Bombay High Court
Mafatlal Fine Spg. And Mfg. Co. Ltd. vs Commissioner Of Income-Tax on 1 October, 1993
Equivalent citations: [1994]206ITR578(BOM)
ORDER
FOR WHICH PLACED AFTER 1-12-1973 Held :
The cut off date "1-12-1973" assumes utmost importance in view of the provisions contained in s. 16 of the Finance Act, 1974, which permits allowance of development rebate only on those machineries for which orders had been placed before 1-12-1973. In this case the orders for the purchase of accessories were placed after 1-12-1973. That being so, it was clearly beyond the cut off date specified in s. 16 of the Finance Act, 1974. The claim for development rebate in respect thereof was, therefore, liable to be rejected. Further, the admitted position is that the original order placed by the assessee for purchase of plant and machinery before 1-12-1973 did not include the accessories in question for which a separate order was placed by the assessee after 1-12-1973, and in that view of the matter it is not covered by s. 16(1)(c) of the Finance Act, 1974.
Conclusion :
Date in which order was placed being beyond cut off date specified in s. 16(c) of the Finance Act, 1974 not entitled to development rebate even though order for the plant which accessories were related to had been placed before 1-12-1973.
Application :
Not to current assessment years.
Citation :
Finance Act 1974 s.16(c) Income Tax Act 1961 s.33 Export market development allowance--EXPORT LICENCE FEES, EXPORT FREIGHT CHARGES AND INSURANCE CHARGES Held :
No weighted deduction is allowable in respect of the said items.--M. H. Daryani v. CIT (1993) 202 ITR 731 (Bom)followed.
Application :
Not to current assessment years.
Citation :
Income Tax Act 1961 s.35B JUDGMENT Dr. B.P. Saraf J.
1. By this reference under section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal has referred the following two questions of law to this court for opinion :
"1. Whether, on the facts and in the circumstances of the case, the assessee was entitled to relief under section 35B of the Act on export licence fees, export freight charges and export insurance charges incurred by it during the assessment yeas 1975-76 and 1976-77 ?
2. Whether, on the facts and in the circumstances of the case, the assessee was entitled to development rebate on accessories to machinery the orders for which were placed after December 1, 1973 ?"
2. So far as the first question is concerned, counsel for the parties are agreed that following the ratio of the decision of this court in M. H. Daryani v. CIT [1993] 202 ITR 731, it may be answered in favour of the Revenue. In view of the above statement and following the ratio of the above decision, we answer the first question referred to us in the negative, i.e., in favour of the Revenue and against the assessee.
3. For deciding a second question, the brief narration of the relevant facts is necessary. The assessee is a limited company carrying on the business of manufacture and sale of textile goods. It was also having a chemical division. During the previous year relevant to the assessment years 1975-76 and 1976-77, the assessee purchased certain plant for which the order had been placed on April 1, 1973. The assessee also purchased some accessories for which the order was placed after December 1, 1973. The claim of the assessee for development rebate on the plant for which the order was placed on April 1, 1973, was allowed by the Income-tax Officer. He, however, disallowed the claim of the assessee for development rebate on accessories of machinery for which the purchase orders were placed after December 1, 1973. The disallowance made by the Income-tax Officer was upheld by the Tribunal. Hence, this reference at the instance of the assessee.
4. We have heard learned counsel for the assessee who contents that having allowed development rebate on the machinery, it was incumbent on his part to allow development rebate on the accessories also even though the order for such accessories had been placed after December 1, 1973. We have given our careful consideration to this submission. We, however, find it difficult to accept the same. The cut-off date "December 1, 1973" assumes utmost importance in view of the provision contained in section 16 of the Finance Act, 1974, which permits allowance of development rebate only on that machinery for which orders had been placed before December 1, 1973. This section, so far as relevant, reads :
"16. Continuance of development rebate in certain cases. - The notification of the Government of India in the Ministry of Finance (Department of Revenue and Insurance) No.S.O.2167, dated the 28th day of May, 1971, issued under sub-section (5) of section 33 of the Income-tax Act shall not apply in respect of - .....
(c) any machinery or plant (not being machinery or plant referred to in clause (b)) installed by any assessee after the 31st day of May, 1974, but before the 1st day of June, 1975, if the assessee furnishes evidence to the satisfaction of the Income-tax Officer that before the 1st day of December, 1973, he had purchased such machinery or plant or had entered into a contract for the purchase of such machinery or plant with the manufacturer or owner of, or a dealer in, such machinery or plant, or had, where such machinery or plant has been manufactured in an undertaking owned by the assessee, taken steps for the manufacture of such machinery or plant.
and accordingly the provisions of the Income-tax Act shall have effect in relation to such ship, machinery or plant, subject to the conditions specified in clauses (a), (b) and (c)."
5. The above section was amended by the Finance Act, 1975, but that amendment is not relevant for our present purpose as the crucial condition of the order have been placed before December 1, 1973, remained unaltered.
6. In this case, the admitted position is that the orders for the purchase of accessories were placed after December 1, 1973. That being so, it was clearly beyond the cut-off date specified in section 16 of the Finance Act, 1974. The claim for development rebate in respect thereof was, therefore, liable to be rejected. We are, therefore, of the opinion that the Tribunal was justified in confirming the order of the Income-tax Officer rejecting the claim for development rebate on accessories on the ground that the purchase order for the same had been placed after December 1, 1973.
7. Counsel for the assessee submits that the order for purchase of plant and machinery having been placed before December 1, 1973, all orders for purchase of accessories of such plant and machinery even subsequent to the said date should relate back to the order for the purchase of the plant and machinery itself. We find it extremely difficult to accept this contention. The admitted position is that the original order placed by the assessee for purchase of plant and machinery before December 1, 1973, did not include the accessories in question for which a separate order was placed by the assessee after December 1, 1973, and in that view of the matter, it is not covered by section 16(1) (c) of the Finance Act, 1974. The Tribunal was, therefore, right in holding that the assessee was not entitled to development rebate on the accessories for which the orders were placed by the assessee after December 1, 1973.
8. Under the facts and circumstances of this case, we answer the second question referred to us also in the negative, i.e., in favour of the Revenue and against the assessee.
9. We make no order as to costs.