9911796707
TMI Blog1987 (2) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is a firm of three partners and it carries on the business of milling paddy in its rice mill for hire. Concerned assessment year is 1979-80 for which the previous year ends by 30-9-1978. In the accounting year relevant to the present assessment year the assessee-firm installed some more items of plant and machinery of the total value of Rs. 1,39,958.73 and the assessee-firm claimed investment allowance of Rs. 34,989.68 being 25% of the cost of the plant and machinery. The Income-tax Officer held that the assessee is not entitled to investment allowance as the firm runs rice mill and the process carried on by it is only to convert paddy into rice which does not amount to either manufacture or production of any new article or thin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble income of the assessee was determined at Rs. 1,17,480 before the firm's tax was deducted as per the assessment order dated 14-12-1982 under section 143(3) read with section 144B. 3. Aggrieved against the dismissal of the claim for investment allowance the assessee went in appeal before the CIT (A) Visakhapatnam and it was contended that the Income-tax Officer disallowed the claim for investment allowance merely on the ground that no manufacturing activity was involved in dehusking paddy into rice and according to the Income-tax Officer a rice mill does not manufacture any new article or thing. The assessee cited before the learned CIT (A) the decision of the Hon'ble Supreme Court in B. Raghurama Shetty's case wherein it was held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uildings. On that ground be confirmed the disallowance of investment allowance on a total amount of Rs. 92,928. However, he found that during the relevant accounting year the assessee had installed following plant and machinery: Rs. (a) Mill machinery - expansion (boiled section) 96,458.12 (b) Boiler expansion 1,882.97 (c) Blower 1,843.55 (d) Par-boiling plant expansion 30,996.14 (e) H.T. Electrical system - expansion 10,714.27 ----------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actured goods should belong to the assessee. In this connection a close reading of section 32A (2) (a) (b) would provide the clue. Section 32A(2)(a) is as follows: "(2) The ship or aircraft or machinery or plant referred to in sub-section (1) shall be the following, namely: (a) a new ship or new aircraft acquired after the 31st day of March 1976, by an assessee engaged in the business of operation of ships or aircraft." From the above it is clear that in order to claim investment allowance on a new ship or aircraft it is not only essential for the assessee to purchase new ship or aircraft but it is also essential that it should be engaged in the business of operation of ships or aircraft. When we contrast the above position with that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry for his business is entitled to investment allowance. There is already a decided case in favour of this assessee on this point rendered by B Bench of this Tribunal in the case of Sri Bamakrishna Boiled Raw Rice Mill. At para 6 of the said order the following is held: "Hence, it is a matter now beyond doubt that paddy and rice are commercially two different commodities. The assessee, therefore, manufactures or produces rice which is different from its raw material-paddy. It employs both labour and machinery, though either of them would be sufficient for construing that there has been manufacture. The work is also done in a licensed industrial establishment. Under the circumstances, we should imagine that the authorities were hardly ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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