9911796707
TMI Blog1996 (4) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in respect of the electrical sub-station. Pursuant to remarks made by the audit party, the assessments were reopened by the Income-tax Officer under section 147(b) rejecting the objection raised by the assessee to such proposal. The Income-tax Officer completed the assessment withdrawing the relief granted by way of extra-shift allowance in respect of electrical substation. The assessee's appeals were allowed by the Appellate Assistant Commissioner granting extra-shift allowance as claimed by the assessee for the assessment years 1974-75. The Department took up the matter in appeal before the Tribunal. By its order dated March 14, 1978, the Income-tax Appellate Tribunal set aside the order of the Appellate Assistant Commissioner with a direction to decide the matter afresh after making a local inspection along with the Income-tax Officer and then to decide the appeal. There was also a direction to the Appellate Assistant Commissioner to prepare a detailed note of local inspection about the machinery, particularly about the disputed items with reference to the description of the machinery. He was also directed to refer in his report as to whether it is possible to treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carbide plant. The Tribunal disallowed the claim of the assessee for the extra-shift allowance. The assessee filed O. P. Nos. 1228 of 1982 and 1226 of 1982 before this court for compelling the Tribunal to refer the question regarding eligibility for extra-shift allowance. By judgment dated January 20, 1985, this court directed the Tribunal to refer the common question under section 256(2) of the Income-tax Act. It is contended by the assessee that the Tribunal has committed an error in coming to the conclusion that the sub-station would come within the scope of the term "electrical machinery" in column 1 under item (iv) of entry III of Part I of Appendix I to the Income-tax Rules, 1962, for the purpose of rate of depreciation. According to the assessee, the enquiry should have been whether the sub-station forms a vital and inseparable part of the plant and machinery. The entire approach of the Tribunal was, therefore, misconceived. On the other hand, the Revenue contended that the sub-station would come under column (1), electrical machinery, switch gear, transformers and other stationary plant and wiring and fittings, electric lights and fan installation under item (iv) and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic controls and the weighing apparatus are part and parcel of the plant. Since the reaction producing calcium carbide takes place only at the proper temperature, the electrical sub-station involved in the electrical thermal process is the very heart of the plant. The unit cannot work independently of the same. The entire unit is depending upon it. It cannot, therefore, be said that the plant can work extra-shift without the sub-station. For these reasons, on facts, I hold the appellant is entitled to extra-shift allowance as claimed." The assessee had produced before the Tribunal a report by the area leader and the head of division of electrothermics and metallurgy and the project manager, calcium silicide and calcium carbide projects, Central Electrochemical Research Institute (Council of Scientific and Industrial Research). A portion of the above report has been quoted in paragraph 10 of the order of the Tribunal. The full text of the report was made available to us at the time of hearing. It reads as follows : "The process of manufacturing calcium carbide involves a reaction between lime and carbon under the influence of electric arc to form calcium carbide. Different carbon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a nearby stream and it was found liberating great quantities of combustible gas. The first factory for the production of calcium carbide was built at Niagara Falls in 1896. Calcium carbide is prepared from quicklime and carbon at 2,000 to 2,000 degree C. "The source of carbon is usually coke, anthracite, or petroleum coke. Coke is most widely used. It should be compact and have a low ash content, a low ignition point, and high electrical resistivity, so that the bulk of the furnace charge will be highly resistant to the flow of energy. Thus, the energy is concentrated, resulting in a more rapid and complete reaction.... The furnace consists of a steel shell with the side walls lined with ordinary firebrick and the bottom covered with carbon blocks or anthracite to withstand the extremely hot, alkaline conditions. Most of the larger furnaces use three-phase electric current and have suspended in the shell three vertical electrodes. Improvements include the "closed" furnace, where almost all the carbon-monoxide from the reaction is collected and utilised, and Soderberg continuous self-baking electrodes, which permit larger capacity furnaces than the old prebaked electrodes.... The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nty held that the sanitary and water supply installations inside a factory do not come under the head "Hydraulic works, pipelines and sluices" excepted from grant of extra-shift depreciation allowance. It was held that sanitary and water supply installations installed in a factory of the assessee manufacturing steel castings, cannot be treated as separate machinery to come under exempted item, "hydraulic works, pipelines and sluices". Similar view was taken by the Supreme Court in CIT v. Taj Mahal Hotel [1971] 82 ITR 44. It was held that sanitary fittings, etc., in the bath-room in a hotel will come within the definition of the word "plant" under section 10(2)(vib) read with section 10(5) of the Indian Income-tax Act, 1922. In the order of the Tribunal, reference is made to the decision in CIT v. M. S. Sahadevan [1980] 123 ITR 820 (Mad). We do not find that this decision has any relevance in deciding the question involved in the present case. What was considered there was whether a particular machinery is electrical machinery or not. It was held that an electrical machinery is one inbuilt into which is the electric motor which forms a vital and inseparable part of the machinery. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
