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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 ..... e to have machinery and plant and that it had failed to establish that it had installed machinery and plant for the purposes of the business of the undertaking within the meaning of clause (2) of the Explanation below sub-section (2) of section 32A of the Income-tax Act, 1961?" The assessment year 1979-80 is involved in the present reference. The assessee is an exporter and is engaged in the business of brass art ware consisting of bell sets, wind chimes, iron bells, candle stands, etc. It claimed itself as manufacturer of these items. The claim of the assessee for weighted deduction under section 35B of the Act on a total expenditure of Rs. 1,60,248 was disallowed by the Income-tax Officer. According to the assessee it is a small scale ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being an exporter it is not necessary for it to own plant and machinery to enable it to claim weighted deduction under section 35B of the Act. In support of his submission he has placed reliance upon the following three cases: (1) Griffon Laboratories Pvt. Ltd. v. CIT [1979] 119 ITR 145 (Cal); (2) Addl. CIT v. A. Mukherjee and Co. (P.) Ltd. [1978] 113 ITR 718 (Cal) ; and (3) CWT v. Radhey Mohan Narain [1982] 135 ITR 372 (All). In the case of Griffon Laboratories Pvt. Ltd. v. CIT [1979] 119 ITR 145 it was held by the Calcutta High Court that an assessee need not own or possess plant or machinery to be a manufacturer of goods to be treated as an industrial company for the purposes of concessional rate of tax. The manufacture may be eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by someone under his supervision or direction. In the case of Addl. CIT v. A. Mukherjee and Co. (P.) Ltd. [1978] 113 ITR 718 (Cal) the controversy was as to whether the assessee was engaged in any manufacturing or processing activity. In this case also the court interpreted the meaning of word "manufacturing" under the fiscal Acts, and was not called upon to interpret the phrase "small scale industrial undertaking", defined differently in section 35B(1A) of the Act. In the case of CWT v. Radhey Mohan Narain [1982] 135 ITR 372 (All) the assessee claimed relief under section 5(1)(xxxii) of the Wealth-tax Act. This court held with reference to section 5(1)(xxxii) of the Wealth-tax Act that an undertaking in order to satisfy the test of "indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to any expenditure incurred after the 31st day of March, 1978, unless the following conditions are fulfilled, namely:- (a) The assessee referred to in that sub-section is engaged in- (i) the business of export of goods and is either a small scale exporter or a holder of an export house certificate; or (ii) the business of provision of technical know-how, or the rendering of services in connection with the provision of technical know-how, to persons outside India; and (b) the expenditure referred to in that sub-section is incurred by the assessee wholly and exclusively for the purposes of the business referred to in sub-clause (i) or, as the case may be, sub-clause (ii) of clause (a). Explanation.- For the purposes of this sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any machinery or plant owned by the assessee, the actual cost thereof to the assessee ; and (b) in the case of any machinery or plant hired by the assessee, the actual cost thereof as in the case of the owner of such machinery or plant." The Explanation to section 35B(1A) provides that for "small scale exporter" means a person who exports goods manufactured or produced in any small scale "industrial undertaking" or undertakings "owned by him". The phrase "owned by him" is very important so far as section 35B of the Act is concerned. The said phrase does not find place in the case of "industrial company" and was not the subject-matter of consideration of the High Court in any of the three rulings relied upon by learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial was placed before it by the assessee to establish that it had installed machinery and plant in the assessment 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. It was not the case of the assessee before the authorities below as noticed by the Tribunal that the assessee owns any machinery or plant. Therefore, the finding of the Tribunal that the assessee is not entitled for the weighted 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) of the Act. In view of the foregoing discussion, we answer the question of law referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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