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TMI Blog2005 (10) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... .A. Mehta J.-The Income-tax Appellate Tribunal, Ahmedabad Bench, "A", has referred the following question under section 256(1) of the Income-tax Act, 1961 ("the Act"), at the instance of the Commissioner of Income-tax: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee is entitled to grant of investment allowance in respect of plant and machinery installed and put to use in the year under consideration for the manufacture of various products like bread, biscuits and cakes?" The assessment year is 1988-89 and the relevant accounting period is year ended on May 31,1987. The assessee claimed investment allowance of Rs. 1,30,037. However, the Assessing Officer disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reserve it has been found by the Tribunal that the statutory reserve has been created in the immediately succeeding year, viz., the assessment year 1989-90, which amounts to sufficient compliance with the relevant provisions and the clarification issued by the Central Board of Direct Taxes in Circular No. 259, dated July 11, 1979 (see [1981] 131 ITR (St.) 70) read with Circular No. 305, dated June 12, 1981 (see [1981] 131 ITR (St.) 72) as well as amendment to section 32A(4)(ii) of the Act by the Finance Act, 1990, with retrospective effect from April 1, 1976. The Tribunal, therefore, granted investment allowance to the assessee. Mr. T.U. Bhatt on behalf of Mr. B.B. Naik, learned standing counsel for the applicant-Revenue, submitted that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not survive. The Assessing Officer himself has recorded that the assessee-company has been incorporated with effect from March 1, 1985 under the Companies Act, 1956, and carries on business as bakers of bread, biscuits and cakes under the name and style of Busy Bakers at Baroda. That the business has commenced from August 23, 1986. Therefore, it is an undisputed fact that the assessee is not a trader. The only question that survives thereafter is as to whether it can be stated that the assessee has satisfied the conditions of section 32A(1) read with section 32A(2)(b)(ii) of the Act. It has been found by the Tribunal that all other conditions prescribed by this section are satisfied and the only dispute between the parties is as to whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity." Applying the aforesaid tests which are positive and negative in character, can it be stated that the activity which is carried on by the assessee is such that the raw material which undergoes a process retains its original identity? The assessee uses flour, ghee, sugar, etc., to prepare/produce bread, biscuits and cakes, etc. The end product which is obtained after the raw materials are processed/consumed is an article which is regarded in the trade, by those who deal in it, as being distinct in identity from the commodity involved in its manufacture. In other words, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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