Jagatjit Industries Ltd. Vs. Assistant Commissioner of Income Tax. - Court Judgment

Excerpt:
- divorce by mutual consent personal presence of parties exempted power of attorney to dissolve the marriage the special power of attorney in favour of one mr. lal babu tiwari was executed by the petitioner (husband) to appear before the court and testify about the contents of the petition. the petitioner has signed the petition before indian consulate high commission of india in uk under section 3(2) of the diplomatic and consular officers (oaths and fees) act, 1947 under which the documents do not require any further evidence.[para 3] if both the parties, by way of affidavits or through counsel, state that they are married, and are able to produce proof of the marriage and that they have been living separately and have not been able to live together for the prescribed period, then there can be no reason as to why the court should not record its satisfaction as envisaged under section 13-b(2) of hindu marriage act, despite the fact that parties had not appeared in person and pass a decree for divorce.[para 6] where the parties are living far away from the jurisdiction of the court competent to dissolve the marriage, the parties after filing their affidavits can appoint attorneys to act on their behalf. attorney is competent to act on behalf of the principal on the basis of power of attorney executed by the principal. the courts have been allowing attorneys to file the petition, to withdraw the petition, to carry on proceedings in the court on behalf of their principal in all other cases. the attorney can also act in matrimonial cases as per instructions of their principle. the court can take necessary precautions to prevent frauds being perpetuated on it but unless the court smells some kind of fraud being played with it, the court should normally recognize the act of the attorneys. i therefore allow this petition. the order of the trial court insisting on the personal appearance of the parties is set aside.[para 8] - 2.2 on first appeal, the learned counsel for the (sic) contended that the boiler as well as tube-wells were used for the generation of the steam which had been used in the distillery division as well as malted milkfood division. he also observed that the analysis of the figures of production as well as turnover clearly indicated that the predominant thrust of the manufacturing activities of the assessed was for the sale of liquor (indian made foreign liquor) and that out of total sale of rs. he, thereforee, concluded that the main business of the assessed was of liquor and the other lines of manufacture like malted milkfood were secondary in importance and magnitude. 3.2 the learned counsel further invited our attention to the decision of the tribunal (bombay bench 'c') in the case of good lass nerolac paints ltd. which provides services and other things like steam and electricity used in the manufacturing process in the various divisions. 32a (2) (iii). the decision of the tribunal (bombay bench) in the case of good lass nerolac paints ltd. he held that the said amount is entertainment expenditure and is clearly hit by the provisions of s. 43a (1) clearly envisaged that any enhancement of liability on account of change in the rate of exchange of currency was to be added to the actual cost of asset as defined in s.orderb. s. saluja. j.m. :the assessed is in appeal against the order of cit (a)-viii, new delhi, dt. 25th march, 1988, on various grounds.2. ground no. 1 urged by the assessed relates to disallowance of investment allowance to the extent of rs. 2,99,040 in relation to plant and machinery added during the year in the administrative division.2.1 the assessed claimed investment allowance at rs. 4,55,884 on the new machinery installed during the previous year on total cost of rs. 18,23,537. the ao disallowed the claim of investment allowance on the following items :rs.(a) malt thermax boiler 6,02,836 (b) transformer 2,697 (c) tubewells 5,90,625the ao disallowed the claim on the ground that the aforesaid machinery was used primarily for the liquor division and item no. 1 of the 11th schedule to the it act specifically excluded investment allowance on such machinery.2.2 on first appeal, the learned counsel for the (sic) contended that the boiler as well as tube-wells were used for the generation of the steam which had been used in the distillery division as well as malted milkfood division. the learned cit (a) observed that on the basis of steam consumption chart prepared by the assessee-company, it had been claimed that 72 per cent of steam had been consumed by the distillery division and the balance 28 per cent by the malted milkfood division he further observed that the learned counsel conceded that the boiler and tubewells installed during the year had been used for the distillery division and that the assessed is not entitled to