TMI Blog1991 (1) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... stment allowance has to be granted ?" The assessee is engaged in the manufacture of electronic equipment. It has an internal telephone system with about 20 lines. This installation is claimed to be a plant and investment allowance was claimed by the assessee. However, the original authority did not grant the allowance but, on appeal, the same was granted by the Commissioner (Appeals). This order of the first appellate authority was affirmed by the Appellate Tribunal. Hence, this reference at the instance of the Revenue. The question arose under section 32A of the Income-tax Act. As per this section : "Section 32A. - (1) In respect of a ship or an aircraft or machinery or plant specified in sub-section (2), which is owned by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to learned counsel, any installation to fall within section 32A(1) should be of such a nature which by itself produces the goods or aids in production of goods. A mere facility which facilitates communication does not result in any production of goods or aid the production of goods and, therefore, it cannot be said to be "used for the purpose of business". Learned counsel advanced a theory of direct nexus between production and installation. Mr. Chanderkumar also contended that telephone installations are office appliances which fall under clause (b) of section 32A and just because they are installed in the place of production, they do not cease to be office appliances. This question directly came up for consideration before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efficiently working and giving proper production. Therefore, if it is found that a particular plant or machinery is substantially and essentially for the purpose of production, such plant and machinery cannot be taken as covered by the expression 'office appliances'. The Appellate Assistant Commissioner has taken a view that this internal telephone system cannot earn development rebate because by itself it produces nothing. This concept is totally outdated if it is found that the plant or machinery in question is helpful in making the other machines run properly and efficiently. It cannot be doubted that the internal telephone system installed in the different factories of the complex would be quite essential in harmonising and co-ordinatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des any article or object, fixed or movable, live or dead, used by a businessman for carrying on his business. It is not necessarily confined to an apparatus which is used for mechanical operations or processes or is employed in mechanical or industrial business. It would not, however, cover the stock-in-trade, that is, goods bought or made for sale by a businessman. It would also not include an article which is merely a part of the premises in which the business is carried on as distinguished from a part of the plant with which the business is carried on. An article to qualify as plant must furthermore have some degree of durability and that which is quickly consumed or worn out in the course of a few operations or within a short time cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in CIT v. Malayalam Plantations Ltd. [1964] 53 ITR 140. It was observed by the Supreme Court thus (headnote): "The expression 'for the purpose of the business' is wider in scope than the expression 'for the purpose of earning profits'. Its range is wide ; it may take in not only the day to day running of a business but also the rationalisation of its administration and modernisation of its machinery ; it may include measures for the preservation of the business and for the protection of its assets and property from expropriation, coercive process or assertion of hostile title ; it may also comprehend payment of statutory dues and taxes imposed as a pre-condition to commence or for carrying on a business, it may comprehend many ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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