COMMISSIONER OF INCOME TAX Vs. TRIBENI TISSUES LTD

JUDGEMENT

(1.) In this reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Commissioner of Income-tax, West Bengal-H, the Tribunal has referred the following question for our opinion :

(2.) Shortly stated, the facts relating to the question are that the assessee in relation to assessment year 1978-79 claimed investment allowance on motors, electrical installations and underground cables, overhead cables, air-conditioning machines, tubewells and weighing machines to the correct value of Rs. 1,23,62,683. The Assessing Officer did not allow the investment allowance on the items on the ground that the electrical machines are in the nature of additional equipment and accessories which were not used in the actual manufacturing process. The Commissioner of Income-tax (Appeals), however, allowed the allowance holding that these items wore plant and machinery for the purpose of manufacture of tissue paper by the assessee. It was indicated that paper manufacturing is an integrated continuing process. The plant and machinery in question installed in the factory function as integral parts of the chain of the manufacturing process and, therefore, he directed the Inspecting Assistant Commissioner to allow investment allowance to the assessee.

(3.) Before the Tribunal, the Departmental representative urged that unless on facts it is established that these articles were part and parcel of the plant and machinery, the assessee could not be allowed investment allowance. The Departmental representative further particularly referred to the investment allowance on tubewells and the weighing machines and indicated that the tubewell and the weighing machines could not be considered as plant within the meaning of Section 32A. It was further indicated by him that if air-conditioning machines were installed in the office, it could not be said that the services were wholly used for the purpose of the business of the assessee. Accordingly, it was urged that the finding given by the Commissioner of Income-tax (Appeals) on this issue should be modified.