investment allowance in view of item no. 1 in the 11th schedule the learned cit (a) noted that the learned counsel, however, contended that the claim may be allowed to the extent that steam had been used for the malted milkfood division. the learned cit (a) did not accept this contention. in the process, he observed that the machinery installed by the assessed during the year had been primarily intended for liquor division and has been used for the manufacture of liquor. he also observed that merely because a part of the steam had also been fed to the malted milkfood division, it would not confer the benefit of investment allowance on the assessee-company. he also observed that the addition of machinery to the malted milkfood division during the year was of rs. 6,28,000 only, whereas in the distillery division, the machinery of the value of rs. 28 lakhs had been added during the year. he, thereforee, concluded that the tubewells and boiler installed during the year under the so-called administrative division were primarily meant for the distillery division and had been installed as a necessary adjunct to the distillery division. he also observed that the analysis of the figures of production as well as turnover clearly indicated that the predominant thrust of the manufacturing activities of the assessed was for the sale of liquor (indian made foreign liquor) and that out of total sale of rs. 33 crores and odd in the previous year, the sale of liquor was rs. 25 crores and odd. he, thereforee, concluded that the main business of the assessed was of liquor and the other lines of manufacture like malted milkfood were secondary in importance and magnitude. he, thereforee, upheld the disallowance of investment allowance. the learned cit (a) also referred to the provisions of s. 32a (2a) and held that the investment allowance would be allowable if the machinery was used wholly or mainly for the purposes of manufacture of articles not included in the 11th schedule. he also added that if the machinery was wholly or mainly used for the production of articles of 11th schedule, investment allowance in respect of such machinery would be denied.3. the learned counsel for the assessed shri m. s. syali invited our attention to para 9 of the assessment order and submitted that the case of the assessed before the ao was that the use of the machinery was meant only for malted milkfood division and its use in the liquor division was only incidental. he further submitted that the ao, however, took the figures of purchases, production, sales, etc., from page 17 of the printed accounts and observed that liquor formed a major part of the activity. he, thereforee, disallowed the investment allowance on the plant and machinery in question. he further invited our attention to para 11.1 of the order of the learned cit (a) and submitted that the plant and machinery in question was used for the generation of steam which had been used in both the distillery division as also the malted milkfood division. he also submitted that malt is a common product for liquor as also for milkfood. he further submitted that it is not in dispute that the administrative division of the assessed is a separate unit. the contentions of the learned counsel were mainly to the following effect, namely :(a) that steam is an independent product and it is not necessary to examine as to how the steam is used in the manufacture of other products;(b) that the steam generated is being used in malted milkfood division and also the liquor division; and(c) that the real controversy is with reference to the interpretation of the word 'mainly' as used in s. 32a(2a).3.1 in support of the proposition that steam being generated is an independent product, the learned counsel relied heavily on the decision of the honble gujarat high court in the case of ambalal sarabhai enterprises ltd. vs . union of india : 1991(54)elt30(guj) wherein it has been held that steam is to be considered as 'goods' being known in the market as a source of power. it is further observed in the said decision that if gas is considered as goods, there is no reason why steam which is one form of gas should not be considered as goods and that is a property which can be weighed, its pressure can be measured. in this connection, the learned counsel also referred to the demand show cause notice issued by the superintendent central excise, kapurthala, on 30th august, 1986 (page 8 of the paper book). he further referred to the order of the asstt. collector, central excise, jalandhar, dt. 2nd january, 1987, placed at pages 8-13 of the paper book and referred to the observations at page 2 of the said letter wherein it has mentioned that 'steam', prior to the restructuring of central excise tariff, was classifiable under ti 68 and was exempt only for captive consumption under notification no. 118/75-ce, dt. 30th april, 1975. notification no. 195/86 ce, dt. 