Simplex Rubber Products Pvt Ltd V. Commissioner of Income Tax

ITR/228/1983

AI Insights

The case revolves around the dispute concerning the eligibility of Simplex Rubber Products Pvt Ltd for an investment allowance under section 32A of the Income-tax Act, 1961. The assessee claimed a 25% investment allowance for the cost of new machinery, arguing that their products, including rollers, diaphragms, valves, and rubber hoses, were covered under the term 'industrial and agricultural machinery' in the Ninth Schedule of the Act. Initially, the Income-tax Officer granted this allowance, but it was later contested by the Commissioner of Income-tax, who found the items did not qualify as machinery under the specified item of the Ninth Schedule. The High Court, referencing a similar case, overturned the Commissioner's decision, affirming the assessee's claim.

• Counselvise Citation: [1996] 140 COUNSELVISE.COM (IT) 796783 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 04-10-1996
• Assessment Year: misc
• Other Referred Cases: Industrial Machinery Manufacturers vs. C.I.T.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MIHIR THAKORE
• Assessee Lawyers: J P SHAH
• Keywords: Income Tax Act; Investment allowance; Industrial and agricultural machinery; Ninth Schedule
• Section: 32A

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 228 of 1983 For Approval and Signature: Hon'ble MR.JUSTICE S.M.SONI and MR.JUSTICE Y.B.BHATT ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements? 2. To be referred to the Reporter or not? 3. Whether Their Lordships wish to see the fair copy of the judgement? 4. Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? -------------------------------------------------------------- SIMPLEX RUBBER PRODUCTS PVT LTD Versus COMMISSIONER OF INCOME TAX -------------------------------------------------------------- Appearance: MR JP SHAH for Petitioner MR MIHIR THAKORE for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE S.M.SONI and MR.JUSTICE Y.B.BHATT Date of decision: 04/10/96 ORAL JUDGEMENT At the instance of the assessee, the following question is referred to us: \"1. Whether on the facts and in the circumstances of the case, the assessee was entitled to investment allowance at the rate of 25% because it manufactures the items mentioned in the Ninth Schedule of the Income-tax Act,1961?\" The assessee is a Private Limited Company. The assessment year under reference is 1977-78, the previous year being the year ended 31st March, 1977. During the course of assessment proceedings assessee claimed investment allowance at the rate of 25% of the cost of new machineries under sec.32A of the Income-tax Act on the ground that items manufactured by the Companny were covered within the term industrial and agricultural machinery specified in the Ninth Schedule of the Income-Tax Act,1961. The said claim of the assessee was allowed by the Income-tax Officer. On examination of the case record, the Commissioner of Income-tax observed that the said items of rubber products, namely, rollers, diaphragms, valves, lines, articles, rubber hoses etc. cannot be said to be machinery covered under item no.8 of the Ninth Schedule. The Commissioner, therefore, arrived at a finding that the assessee Company is not entitled to investment allowance at the rate of 25% of the cost of machinery. He, therefore, held that the order of I.T.O. was erroneous, in so far as it was prejudicial to the interest of the revenue and set aside the order directing the I.T.O. to withdraw the investment allowance already granted to the assessee.The appeal preferred by the assessee against the said order came to the dismissed upholding the view taken by the Commissioner. Items manufactured by the assessee Company is covered within the term industrial and agricultural machinery specified in the Ninth Schedule of the Income-tax Act,1961 as held by this Court in ITR no.384/81 decided on 6th October,1993 wherein it has been observed as under: \" The aforesaid question is covered by the decision of this Court in the case of Industrial Machinery Manufacturers vs. C.I.T..(1993) 203 I.T.R. 436, wherein the Court has held that the Tribunal was wrong in holding that humidifiers manufactured by the assessee were not textile machinery or textile accessories. The Court held that the assessee was entitled to get higher development rebate as prescribed. In this view of the matter, the textile accessories manufactured by the assessee in the present case also were covered by the Ninth Schedule\" In view of the said judgment of this Court assessee was entitled to investment allowance at the rate of 25% as the items manufactured fall within the Ninth Schedule of the Income Tax Act,1961. The question referred to us is therefore required to be answered in the affirmative i.e. in favour of the assessee. Reference stands disposed of accordingly. ******** sf-sms "