9911796707
TMI Blog1986 (8) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... rice mill for hire. Concerned asst. yr. is 1979-80 for which the previous year ends by 30th Sept., 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 per cent of the cost of the plant and machinery. The ITO 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 thing. The process employed by the assessee firm is dehusking the paddy and converting into rice and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rieved 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 ITO 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 ITO a rice mill does not manufacture any new article or thing. The assessee cited before the ld. CIT(A) the decision of the Hon'ble Supreme Court in (1981) 47 STC 369 (SC) wherein it was held that paddy and rice are two distinct commodities and milling of paddy involved manufacturing process. The order of the "B' Bench of this Tribunal dt. 29th July, 1983 passed in the case of Sri Ramakrishna Boiled Raw Rice Mill (ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Total Rs. 1,41,895.00 The ld CIT(A) also found that the above machinery and plant are specifically installed in boiled section. Therefore, he directed the ITO to satisfy himself by verifying the details of machinery to be in accordance with r. 5AA of the IT Rules, after satisfying himself about the details as well as creation of necessary reserves the ITO was directed to grant investment allowance. Thus he partly allowed the appeal filed by the assessee by his impugned orders. 4. The Department having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of operation with that of ships or aircraft. When we contrast the above position with that of the new machinery or plant installed after 31st March, 1976 the following position emerges. Sec. 32A(2)(b)(iii) which needs (b) any new machinery or plant installed after the 31st day of March, 1976 (iii) in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule. It is admitted that rice is not an article specified in the list of Eleventh Schedule. In contrast to the new ship or new aircraft it is enough for the new machinery or plant is installed for the purpose of business of manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture. The work is also done in a licensed industrial establishment. Under the circumstances we should imagine that the authorities were hardly justified in having even a doubt as to assessee's eligibility for investment allowance in respect of machinery used in its business." In the said order all the case law which was cited by assessee before the CIT(A) was also cited before the Tribunal. Further the learned Members took note of another Supreme Court case reported in Idandas vs. Anant Ramachandra Phadke AIR 1982 SC 127 where the Supreme Court laid down three tests to hold that a manufacturing process is used. The tests are (i) Certain commodity should have been produced: (ii) The process of production must involve either ..... X X X X Extracts X X X X X X X X Extracts X X X X
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