Additional Commissioner of Income Tax vs Wheel and Rim Company of India Ltd.

Govindan Nair, C.J.—Two questions have been referred to us in respect of the assessment year 1969-70. The questions read as follows :

Whether the assessee was entitled to extra shift allowance in respect of wirings and fittings of electric machinery ?

Whether the manufacture of rims and wheels for cycles would fall under the head ''Cycle manufacture works'' under item 8 of C of Part I of

Appendix I of the Income Tax Rules, 1962, and hence the assessee should be allowed depreciation at 10% on the general machinery used

therefore ?

Having regard to the first question, what has to be considered is whether item (3)(b) of E of Part I of Appendix I of the Income Tax Rules,

1962, applies or whether Item (3)(c) thereof applies.

As far as the second question is concerned, what has to be seen is whether the works of the assessee can be termed as cycle manufacture

works under Item 8 of C of Part I of Appendix I. The Tribunal dealt with the matter in paragraphs 5 and 6 of its order.

The wiring that has been done was for the purpose of energizing the electrical machinery. The wiring referred to in item (3)(c) of E of Part I of

Appendix I specifically relates to wiring and fittings of electric light and fan installations. Therefore, the said item will have no application. We see

no error in the conclusion reached by the Tribunal. We, accordingly, answer question No. 1 in the affirmative, i.e., in favour of the assessee and

against the department.

As regards question No. 2, what we have to consider is whether the manufacture of rims and wheels by the assessee would entitle the assessee

to say that its work should come under the heading ""Cycle manufacture works"" under item 8 of C of Part I of Appendix I.

Two views are possible, namely, that its work must produce the entire cycle or that it must produce substantial parts of the cycle. It is well

known that parts of cycles are made in factories or in different places or in different works. Seldom it is that the entire bicycle parts are

manufactured in the same factory and assembled in the same factory. The Tribunal has taken the view that the assessee''s works are cycle

manufacture works. We are not prepared to say that the conclusion reached by the Tribunal is erroneous. We, accordingly, answer question No. 2

also in the affirmative, i.e., in favour of the assessee and against the department. The department will pay the costs of the assessee including

counsel''s fee of Rs. 500.