13th march, 1986, exempts steam from whole of the duty of excise. though notification no. 195/86 ce, dt. 13th march, 1986, was issued during the period 3rd march, 1986, to 7th august, 1986, as laid down under the said act, it does not bring at par the level of exemption as it existed prior to 1st march, 1986, or 28th february, 1986, inasmuch as, steam was exempt under notification no. 118/75-ce, dt. 30th april, 1975, only if it was used actively whereas under notification no. 195/86-ce dt. 13th march, 1986, it is wholly exempt for all clearance without any condition for captive consumption'. the learned counsel further invited our attention to the copy of notification no. 195/86-ce, dt. 13th march, 1986, placed at page 14 of the paper book. he further, invited our attention to the order of the cit (a)-xiii, new delhi, dt. 8th december, 1995 for asst. yr. 1990-91 in the case of the assessee, wherein similar arguments were made before the learned cit (a) on behalf of the assessed that steam was an independent item which itself was marketable and that the steam was used exclusively for captive consumption, i.e., for producing electricity, light and power. it was also urged on behalf of the assessed that machineries installed in the administrative division were not for liquor division but were for production of electricity and, thereforee, the machineries were independent and were not used for the production of liquor. it was also urged before the learned cit (a) that activity relating to generation of electricity is not incidental to the production of liquor and that if the assessed had not generated electricity it would have bought the same from outside parties, and that the activity was thus a different activity and did not come under sch. 11. the learned cit (a) observed that the ao had not examined the issue from this angle while refusing investment allowance. the learned cit (a), thereforee, restored the matter to the file of the ao for reconsideration. he also observed that in case the assessed was engaged in generating electricity, then on the basis of the decisions relied upon by the assessee, it was entitled to investment allowance on the unit engaged in generation of electricity. in view of the foregoing, the learned counsel urged that though a new argument has been taken but no investigation of new facts is involved and, thereforee, the tribunal which has a wider jurisdiction can decide the issue in the light of the aforesaid decision of the honble gujarat high court reported in 1991 (54) elt 30 (supra). he also mentioned that no fresh additional evidence was required for deciding the issue. the learned counsel, however, further submitted that he has no objection if the matter is examined afresh by the ao in the light of the new arguments now taken before the tribunal.3.2 the learned counsel further invited our attention to the decision of the tribunal (bombay bench 'c') in the case of good lass nerolac paints ltd. vs. ito (1985) 22 ttj (bom) 29 : (1985) 11 itd 767 (bom). in the said case, the assessee-company was basically manufacturing pigments and paints and had also manufactured synthetic resins which were used in the manufacture of paints. a question arose that whether synthetic resins were manufactured in a separate plant whether investment allowance on plant and machinery used in the manufacture of synthetic resins was admissible to the assessee, irrespective of the fact that pigments and paints were included in the 11th schedule of the it act. the tribunal held that 'merely because the assessed was a manufacturer of paints and pigments, it could not be contended that it was not entitled to investment allowance in respect of the new plant set up for manufacture of synthetic resins'. the learned counsel thereforee, urged that the assessed is also manufacturing steam for the generation of electricity and power, which was being used in the two divisions and, thereforee, the investment allowance ought to be allowed to the assessed in view of the said decision.3.3 the learned counsel further submitted that both the ao and the learned cit (a) have gone by the figures of total turnover in relation to liquor and malt and have held that the steam has been used mainly for manufacture of liquor. in this connection, he invited our attention to page 17 of the annual report, 1981 in the case of jagatjit industries, wherein the value of quantity of malt and malt extract produced has been shown at rs. 23,94,485 and the value of quantity of liquor produced has been shown at rs. 14,61,31,826. similarly, the value of quantity of malted milkfood has been shown at rs. 4,17,32,883. the learned counsel submitted that in terms of quantity malt and malt extract were produced at 485 tons and malt milkfood was produced at 1950 tons. as against this, the liquor was 7,295 kilo-litres. he submitted that the production of malt and malt products is much more than