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TMI Blog1985 (4) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... aims investment allowance on machinery. However, on examination of the nature of the assessee s claim of investment allowance cannot be granted on the ground that the assessee is not engaged in manufacturing activity where, there is a process of conversion of raw materials into finish products. The assessee main job is change of alternation of the shape and firm of material, like digging the ground for the convenience of installing the machineries and equipments etc. this does not amount to manufacturing nay article. Hence the claim is not allowed. At the time of heaving the assessee representative emphatically argued in writing that the investment allowance is allowable. However, as already discussed the assessee s argument is not consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Private Ltd. (1980) 126 ITR 377 (Bom). In this case it has been held by their Lordships that where the assessee is doing construction repairs and for this purpose has a small activity of manufacture of windows etc., there is no production of any article or things as required by the statute. 3. Elaborating his argument further Shri Sathe referred to Chowgule Co. s case AIR 1981 SC 1014 to show that unless the end result of one or more process employed by the assessee is a commodity known to commerce as distinct from the original feed material, there is no manufacture or production of article or thing. Shri Sathe gave an illustration through a reported case of Calcutta High Court in CIT vs. Hindusthan Metal Refining Works (P) Ltd. (1981) 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allation of machinery etc. It is necessary to understand the process and nature of business conducted by the assessee firm. The assessee purchases or gets the material from its clients in the form of M. S. Steel plates of various sizes, types and gauges and also the other material like welding electrodes, gases (oxygen, acetylene), girding wheels etc. The consumable or spares like hardware, paints, varnishes, thinners are also required by the assessee s business. During the year under consideration, the assessee has undertaken the work of manufacturing and preparing i. e. fabricating certain parts which are onward used in the installation/construction of the factory sheds and steel foundations required for machinery erection for its cli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urlines joining the edges of two trusses, hoppers for lifting thermal coal ash in bucket shape and ducting etc. The above articles duly fabricated are assessable and erected by the assessee, For this purpose the assessee has to take machinery. The assessee has also to engage pulleys and other equipments for bringing into existence certain things which cannot by any stretch of imagination be described as a mere processing of the original steel plants supplied by the contractees. As all the conditions for allowance of investment allowance are fulfilled the order of the AAC was sought to be supported. 5. Elaborating the point further and relying on CIT vs. Tata Locomotive Engg. Co. Ltd. (1967) 68 ITR 325 (Bom) Shri Nadpurohit pointed out t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isk and responsibility. 6. Shri Nadpurohit then put an alternative argument that investment allowance is alloable for the business of generation of electricity under s. 32A (2) (b) (i). What the assessee does, for the business generation of electricity by M. S. E. B. Regarding the meaning of install , reliance was placed on CIT vs. Shri Rama Vilas Service (P) Ltd. (1959) 38 ITR 25 (Mad) and CIT vs. Indian Turpentive Rosin Co. Ltd. (1969) 75 ITR 533 (All). Lastly he pointed out that there is no dispute that the assessee is a small scale industry and that the assessee s case does not fall under Eleventh Schedule accordingly it was submitted that the order of AAC is correct. 7. In his rejoinder Shri Sathe pointed out that page 776 of Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained in his letter dt. 20th Jan., 1983, the ITO has missed certain important aspects. As pointed out by the assessee, the assessee does not perform the civil works. He has acquired expertise in converting the mild steel plates into various sizes, types and gauges etc. The finished products in the form of Trus Pulines etc. are known in commerce as a commodity entirely different from a mild steel plate. Besides, the assessee is not relying wholly on the material supplied by M. S. E. B. He makes his own purchases of electrodes, gases (oxygen acetylene), grinding wheels etc. and spares like hardware, paints, varnishes, thinners etc. to give to the product required identity and finish. the fact that the assessee s machinery consists of por ..... X X X X Extracts X X X X X X X X Extracts X X X X
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