1992 (5) TMI 6 - HC - Income Tax

Summary

Issues:
1. Interpretation of whether electric bulbs and fittings are covered by item No. 12 of the Eleventh Schedule.
2. Entitlement to investment allowance under section 32A for machinery used in the manufacture of electric bulbs and fittings.
3. Rectifiability of the original assessment order under section 154 regarding investment allowance on machinery used for manufacturing electric bulbs and fittings.

Detailed Analysis:
Issue 1: The Tribunal held that electric bulbs and fittings are considered domestic electrical appliances based on the Explanation to item No. 12 of the Eleventh Schedule. The Tribunal concluded that machinery for manufacturing electric bulbs and fittings falls under this item, making them ineligible for investment allowance under section 32A(2)(b)(iii). The Tribunal deemed the matter non-debatable and rectifiable under section 154 due to an apparent mistake in the original assessment order.

Issue 2: The Commissioner of Income-tax (Appeals) initially held that machinery used for manufacturing bulbs and electric fittings is not entitled to investment allowance. However, the Tribunal disagreed, citing the clear provisions of section 32A(2)(b)(iii) and the Eleventh Schedule. The Tribunal concluded that the original assessment granting investment allowance on such machinery contained an apparent error, justifying rectification under section 154.

Issue 3: The assessee argued that the decision of the Tribunal was unsustainable in law, emphasizing that electric bulbs and fittings manufactured by the assessee do not qualify as domestic electrical appliances under item No. 12 of the Eleventh Schedule. Referring to relevant case law and statutory provisions, the assessee contended that the machinery used for manufacturing these items should be entitled to investment allowance. The assessee further highlighted the debatable nature of the issue, asserting that any amendment to the original order would amount to a change of opinion beyond the scope of section 154.

The High Court, concurring with the assessee's arguments, held that the issue of whether electric bulbs and fittings fall under item No. 12 of the Eleventh Schedule was debatable, especially considering the diverse range of products manufactured by the assessee. The Court emphasized that the machinery used for manufacturing these items should be eligible for investment allowance, as they do not strictly fall under the category of domestic electrical appliances. Consequently, the Court ruled in favor of the assessee, rejecting the rectifiability of the original assessment order under section 154. The judgment was delivered by SHYAMAL KUMAR SEN, with agreement from AJIT K. SENGUPTA.