P. KROPIVNIK Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The following questions of law have been referred to this Court for opinion by the Income Tax Tribunal, Chandigarh Bench, Chandigarh (for short 'the Tribunal') arising out of ITA Nos.555/Chandi/84 relating to the assessment year 1980 -81: 1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that construction, manufacture or production of Ropeways was not the business of the assessee but it was only a means for transporting the timber etc. of a third party from one place to another and consequentially not entitled to investment allowance under Section 32A of the ITA, 1961.

(2.) WHETHER on the facts and in the circumstances of the case, the Tribunal was right in holding that Ropeways were road transport vehicles as contemplated by proviso (b) to Section 32A(1) and, therefore, not entitled to investment allowance? At the time of hearing of the petition, petitioner sought to redraft the questions of law in the following manner: 1. Whether under the facts and circumstances of the case the Tribunal was justified in upholding that the assembly of component is not manufacturing/industrial activity and hence not allowing the investment allowance on the plant and machinery installed in the factory premises of the applicant in Chandigarh for assembling/manufacturing of Ropeways 2. Whether under the facts and circumstances of the case the order of the Tribunal is perverse in upholding that the respondent is not a Small Scale Industrial Undertaking for the purpose of eligibility of allowing of investment allowance under Section 32A and not having any factory premises and not going into the facts of the matter in consequence of the conclusion reached by the Tribunal in question No.1 though the applicant is having a registration No.53 53 01509 PMT SSI dated 06.10.1975 and a regular factory at 57, Phase II, Industrial Area, Chandigarh

(3.) THE facts as noticed in the case are that the petitioner is engaged in the business of manufacture of Ropeways and also from transport business carried on by installing the Ropeways during the year in question. The assessee entered into a contract with M/S Babu Ram and sons on September 12, 1979 whereby he agreed to put up a Ropeway in forest Gawas, UP 54 and 55, Kheshdhar Range of Rohroo Forest Division for the purpose of transportation of B.L.Timber Billets of all sizes belonging to M/S Babu Ram and Sons on contract basis on the terms and conditions agreed therein. For the purpose of putting up these Ropeways, the assessee purchased various material consisting of wire ropes, driving units ( i.e. engines, differentials, gearboxes, brakes etc.), Lasso pulleys and hangers, rope hooks, tools and accessories. On this total investment the assessee claimed investment allowance under Section 32A of the Income Tax Act, 1961 ( for short the Act) to the extent of 25% of the total investment. The claim made by the assessee was disallowed by the Assessing Officer with the observation that the machinery so installed by the assessee is not being used in the business of manufacture or production of any article or thing as required under Section 32A of the Act and was merely being used for transportation of timber from jungle to motorable road through Ropeway transport.