COMMISSIONER OF INCOME TAX Vs. PERFECT LINERS

JUDGEMENT

(1.) THE Tribunal has referred the following question under s. 256(1) of the Act

(2.) THE assessee is engaged in the business of purchasing rough castings and supplying the same to the manufacturers of pump -sets, tractors, etc., after machining and polishing them in its factory. It claimed before the ITO development rebate of Rs. 42, 146 for the assessment year 1970 -71 and Rs. 6, 038 for the assessment year 1971 -72, which are the years under reference, on the basis of allowance of 35% having to be made on the cost of machinery. This claim for allowance of 35% as development rebate was made on the ground that the assessee was a priority industry which came within the scope of the entries in the Fifth Schedule to the Act. The assessee relied on item (9) read with item (24) of the Act as being applicable to its case. The ITO, however, held that the assessee could be granted development rebate only at the general rate of 20% as in his opinion the assessee's case did not come under item (24)

(3.) THE assessee does not manufacture any internal combustion engines. Parts with which we are now concerned are claimed to be components of such internal combustion engines. The higher rate is applicable as provided in s. 33(1)(b)(B)(i), where the machinery or plant is installed for the purpose of business of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule. The short question is whether the machinery which produced the items with which we are now concerned has been installed for the purpose of construction or manufacture of the components of item No. (5)