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TMI Blog2004 (12) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... ighted deduction under section 35B of the Act as it did not have any machinery or plant in the relevant assessment year, is correct in view of the provisions of section 35B(1A) - - - - - Dated:- 1-12-2004 - Judge(s) : R. K. AGRAWAL., PRAKASH KRISHNA. JUDGMENT The judgment of the court was delivered by P. Krishna J.- The Income-tax Appellate Tribunal, Delhi, at the instance of the assessee has referred the following question of law under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for opinion to this court: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that it was obligatory for the assessee to have machinery and plant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year in question, for the purposes of its business within the meaning of clause (2) of the Explanation below sub-section (2) of section 32A. The Tribunal did not accept the contention of the assessee that it was not obligatory for the assessee to have any machinery and plant and that what was required was that if the assessee had installed a machinery and plant, its aggregate value on the last date of the previous year, for the purposes of business of the undertaking did not exceed Rs. 10,000. Heard Shri Vikram Gulati, learned counsel for the assessee, in support of the reference, and Shri A. N. Mahajan, learned standing counsel for the Revenue. Learned counsel for the assessee contended that the assessee being an exporter it is not ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition given of an "industrial company" that the plant and machinery should be owned by the assessee. The judgment is principally based upon the fact that a manufacturer is a person by whom or under whose direction or control the goods are manufactured. A manufacturer may hire a plant or machinery and employ hired labour and manufacture the goods. The court was interpreting the definition of "industrial company" with reference to the word "manufacture". It was held that a manufacturer may hire a plant or machinery and employ hired labour and manufacture the goods. But to earn the benefit of the concessional rate of tax a company must mainly engage itself in the manufacture or processing of goods either personally or by someone under his sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 35B was admissible if the assessee is engaged in the business of export of goods and is either a small scale exporter or a holder of an export house certificate. Under the Explanation to sub-section (1A) a small scale exporter means a person who exports goods manufactured or produced in any small scale industrial undertaking or undertakings owned by him. Small scale industrial undertaking has been given the meaning assigned to it in clause (2) of the Explanation below sub-section (2) of section 32A of the Act. Sub-section (1A) of section 35B along with Explanation is reproduced below:- "(1A) Notwithstanding anything contained in sub-section (1), no deduction under this section shall be allowed in relation to any expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws:- "(2) an industrial undertaking shall be deemed to be a small scale industrial undertaking, if the aggregate value of the machinery and plant (other than tools, jigs, dies and moulds) installed, as on the last day of the previous year, for the purposes of the business of the undertaking does not exceed,- (i) in a case where the previous year ends before the 1st day of August, 1980, ten lakh rupees; (ii) in a case where the previous year ends after the 31st day of July, 1980, but before the 18th day of March, 1985, twenty lakh rupees; and (iii) in a case where the previous year ends after the 17th day of March, 1985 thirty-five lakh rupees, and for this purpose the value of any machinery or plant shall be- (a) in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Finance Act, 1978. All the three authorities have found that the assessee does not own any plant and machinery. Learned counsel for the assessee invited the attention of this court towards the balance-sheet and the schedule of fixed assets of the assessee for the relevant assessment year. The total value of the fixed assets as shown in the schedule is of Rs. 31,975 which consists of furniture and fixtures, electric fitting, car, scooter and Bhatti equipment. The Tribunal noticed the fact that depreciation on Bhatti was disallowed by the Income-tax Officer. But the assessee did not file any appeal against the refusal of the Income-tax Officer to grant depreciation on the said Bhatties. The Tribunal has recorded a finding that no ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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