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S.P.G.C. Metal Industries Pvt. Ltd. Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberT.C.P. No. 104 of 1983
Judge
Reported in[1985]152ITR484(Mad)
ActsIncome-tax Act, 1961 - Sections 32(1) and 32A(2)
AppellantS.P.G.C. Metal Industries Pvt. Ltd.
RespondentCommissioner of Income-tax
Appellant AdvocatePadmanabhan, Adv.
Respondent AdvocateNalini Chidambaram and ;C.V. Rajan, Advs.
Excerpt:
- - 256(1) of the act but without success......of income-tax (appeals) after giving a finding that the assessee is only a manufacturer of metal containers and that the metal containers produced by the assessee can by no means be called iron and steel (metal). aggrieved by the decision of the tribunal, the assessee has filed an application before the tribunal under s.256(1) of the act but without success. it is in those circumstances, the assessee has field the present petition under s.256(2) seeking a direction to the tribunal to refer the two questions set out above. 4. the assessee will be entitled to the investment allowance only if the articles manufactured by it fall within any of the items in schedule ix. item 1,schedule ix, is 'iron and steel(metal)'. section 32(1)(vi)[32a(2)(b)(ii)] of the act provides that in the.....
Judgment:

Ramanujam, J.

1. In this reference petition, the assessee seeks a direction to the Tribunal to refer the following two questions for the opinion of this court.

'1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the claim of investment allowance is not available to the applicant

2. Whether the Tribunal was right in holding that the assessee is not manufacturing iron and steel (metal) and that denial of the investment allowance claim is just and proper ?'

2. The assessee is a company carrying on the business of purchasing tin sheets and converting the same into containers both plain and printed by a manufacturing process. It field a return of income admitting a loss of Rs. 7,72,540. The assessing authority determined the assessee's loss at Rs. 65,464. In the course of the assessment proceedings, the assessee, inter alia, claimed investment allowance in respect of the machinery installed before February 2, 1977, to the tune of Rs. 24,462. In support of that claim, the assessee relied on certain documents and the decision of this court in Addl. CIT v. Trichy Steel Rolling Mills Ltd. [1979] 188 ITR 39. However, the assessee's claim was rejected on the ground that the assessee is not a manufacturer of iron and steel, but it merely used iron and steel manufactured by others in the process of manufacture of tin containers and, therefore, the assessee is not entitiled to cliam investment allowance in respect of the machineries installed and used by it. Aggrieved by the order of assessment, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) contending that it was entitled to investment allowance. In support of its plea, the assessee produced the following :

1. Indian Standerds Institution Manual with reference to the meaning of words 'tin plate'.

2. A certificate dated October 11, 1980, from the Tamil Nadu Industrial Investment Corporation to the effect that the item manufactured by the petitioner should be classified under Iron and Steel (Metal).

3. A similar certificate dated June 19, 1980, from the State Industries Promotion Corporation of Tamil Nadu Ltd.

4. A photostat copy of the import licence issued to the petitioner.

5. A certificate from the Central Excise Department classifying the petitioner's industry, as 'Iron and Steel (Metal)'.

3. The Commissioner of Income-tax (Appeals) rejected the assessee's contention and confirmed the order of the assessing authority. the assessee took the matter on a further appeal to the Income-tax Appellate Tribunal. The Tribunal also confirmed the order of the Commissioner of Income-tax (Appeals) after giving a finding that the assessee is only a manufacturer of metal containers and that the metal containers produced by the assessee can by no means be called iron and steel (metal). Aggrieved by the decision of the Tribunal, the assessee has filed an application before the Tribunal under s.256(1) of the Act but without success. It is in those circumstances, the assessee has field the present petition under s.256(2) seeking a direction to the Tribunal to refer the two questions set out above.

4. The assessee will be entitled to the investment allowance only if the articles manufactured by it fall within any of the items in Schedule IX. Item 1,Schedule IX, is 'iron and steel(metal)'. Section 32(1)(vi)[32A(2)(b)(ii)] of the Act provides that in the case of new machinery or plant installed after 31st day of May, 1974, for the manufacture of any one or more of the articles or things specified in the Ninth Schedule, investment allowance could be claimed. Therefore, the main question for our consideration in this case is to find out whether the assessee is the manufacture of any of the items in the Ninth Schedule so as to enable it to claim investment allowance in respect of the machinery used in the manufacture. The assessee claimed investment allowance on the basis that it is manufacturing iron and steel (metal). But it has been factually found by all the lower authorities including the Tribunal That the articles manufactured by the assessee are only metal containers made out of tin plates. Therefore, the assessee is not in fact manufacturing any iron and steel. According to the assessee, for the manufacture of tin containers, iron, and steel is also used. Even assuming that the assessee is using iron and steel for the manufacture of metal containers, the assessee can never claim to be a manufacturer of iron and steel. Thus, the view taken by the Tribunal appears to be in accordance with the statutory provision in section 32(1)(vi)[32A(2)(b)(ii)] of the Act. Apart from this, we find that in view of the finding given by the Tribunal that the assessee is not a manufacturer of iron and steel, the decision of this court in Addl. CIT v. Trichy Steel Rolling Mills Ltd. : [1979]118ITR39(Mad) , squarely applies. Thus, the view of the Tribunal does not call for any interference. The tax case petition is dismissed. No costs.


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