- (1.) Heard learned counsel for the parties. The following questions have been referred to this Court by the order of the Income Tax Appellate Tribunal, Patna Bench, Patna in R.A. No. 27(Pat)/1989, relating to the assessment year 1981-82: 1. Whether on the facts and in the circumstances of the case, the Tribunal has erred in law in holding that the petitioner is not entitled to the claiming investment allowance on the basis of explanation inserted by Finance Act, 1987 w.e.f. 1.4.1988 when the claim of petitioner is in the year 1981-82? 2. Whether on the facts and in the circumstances of the case, the finding of the Tribunal is perverse in holding that blending flavouring concentrates includes synthetic essence? 3. Whether in the facts and circumstances of the case whether the order passed by the Tribunal is legally correct in holding that the product of the petitioner industry covers under list 5 of Eleventh Schedule and as such is not entitled for investment allowance in spite of the fact that the matter has been decided by Bombay High Court in the case of Duke and Company that while manufacturing soft drinks like Thumps-up, Limca or Gold Spot any blending flavouring concentrates is not being used?
(2.) As per the statement of facts given, the Assessee-Company is manufacturer of soft drinks like Thumps Up, Gold Spot etc. In the process of manufacturing of soft drinks the petitioner used synthetic flavouring essence, which, according to the petitioner, is not the form of concentrates like natural concentrates, which may be used for blending and flavouring of the soft drinks. The petitioner's plant and machineries, used for manufacture of an article specified in the list of Eleventh Schedule and particularly in Entry-5 of the Eleventh Schedule on which, according to the petitioner, investment allowance is allowable under Section 32-A of the Income Tax Act, 1961. The petitioner's claimed the deduction of investment allowance but the same was disallowed by the Assessing Officer on the ground that the claim was not made in the original return and the goods manufactured by the petitioner comes under the goods, mentioned in the list in Eleventh Schedule for the purpose of grant of investment allowance being item No. 5 of the Eleventh Schedule of the Income Tax Act. The petitioner preferred an appeal against the said order before the Commissioner of Income Tax(Appeals), who allowed the appeal of the assessee holding that the revised return filed by the petitioner should be held to be valid return since the petitioner had filed extension in form No. 6 and no rejection order was communicated to the petitioner. The Appellate Authority further held that in that view of the matter the return filed by the petitioner is a return under Section 139(4) and hence it is a valid return. The learned Commissioner of Income Tax (Appeals) further held that the petitioner essentially is entitled for the claim of investment allowance as it does not fall within item No. 5 of Eleventh Schedule. The learned Commissioner of Income Tax(Appeals) held that there is distinction between "blended flavouring concentrates" and "synthetic flavouring essence" and petitioner was not using any blended flavouring concentrates in any form and as such is entitled to the benefit because of the investment allowance. The learned Appellate Authority relied upon the judgment of the Bombay High Court delivered in the case of Duke & Sons Ltd. v. Superintendent of Central Excise, 2000 126 ELT 574. The Revenue Department has preferred appeal before the Tribunal against the order of CIT (Appeals) and the Tribunal accepted the appeal and rejected the claim of the petitioner on the basis of an explanation inserted by Finance Act, 1987 with effect from 1st April, 1988. The Tribunal opined that in view of the explanation inserted with effect from 1st April, 1988 blended flavouring concentrates include synthetic essence, even if the said explanation was inserted much after the period relevant for the purpose of assessment.
(3.) In the background of these facts, the above questions were referred to this Court by the Tribunal.;