I.P. Mukerji, J. - (1.) I have had the privilege to go through the draft judgment prepared by my sister Justice Amrita Sinha. I wholeheartedly agree with it. I would like to add a few observations of my own.
(2.) This is a reference under Section 256(1) of the Income Tax Act, 1961. The Section is as follows: "Section-256. Statement of case to the High Court.- (1) The assessee or the Commissioner may, within sixty days of the date upon which he is served with notice of an order passed before the 1st day of October, 1998, under section 254, by application in the prescribed form, accompanied where the application is made by the assessee by a fee of two hundred rupees, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order and, subject to the other provisions contained in this section, the Appellate Tribunal shall, within one hundred and twenty days of the receipt of such application, draw up a statement of the case and refer it to the High Court : Provided that the Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the period hereinbefore specified, allow it to be presented within a further period not exceeding thirty days. (2) If, on an application made under sub-section (1), the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may, within six months from the date on which he is served with notice of such refusal, apply to the High Court, and the High Court may, if it is not satisfied with the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it, and on receipt of any such requisition, the Appellate Tribunal shall state the case and refer it accordingly. (2A) The High Court may admit an application after the expiry of the period of six months referred to in sub-section (2), if it is satisfied that there was sufficient cause for not filing the same within that period. (3) Where in the exercise of its powers under sub-section (2), the Appellate Tribunal refuses to state a case which it has been required by the assessee to state, the assessee may, within thirty days from the date on which he receives notice of such refusal, withdraw his application, and, if he does so, the fee paid shall be refunded."
(3.) In an appeal (ITA No.2189 CAL of 1991) of the applicant/assessee for the assessment year 1983-1984, the Income Tax Appellate tribunal "B" Bench, Calcutta (hereinafter referred to as the tribunal), on 20th October, 1997 disposed of it in the following way: "The assessee's claim for Investment Allowance of Rs.38,70,590/- was reduced to Rs.29,05,913/-. On verification of the details the Assessing Officer found that the assessee had claimed Investment Allowance on weighing machines and other machinery which were not directly engaged in the production and so was the case with regard to computer. The CIT (Appeals) confirmed the assessment order after observing that no satisfactory explanation was given by the assessee as to why the claim should be accepted. At the time of hearing before us, it was submitted that the assessee was engaged in the manufacturing of packet tea, coffee, instant coffee, etc, and this was concluded by the Tribunal's Order as also by the jurisdictional High Court at Calcutta in assessment years 1981-82 and 1982-83. It is further submitted that even in assessment year 1983-84 when revision took place under Section 263 the matter was carried before the Tribunal and the point was decided in favour of the assessee. The learned Departmental Representative submitted that now the Calcutta High Court in the case of Apeejay Pvt. Ltd Vs. CIT (Cal), 1994 206 ITR 367 had decided the controversy against the assessee. Faced with this situation, the learned counsel for the assessee Dr. D. Pal only submitted only submitted that the decision of the Calcutta High Court was against the decision of the Supreme Court in the case of Chowgule and Co. Pvt. Ltd. Vs. Union of India (S.C), 1981 47 STC 124. Ongoing through the judgment of Apeejay Pvt. Ltd. we find that the Supreme Court decision in the case of Chowgule and Co. Pvt. Ltd. has been considered by the Calcutta High Court and thereafter the controversy is decided against the assessee, where it was held that blending amounts to processing, but not manufacture or production of an article and input and output remains tea only and no commercially new and distinct commodity was brought existence. Apart from this, the basis on which the Assessing Officer did not grant Investment Allowance on certain machinery is find that those machinery were not directly engaged in the production and this finding is not in any way rebutted by bringing to our notice appropriate material. Even before the CIT (Appeals) similar was the position and that is why he observed that there was no satisfactory explanation. We are, therefore, not inclined to interfere with the appellate order.";