Per Shri T. Venkatappa, Judicial Member - The assessee is a company engaged in the manufacture of electronic equipments. During this year, the assessee claimed investment allowance on the internal telephone installation in the factory. The AAC considered this item as an officer equipment and refused the allow investment allowance under section 32A of Income-tax Act. 1961 (the Act). The assessee appealed to the Commissioner (Appeals). Following the decision of the Himachal Pradesh High Court in CIT v. Mohan Meakin Breweries Ltd.  2 Taxman 103, he held that the internal telephone system should be considered as a plant in the assessees factory and investment allowance has to be granted. Against the same, the revenue has preferred this appeal.
2. The learned departmental representative submitted that PABX and Intercom system is only an office equipment and so no investment allowance is allowable. He submitted that the decision of the Himachal Pradesh High Court in Mohan Meakin Breweries Ltd.s case (supra) is one dealing with development rebate and not investment allowance. The learned counsel for the assessee supported the order of the Commissioner (Appeals).
3. We have considered the rival submissions. The internal telephone system in the factory is very essential for the efficient working of the factory and for co-ordinating the manufacturing work undertaken by the assessee. Without internal telephone system it is very difficult to carry on the manufacturing process undertaking by the assessee. The said internal telephone system installed by the assessee cannot be treated as office appliance. It is a scientific apparatus within the meaning of plant in section 43 of the Act. So, this is a plant installed in the assessees factory. The assessee is an industrial underrating. In out view, the assessee is entitled for investment allowance under section 32A. In Mohan Meakin Breweries Ltd.s case (supra) the question arose whether installation of internal telephone system could be construed as plant and development rebate could be allowed under section 33 of the Act. The Himachal Pradesh High Court held that it is not office equipment and it is plant entitled for development rebate. It was observed as under : "... It cannot be doubted that the internal telephone system installed in different factories of the complex would be quite essential in harmonising and co-ordinating the manufacturing process undertaken by the assessee. We are, therefore, of the opinion that the installation of the internal telephone system cannot be construed as office appliances. It can, therefore, earn development rebate under section 33, ..." (p. 110) The above ration squarely applies to the instant case. For allowing the investment allowance under section 32A the Commissioner (Appeals) was right in following the above ration. Thus, we uphold his order in allowing investment allowance on the installation of internal telephone system in the assessees factory.