S.P.G.C. Metal Industries Pvt. Ltd. vs Commissioner of Income Tax

Ramanujam, J.—In this reference petition, the assessee seeks a direction to the Tribunal to refer the following two questions for the opinion

of this court.

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 ?

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 ?

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 :

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

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).

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

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

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

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.

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. Commissioner of Income Tax Vs. Trichy Steel Rolling Mills Ltd., , squarely applies. Thus, the view of the Tribunal does not

call for any interference. The tax case petition is dismissed. No costs.