9911796707
TMI Blog1993 (10) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of manufacture and sale of cement. It also carries on business as miners, metallurgists, builders, contractors, engineers, merchants, importers and exporters and deals in property of all kinds. It also carries on investigations to discover places where cement can be profitably made and is engaged in prospecting and research work to obtain prospecting licences. During the assessment year 1971-72, the assessee entered into a contract with the Government of Bhutan for prospecting limestone in Bhutan. As per letter dated September 9, 1968, addressed to the Trade Commissioner, Government of Bhutan, the assessee agreed to send its geologist to Bhutan to explore the possibility of existence of sufficient quantity of limestone so as to determine the viability of its commercial exploitation. For the above services, which were expected to take about eleven months, the assessee was to be paid a sum of Rs. 4,50,000 in instalments and in the manner specified in the said letter. The terms contained in the above letter of the assessee were accepted by the Government of Bhutan, vide its Trade Commissioner's letter dated October 11, 1968. The assessee undertook the said work and incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue relied on the provisions of section 33(6) of the Act and contended that the assessee was not entitled to claim development rebate in respect of the new water works installed in its residential colonies. On consideration of the rival contentions, the Tribunal came to the conclusion that the assessee was not entitled to development rebate on this amount in view of the specific prohibition contained in section 33(6) of the Act. The Tribunal, therefore, restored the order of the Income-tax Officer in this regard. The assessee has come in reference against this decision also which is the subject-matter of question No. 2. We have heard learned counsel for the assessee, Mr. Soli Dastur, at length. So far as the first question is concerned, the submission of learned counsel is that the expenditure incurred by the assessee falls within sub-clauses (ii), (iii) and (viii) of clause (b) of section 35B(1) of the Act. We have considered the above submission. Section 35B of the Act provides for allowance of weighted deduction on expenditure incurred wholly and exclusively on any of the activities specified in the various sub-clauses of clause (b) of section 35B(1) of the Act. Sub-clauses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. We now turn to question No. 2 which pertains to allowability of development rebate on the cost of water works amounting to Rs. 9,00,000 incurred by the assessee for provision of supply of water to the residential colonies. On a careful consideration of the facts and circumstances of the case and the provisions of section 33(6) of the Act, we find ourselves in agreement with the Tribunal that the assessee is not entitled to development rebate in respect of the same. The total cost of additions to the water works during the year was Rs. 28,53,200. The Income-tax Officer bifurcated this cost into two parts, viz., cost of water works at the factory and cost of water works at the residential colonies. The Income-tax Officer estimated the cost of the water works at the residential colonies at Rs.9,00,000. He allowed the claim for development rebate in respect of the cost of the water works at the factory amounting to Rs. 19,53,200 and disallowed the claim in respect of the cost of water works at the residential colonies. We do not find any infirmity in this action of the Income-tax Officer which was also approved by the Tribunal. Learned counsel for the assessee submits that the wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed by the Income-tax Officer. What has been disallowed is the claim of development rebate in respect of the cost of the water works installed at the residential colonies, which was estimated at Rs. 9,00,000. In that view of the matter, there is no force in the submission of the counsel for the assessee that the water works had been installed at the river bed and not in the residential accommodation. There is a clear factual finding that the cost of water works installed at the residential colonies was Rs. 9,00,000 and the claim of the assessee for development rebate has been disallowed only in respect of this amount. That being so, section 33(6) is clearly attracted and the Tribunal was justified in not allowing the development rebate in respect of the same. Learned counsel for the assessee also drew our attention to the Memorandum explaining the provisions in the Finance Bill, 1965, wherein at page 149, it has been stated that machinery or plant installed after March 31, 1965, in the office or residential accommodation including residential accommodation of the nature of a guest house, such as air-conditioners, fans, refrigerators, etc., will not qualify for development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential accommodation will fall within section 33(6) of the Act. We have perused the above judgment. We find that in the above case, this court, while interpreting section 33(6) of the Act, was of the opinion that "plant and machinery installed in the residential accommodation" could mean only those plants and machinery which are intended for use therein. This judgment, in our opinion, does not help the assessee in the present case. It cannot be contended that the water supply was not intended for use in the residences. If any machinery or plant was installed in the residential accommodation for supplying water to the residents, it will fall within section 33(6) of the Act. It may also be pertinent to mention that whatever might be the components of the water works, the admitted position is that it is "plant and machinery" and it is on that basis alone that development rebate is claimed under section 33 of the Act. In that view of the matter, it is not necessary to go into the components of the installations. On the other hand, we can proceed on the basis that these are plant and machinery and it is on that basis alone that the assessee is claiming development rebate. If that is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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