAN INDUSTRIES [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. MOHAN MEAKIN BREWERIES LIMITED [REFERRED TO]
SUNDARAM MOTORS PRIVATE LIMITED VS. COMMISSIONER OF INCOME TAX [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. I B M WORLD TRADE CORPORATION [REFERRED TO]
Cited Judgements :-
COMMISSIONER OF INCOME TAX VS. SLM MANEKLAL INDUSTRIES LIMITED [LAWS(GJH)-1993-6-52] [REFERRED TO]COMMISSIONER OF INCOME TAX VS. PROFESSIONAL INFORMATION SYSTEMS and MANAGEMENT [LAWS(GJH)-2005-1-19] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. PROFESSIONAL INFORMATION SYSTEMS AND MANAGEMENT [LAWS(GJH)-2005-1-48] [REFERRED TO]
ASSISTANT COMMISSIONER OF INCOME-TAX VS. INVESTMENT TRUST OF INDIA LTD [LAWS(MAD)-1998-5-3] [REFERRED]
JUDGEMENT
B.K.MEHTA,J. -
(1.)IN the course of the asst. year 1970 71, the assessee company, which has a textile manufacturing unit at Ahmedabad, made a two fold claim : firstly, in respect of a sum of Rs. 1,03,437 being a
payment made to the Textile Commissioner as compensation for the shortfall in production of
controlled variety of cloth and, secondly, being the development rebate on the air conditioner and
electric fans admittedly installed in the office premises of the company. The first head of the claim
was disallowed by the ITO on the short ground that the impugned payment was for infringement of
the statutory order and was, therefore, in the nature of penalty.
(2.)THE AAC, however, in appeal at the instance of the assessee, allowed the claim following the decision of the Tribunal in the case of Rustom Jehangir Vakil Mills Ltd.
The view of the AAC was confirmed by the Tribunal on appeal at the instance of the Revenue.
(3.)AS regards the claim for the development rebate, the ITO was of the view that the fans and air conditioner cannot be said to be machinery or plant directly or wholly used for the purposes of business and, therefore, disallowed the claim. The AAC confirmed the view of the ITO. However, on appeal at the instance of the assessee, the Tribunal upheld the claim of the assessee since in its opinion the items were within the expression it "plant and machinery" as specified in ss. 32 and 33 of the 1961 Act. On these facts, at the instance of the Revenue, the following two questions have been referred to us for our opinion :
"1. Whether, on the facts and in the circumstances of the case, the payment of Rs. 1,03,437 made to the Textile Commissioner under the provisions of cl. 21C(1)(b) of the Cotton Textile (Control) Order, 1948, was business expenditure allowable under S. 28 or under S. 37 of the Act ? 2. Whether the Tribunal was right in holding that the air conditioner and the electric fans are plant or machinery within the meaning of S. 32 and S. 33 of the IT Act, 1961, and they are, therefore, entitled to depreciation and development rebate, irrespective of the fact as to whether they are installed in the office premises ?"
(2.)THE AAC, however, in appeal at the instance of the assessee, allowed the claim following the decision of the Tribunal in the case of Rustom Jehangir Vakil Mills Ltd.
The view of the AAC was confirmed by the Tribunal on appeal at the instance of the Revenue.
(3.)AS regards the claim for the development rebate, the ITO was of the view that the fans and air conditioner cannot be said to be machinery or plant directly or wholly used for the purposes of business and, therefore, disallowed the claim. The AAC confirmed the view of the ITO. However, on appeal at the instance of the assessee, the Tribunal upheld the claim of the assessee since in its opinion the items were within the expression it "plant and machinery" as specified in ss. 32 and 33 of the 1961 Act. On these facts, at the instance of the Revenue, the following two questions have been referred to us for our opinion :
"1. Whether, on the facts and in the circumstances of the case, the payment of Rs. 1,03,437 made to the Textile Commissioner under the provisions of cl. 21C(1)(b) of the Cotton Textile (Control) Order, 1948, was business expenditure allowable under S. 28 or under S. 37 of the Act ? 2. Whether the Tribunal was right in holding that the air conditioner and the electric fans are plant or machinery within the meaning of S. 32 and S. 33 of the IT Act, 1961, and they are, therefore, entitled to depreciation and development rebate, irrespective of the fact as to whether they are installed in the office premises ?"
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