that of liquor and that the said products are not hit by the provisions of 11th schedule. he further submitted that the provisions of s. 32a(2a) provide that the deduction under sub-s. (1) shall not be denied in respect of any machinery or plant installed and used mainly for the purpose of business of production of any article or thing, not being an article or thing specified in the 11th schedule, by reason only that such machinery or plant is also used for the purposes of production of any article or thing specified in the said list. he submitted that the main activity related to production of malt and malt products and, thereforee, in terms of the said provisions of sub-s. (2a), the investment allowance should not be denied to the assessee. in this connection, he also referred to the para 30.3 of cbdt circular reported in (1978) 112 itr 20 , which clarifies the provisions of new s. (2a). it is mentioned therein that 'as investment allowance is not intended to be denied in such cases, a new sub-s. (2a) has been inserted in s. 32a to provide that investment allowance will not be denied by reason only that machinery or plant installed or used mainly for the purposes of production of any article or thing not specified in the list in the 11th schedule is also used for purposes of manufacture or production of any article or thing specified in the said list'. in view of the foregoing, he submitted that the tax authorities have erred in comparing the figures of turnover of malt and liquor and that the turnover in the case of liquor could be on account of higher margin of profit in the said commodity. he emphasised that the steam generated has been used mainly for the production of malt and malt products and, thereforee, terms of the provisions of sub-s. (2a), the assessed ought to be allowed the investment allowance as claimed.4. the learned departmental representative, shri p. k. sahu, submitted that the main arguments of the learned counsel are that steam is an independent product and that the prohibition of 11th schedule is not applicable in the case of steam. he submitted that the investment allowance is admissible to an industrial undertaking producing any article or thing not specified in the list in the 11th schedule. he further submitted that the administrative division of the assessee-company is part of the integrated undertaking and the same cannot be taken as an independent division. in this connection, he referred to the decision of the honble supreme court in the case of textile machinery corpn. ltd. vs . cit : [1977]107itr195(sc) . in the said decision, it was observed that 'the new undertaking must be an integrated unit by itself wherein articles are produced and at least a minimum of 10 persons with the aid of power and a minimum of 20 persons without the aid of power have been employed'. it is further observed that for the purpose of s. 115c the industrial unit set up must be new in the sense that new plants and machinery are erected for producing either the same commodities or some distinct commodities and that in order to deny the benefit of s. 15c the new undertaking must be formed by reconstruction of the old business. the learned departmental representative further referred to page 6 of the paper hook where in the note on investment allowance it has been mentioned that the assessee-company is having a common utilities department called administrative division at the works at hamira. which provides services and other things like steam and electricity used in the manufacturing process in the various divisions. he, thereforee, submitted that the administrative division is part of one integrated industrial undertaking and the other division are interdependent. in this connection, he also invited our attention to page 11 of the paper book, wherein in the first para it is mentioned that m/s. jagatjit industries ltd., hamira, had manufactured and cleared for captive use in the factory certain quantity of steam for the period from 1st march, 1986, to 12th march, 1986, valued at rs. 66,91,104. he further referred to page 17 of the annual report in the case of the assessed and submitted that the figures of sales in the case of liquor are much more than in the case of malt and malt products. he further submitted that under the provisions of s. 32a (2a) only a minor concession is made if the main activity is with reference to items other than prohibited items. he also submitted that the assessed has not raised any ground with reference to the setting aside of the matter to the ao and that plea now taken by the assessed with reference to new arguments may not be taken into account for the purposes of restoring the matter to the file of the ao.5. we have carefully considered the rival submissions on this issue and have also perused the orders of the tax authorities and other relevant record to which our attention was drawn during the course