9911796707
TMI Blog1983 (12) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... te unit at Nagercoil was a business expenditure at all which is allowable from the business income of the assessee for this assessment year. The second issue was whether development rebate under section 33 of the Income-tax Act, 1961 ('the Act') could be allowed in respect of the machinery in the Nagercoil unit. According to the assessee, the machinery had already been installed during the year, while according to the department, they were installed long after the close of the previous year. In appeal, the AAC upheld the contentions of the assessee, but the Tribunal set aside that order and remitted the matter back to the ITO for determining, firstly, whether the assessee's two units, the old unit at Alleppey and the new one at Nagercoil, constitute the same business in the light of the Supreme Court decision in B.R. Ltd. v. V.P. Gupta, CIT [1978] 113 ITR 647 and deciding, secondly, the issue regarding the development rebate taking into account the decision on the first issue. The present appeal emanates from the assessment so made by the ITO on the basis of the direction contained in the order of the Tribunal. 2. The ITO, in the assessment so made, has considered the first point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the assessment year 1976-77, namely, the subsequent assessment year. He has pointed out that in view of the decision of the Gujarat High Court in CIT v. Saurashtra Wire-Healds Mfg. Co. (P.) Ltd. [1968] 67 ITR 524, the relevant year for the grant of development rebate is the year in which the installation is completed. He considered that the decision of the Kerala High Court in CWT v. Travancore Cements Ltd. [1964] 54 ITR 583 and of the Supreme Court in CIT v. Mir Mohammad Ali [1964] 53 ITR 165 do not help the assessee. On this basis he denied the allowance of development rebate to the assessee for this assessment year. The assessee raised the issue regarding the denial of development rebate before the commissioner (Appeals). The Commissioner (Appeals) took note of the submissions made by the assessee and also the relevant part of the directors' report regarding the installation of the machinery at Nagercoil. This portion as extracted by the Commissioner (Appeals) in his order reads as under : " As reported last year, the company has ventured into an expansion programme of a mechanised unit for the manufacture of floor coverings in Kanyakumari District in Tamil Nadu. The proje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that section 33 allows development rebate in respect of the machinery installed and wholly used for the purpose of the business of the assessee. The conditions laid down both in respect of installation and in respect of user cannot be said to be satisfied by the assessee. It is pointed out that the assessee has not claimed depreciation on this machinery for this assessment year obviously on the basis that the machinery has not been used during the year. It is further pointed out that even according to the directors' report, the machinery in question has been placed in thatched sheds. This fact together with the further fact that only trial runs were made would not amount to installation of the machinery for the purpose of grant of development rebate. 5. On behalf of the assessee, it is submitted that the directors have in their report clearly stated that the machinery has been installed even though such installation is in temporary sheds. The ITO has himself found that workers were recruited in December 1974. The point about the trial run has already been clarified before the Commissioner (Appeals). The assessee is an exporter of coir products and the factory at Nagercoil is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst question. The matter has not been restored to the Commissioner (Appeals) as has been made out in ground No. 2. 6. Certain observations of the Tribunal have also been relied upon in this connection. These observations have been quoted by the ITO in the assessment order. We have also reproduced these observations earlier. It is clear that these observations do not amount to a direction of the Tribunal. It is a guarded remark of the Tribunal that the trial runs may not show the real installation of the machinery for the purpose of granting development rebate. There are no findings or directions contained in this remark and the order of the Commissioner (Appeals) cannot be assailed on this ground. 7. The departmental representative has contended vehemently that there has been no installation and no user. The departmental representative has also emphasised the fact that there has been only trial production. Ground No. 3 in the memorandum of appeal emphasises the fact that the machinery has been installed in thatched sheds. He has also brought to our notice that the assessee had not claimed depreciation. We do not think that these facts would stand in the way of the assessee's enti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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