Punjab-Haryana High Court
Commissioner Of Income-Tax vs Mount Shivalik Breweries Ltd. on 15 May, 1996
Equivalent citations: [1997]228ITR414(P&H)
Author: M.L. Singhal
Bench: M.L. Singhal
JUDGMENT
N.K. Sodhi J.
1. This order will dispose of three Income-tax Cases Nos. 61 to 63 of 1995 in which common questions of law and fact arise. For the sake of convenience, facts are being taken from Income-tax Case No. 61 of 1995.
2. This petition has been filed by the Commissioner of Income-tax, Patiala, under Section 256(2) of the Income-tax Act, 1961 (for short "the Act"), for a direction to the Income-tax Appellate Tribunal, Chandigarh, for referring the following questions of law to this court for its opinion :
" (i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the assessee is eligible for investment allowance under Section 32A and deduction under section 80I of the Income-tax Act, 1961, in respect of new industrial unit set up at Chandigarh, i.e., 'spirit bottling plant' when the assessee did not qualify the pre-condition of the maintenance of separate books of account and not indulged in the manufacturing activities ?
(ii) In the alternative, if the claim of the assessee is accepted, whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in directing to allow investment allowance under Section 32A and deduction under section 80I when the machinery was being used for manufacturing or production of any articles specified in the Eleventh Schedule of the Income-tax Act, 1961 ?"
3. The following additional question of law was claimed in Income-tax Case No. 62 of 1995 :
" Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the Commissioner of Income-tax could not intervene under Section 263 to charge interest under Section 216 after allowing opportunity of being heard to the assessee ?"
4. The order of assessment was passed under Section 143(3) of the Act for the assessment year 1984-85 on March 31, 1986. The Assessing Officer allowed the benefit of investment allowance under Section 32A of the Act but the assessee's claim for deduction under section 80I was disallowed. However, on an application filed under Section 154 of the Act, the benefit of deduction under section 80I was also allowed. Thereafter, the Commissioner of Income-tax exercised his jurisdiction under Section 263 of the Act and held that before the assessee could be granted relief under sections 32A and 80I of the Act, it was necessary for it to maintain separate books of account and also show that it has set up a new industrial unit. The Commissioner found that no separate account books had been maintained by the assessee in regard to its spirit bottling plant at Chandigarh and that there was no manufacturing activity involved in the bottling plant. According to the Commissioner, the basic conditions for the grant of relief under the aforesaid sections were not satisfied. Accordingly, the assessment order was modified and the investment allowance under Section 32A and the deduction under section 80I were disallowed.
5. Not being satisfied with the order of the Commissioner, the assessee preferred an appeal before the Income-tax Tribunal who after taking into account the certificate of the internal auditor, the affidavit of the company secretary and other material on record came to the conclusion that the assessee was maintaining separate books of account in respect of the spirit bottling plant at Chandigarh. On the question as to whether the bottling plant involved any manufacturing activity, it was held that the original commodity, i.e., rectified spirit underwent certain processes whereby it got converted into rum, whisky and brandy. According to the Tribunal in market parlance, rectified spirit is not the same thing as rum, brandy or whisky and, therefore, it held that the assessee was engaged in manufacturing activity so as to be entitled to the relief under sections 52A and 80I of the Act. The appeal filed by the assessee was consequently allowed. The Revenue filed an application under Section 256(1) of the Act, which was dismissed, as according to the Tribunal the findings recorded by it were findings of fact and no referable question of law arose from its order dated March 29, 1994. It is against this order that the present petition has been filed under Section 256(2) of the Act.
6. Having heard learned counsel for the department and after perusing the orders of the Tribunal, we are of the opinion that the following question of law does arise from the order of the Tribunal ;
" Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was eligible for investment allowance under Section 32A and to the deduction under section 80I of the Act in regard to its new industrial unit set up at Chandigarh ?"
7. In the result, we allow this petition and direct the Tribunal to refer the above question of law to this court along with the statement of case.