of hearing. we have also seen the case law relied upon by both the parties. it is observed that in view of the decision of the honble gujarat high court in the case of ambalal sarabhai enterprises ltd. vs. union of india (supra), there is no doubt that steam constitutes goods and that it has to be treated as an article or 7thing produced by the assessee-company in terms of provisions of s. 32a (2) (iii). the decision of the tribunal (bombay bench) in the case of good lass nerolac paints ltd. vs. ito (supra) also supported the contention of the learned counsel that the investment allowance could not be denied in respect of the intermediate product, as in the case of the assessee, the intermediate product is steam used for the generation of electricity and power. it is also observed from page 17 of the annual report of the assessee-company that whereas in terms of quantity the production of malt and malt products is much more than the production of liquor (though it is given in terms of kilo-litres) the sale price of liquor is much more as compared to the sale price of malt and malt products. the plea of the learned counsel that this could be on account of higher margin of profit in the case of liquor cannot be overlooked. it is also observed that this issue has been restored to the file of the ao by the learned cit (a) in relation to the asst. yr. 1990-91 in view of the new plea taken by the assessed in relation to steam being an intermediate product and eligible for investment allowance. it is also observed that the intention underlying the provisions of s. 32a (2a) is that where the assessed is mainly producing articles or things which are not specified in the 11th schedule the benefit of investment allowance cannot be denied to him, if incidentally the intermediate product-in this case the steam-is also used in the production of any article or thing specified in the last in the 11th schedule in this connection, we feel that the plea of the learned counsel that in terms of production of the quantity of the related products, the quantity of liquor is much less when compared to the quantity of malt and malt products needs further verification, as the quantity of liquor is given in terms of kilolitres. we, thereforee, feel that it will be just and fair to restore this issue to the file of the ao, who may reexamine the same in the light of the foregoing submissions of the learned counsel after giving reasonable opportunity of being heard to the assessee.6. ground no. 2 relating to the addition of rs. 7,87,358 on account of cash assistance was not pressed by the learned counsel. the same is, thereforee, rejected.7. ground no. 3 urged by the assessed relates to disallowance of rs. 1,08,860 towards provision for doubtful debts and doubtful advances.7.1 the learned counsel was fair enough to mention that this ground may have to be decided against the assessed as the arbitration award was made in november, 1982. the said ground is, thereforee, rejected.8. ground no. 4 urged by the assessed relates to disallowance of rs. 14,212 on account of entertainment expenses incurred in the glass division of the company.8.1 the ao treated the expenses of rs. 14,212 debited in the glass unit as entertainment expenses and disallowed the same under s. 37(2a).8.2 on first appeal, the learned cit (a) observed that the said amount included, inter alia, an amount of rs. 8,695 as payment to various clubs. he also observed that the said amount of rs. 8,695 included membership fee paid to clubs amounting to rs. 768 and sustained the balance amount of rs. 7,927 as entertainment expenditure. he further observed that an amount of rs. 4,375 had been spent by the company for providing refreshment to the shareholders attending the general meeting of the company. he held that the said amount is entertainment expenditure and is clearly hit by the provisions of s. 32(2a) expln. (2). the learned cit (a), thereforee, upheld the disallowance to the extent of rs. 13,444.8.3 the learned counsel invited our attention to the details of entertainment expenditure (page 24 of the paper book) and submitted that the amount of rs. 4,375 had been spent on the meeting of the shareholders, wherein the employees of the company had also participated. he, thereforee, prayed that reasonable relief may be allowed on account of employees participation.8.4 the learned departmental representative relied heavily on the orders of the tax authorities.8.5 we have carefully considered-the rival submissions an this issue and we feel that it will be reasonable to allow 35 per cent of the expenses of rs. 4,375 on account of participation of employees in the shareholders meeting. the ao is directed to allow appropriate relief to the assessed on the said basis.9. ground no. 5 urged by the assessed relates to disallowance of rs. 3,99,580 on account of consumption of moulds in glass division and directing the ao to allow