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TMI Blog1998 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the assessee, the Commissioner found that the plant and machinery installed in the assessee's premises on the last day of the previous year, viz., March 31, 1979, were as under : Name of the machinery Gross block as at 31-3-1979 Rs. 1. Plant and machinery 7,19,894 2. Electric equipments 90,304 3. Library 4,735 4. Patterns 5,776 5. Generators 1,72,234 6. Tractors 10,600 7. Furnace 258 --------------- 1 03,801 -------------- There is no dispute that the assessee was not a holder of an export house certificate. The Commissioner held that the assessee is not a smallscale industrial undertaking as its aggregate value of the machinery and plant installed on the last day of the previous year exceeded ten lakh rupees. The Commissioner, therefore, held that as the assessee cannot be treated as a small-scale industrial undertaking the weighted deduction under section 35B of the Act was not available to the assessee. The Commissioner, therefore, directed the Income-tax Officer to withdraw the weighted deduction and complete the assessment. The assessee preferred an appeal before the Income-tax Appellate Tribunal against the order of the Commissioner. Before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y small-scale industrial undertaking or undertakings owned by him, provided that such person does not own any industrial undertaking which is not a smallscale industrial undertaking. The expression, "small-scale industrial undertaking" is defined in clause (d) of the Explanation which reads as under : "'Small-scale industrial undertaking' has the meaning assigned to it in clause (2) of the Explanation below sub-section (2) of section 32A." Clause (2) of the Explanation to section 32A(2) of the Act defines the expression, "small-scale industrial undertaking" as under: "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 Marc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, inter alia, on any office appliance or any road transport vehicle and other items of machinery or plant expressly mentioned in section 32A. When clause (2) of the Explanation below section 32A(2) refers to the machinery or plant, it refers to the machinery or plant on which investment allowance is allowable under the Act. Once certain machinery or plant go out and are not eligible for the grant of investment allowance, the reference to plant and machinery in the Explanation to section 32A would refer to the other items of plant and machinery, eligible for investment allowance. In our opinion, the Explanation to section 32A(2) of the Act has to be read in the scheme and setting of the grant of investment allowance and it cannot be construed de hors the scheme or the context in which the said Explanation appears. In our view, the Explanation to section 32A(2) would refer only to those plant and machinery on which investment allowance is allowable and in the context of the Explanation, it can only mean those machinery or plant which are eligible for the grant of investment allowance and used for the purpose of business of manufacture or production of the article and things. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt is with reference to Explanation (3) to section 32(1)(vi) of the Act, the reasoning of the Bombay High Court that the Explanation appended to the section has no independent existence and there must be a conjoint reading of the Explanation along with the main provision and if so read, the expression, "machinery and plant" would exclude office appliances and road transport vehicles would equally apply to the provisions of section 32A(2) of the Act. The situation present in the instant case did arise before the Kerala High Court and the Kerala High Court also has taken a view that under the definition of small-scale industrial undertaking, recourse to section 43(3) would not be necessary and the expression, "machinery and plant" has to be understood in the context of the statutory provisions of section 32A and section 35B of the Act. We are in complete agreement with the views expressed by the Bombay High Court as well as the Kerala High Court. The Tribunal, however, has not determined whether any of the four items, namely, library, patterns, generators and tractors, would fall within the scope of the proviso to section 32A(1) of the Act. Though learned counsel for the assessee wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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