1996 (2) TMI 104 - HC - Income Tax

Summary

Issues:
1. Claim of investment allowance for installation of a centrifuging machine.
2. Determination of whether the business activity of centrifuging latex constitutes manufacturing.
3. Appeal by Revenue challenging the entitlement to investment allowance.
4. Consideration of whether the assessee is an industrial company.

Analysis:
1. The assessee, a company engaged in centrifuging latex, claimed investment allowance for installing a centrifuging machine. The assessing authority initially denied the claim, but the Commissioner of Income-tax (Appeals) directed the allowance to be granted at the rate applicable to manufacturing companies.

2. The question of whether centrifuging latex constitutes manufacturing was the focal point before the authorities. The Income-tax Appellate Tribunal, in an earlier order, considered this question "for statistical purposes" but later reaffirmed its stance in a subsequent order, leading to a dispute between the assessee and the Revenue.

3. The Revenue appealed to the Income-tax Appellate Tribunal, seeking a reference to the High Court on four questions, primarily focusing on the entitlement to investment allowance and the classification of the assessee as a manufacturing company. The Tribunal's decision was influenced by its earlier order and the understanding that the assessee qualified for investment allowance as a manufacturing company.

4. The High Court, in its analysis, emphasized the importance of determining whether the activity of centrifuging latex amounts to manufacturing. Referring to relevant legal precedents and the commercial nature of the activity, the Court concluded that the activity qualified as manufacturing. The Court also addressed the Tribunal's reliance on its earlier order, highlighting the circumstances under which the order was recalled and reaffirmed, ultimately finding no error in the Tribunal's decision.

5. The Court dismissed the petition, noting that the questions raised by the Revenue were adequately addressed in previous decisions and that the assessee's status as an industrial company, entitled to a concessional tax rate, was a legal consequence of being classified as a manufacturing company. The Court found no grounds for interference with the Tribunal's order, leading to the dismissal of the petition.