depreciation on the same.9.1 the ao noted from schedule of the printed accounts that the assessed had debited an amount of rs. 3,99,850 on account of moulds consumed during the year. the ao observed that 100 per cent write off of the expenditure on moulds was not permissible as the same was of capital nature and only 30 per cent is provided as depreciation under the it rules. he, thereforee, added back the said amount and observed that depreciation would be allowed.9.2 on first appeal, the learned cit (a) observed that the said issue was covered by order in appeal no. 275/82-83 and he declined to provide any relief to the assessee. in the process he also observed that the assessed would be entitled to depreciation @ 33 per cent under item 3(ii) (d) (5) of the appendix to the it rules.9.3 the learned counsel for the assessed invited our attention to the order of the tribunal dt. 20th september, 1990, in ita no. 4209/del/1987 in the case of the assessed for asst. yr. 1981-82, whereby the issue has been decided against the assessee. however, the learned counsel further invited our attention to the decision of the honble karnataka high court in the case of cit vs . mysore spun concrete pipe pvt. ltd. : [1992]194itr159(kar) , wherein it was held that replacement of moulds was not in the nature of replacement of capital machinery, but in the nature or replacing a part of the machinery and that no new asset of enduring nature came into existence and no extra capacity was added in the process. it was further held that though the initial expenditure on moulds was capitalised, the subsequent expenditure incurred on replacement of damaged moulds is revenue expenditure. the learned counsel submitted that the said decision of the honble karnataka high court was not before the tribunal and that in the light of the said decision, the tribunal may now provide relief to the assessee.9.4 the learned departmental representative relied heavily on the order of the tax authorities.9.5 we have carefully considered the rival submissions on this issue and have also seen the decision of the honble karnataka high court reported in : [1992]194itr159(kar) (supra) and we feel that the submissions made by the learned counsel are supported by the said decision and that the expenditure on replacement of moulds has to be allowed as revenue - expenditure. the ao, is, thereforee, directed to allow the said expenditure and allow appropriate relief to the assessee.10. ground no. 6 urged by the assessed relates to disallowance of investment allowance on account of increased cost of plant and machinery for which loans were obtained in foreign currency.10.1 the ao disallowed the claim of the assessed at rs. 1,51,385 towards investment allowance on account of increased cost of plant and machinery for which loans had been obtained in foreign currency. the liability to repay the foreign currency loan increased as on 21st december, 1981, by rs. 6,05,546 and the assessed claimed investment allowance on this enhanced liability.10.2 on first appeal, the learned counsel for the assessed contended that s. 43a (1) clearly envisaged that any enhancement of liability on account of change in the rate of exchange of currency was to be added to the actual cost of asset as defined in s. 43(1). he relied on the decision of the honble bombay high court in the case of addl. cit vs . chowgule & co. pvt. ltd. : [1986]159itr12(bom) . the learned cit (a) referred to the provisions of s. 43a and the provisions of s. 32a and observed that investment allowance under s. 32a is to be allowed in the previous year in which the machinery or plant was installed or if the machinery or plant was first put to use in the immediately succeeding previous year then in respect of that previous year. he further observed that in the case of the assessee, the machinery had been installed and put to use in the earlier year (1975). he, thereforee, rejected the claim of the assessee.10.3 the learned counsel referred to various decisions of the tribunal and submitted that the majority of the decisions was against the assessed and that the decision of the tribunal (madras bench b) in the case of southern asbestos cement ltd. vs. dy. cit (1991) 38 itd 449 (mad), was in favor of the assessee. however, the learned counsel submitted that in view of the small amount involved during the year under consideration this case need not be referred to the special bench.10.4 the learned departmental representative relied heavily on the orders of the tax authorities.10.5 we have carefully considered the rival submissions on this issue and have also perused the various decisions referred to by the learned counsel. it is observed that the decision of the tribunal (delhi bench b) dt. 28th october, 1994 in ita no. 3883/del/1991 in the case of dalmia cement is also against the assessed on this issue. it may be mentioned that the line of argument adopted by the learned cit (a) for declining relief to the assessed is almost the same as of the tribunal in the said decision. accordingly, we see no reason to interfere with the order of the learned cit (a) in this behalf. this ground is, thereforee, rejected.11. ground no. 7 urged by the assessed relates to charging of interest under s. 216 of the it act.11.1 the ao observed in the assessment order that interest under s. 216 may be charged.11.2 on first appeal the learned counsel for the assessed submitted that the assessed was entitled to certain refund from the deptt. and, thereforee, the ao was not justified in charging interest under s. 216. he further submitted that the ao had not recorded any finding that there was underestimate of advance-tax payable by the assessee. in this connection, he relied on the decision of the honble gujarat high court in the case of cit vs. nagri mills ltd. (1965) 57 itr 304 . the learned cit (a) considered the submissions and observed that the assessed furnished a statement of advance-tax under s. 209a (1) (a) on 4th june, 1981, in form no. 28a indicating total income at rs. 1,02,27,306 and worked out total tax at rs. 59,06,268. he further observed that on the basis of the said statement, the assessed paid advance-tax of rs. 19,61,999 towards the first installment on 2nd september, 1982. he also observed that the estimate of advance-tax was filed in form no. 29 estimating total income of rs. 2,10,00,000 and total advance-tax was worked out at rs. 1,18,38,750 and on the basis of such estimate, the assessed paid advance-tax amounting to rs. 49,07,876. he also observed that with the said estimate, the assessed had written to the ao that sales in the year under consideration had been estimated at rs. 28 crores based on sales up to june, 1981, and further by applying margin of profit of 7.5 per cent the profit worked out to rs. 210 lakhs. the learned cit (a) further noted that on 10th december, 1981, the assessed filed a revised estimate showing estimated total income at rs. 305 lakhs and worked out the total tax at rs. 1,71,94,375 and that the assessee-company paid tax of rs. 1,02,63,500. he also noted that the assessed had written to the ao that sales in the year under consideration had been estimated at rs. 3,250 lakhs on the basis of progressive sale figures up to november, 1981, which were of the order of rs. 2,900 lakhs. the learned cit (a) concluded that the assessed had underestimated the advance-tax payable in the first two installments so as to defer the payment of advance-tax. in the process he also observed that the wide disparity in the income estimated by the assessed on the three occasions could not be explained, as attempted by the assessee, by arguing that in view of the nature of business estimate of profit could not be correctly made. the learned cit (a) declined to accept the said plea. in this connection, he further observed that when the assessed filed the estimate of advance-tax on 2nd september, 1981, a period of more than 8 months had already elapsed and that only 4 months were left for the closure of accounts. he further observed that if a company with elaborate aid of accounting staff and ca could not make the projections of the annual turnover, then it would negate the provisions of advance-tax. he, thereforee, held that on the totality of circumstances there was justification for invoking the provisions of s. 216 by the ao. the learned cit (a), however, also observed that the first installment had been paid on the basis of statement of advance-tax and, thereforee, s. 216 could not be invoked for computing interest with regard to the said installment and that the interest was to be computed on the basis of the estimate filed in september, 1981, whereby the assessed had reduced the amount payable in that instalment. the learned cit (a) also observed in the process that there was lacunae in the provisions of s. 216 as they could not be invoked with reference to the statement of advance-tax. regarding decision of the honble gujarat high court in (1965) 57 itr 304 (supra), the learned cit (a) observed that he had arrived at the conclusion regarding the applicability of s. 216 after hearing the learned counsel and carefully considering the relevant facts and circumstances of the case and that any irregularity committed by the ao in not recording a clear finding had been removed at the appellate stage. he, thereforee, directed the ao to recompute the interest under s. 216 in the light of the observations mentioned above.11.3 the learned counsel for the assessed invited our attention to pages 28-40 of the paper book, where details of estimates filed and the plea taken by the assessed before the ao and form nos. 28a and 29 are placed. he further submitted that the statement of advance-tax was based on the last assessed income in terms of the provisions of s. 209a and that as the income kept on increasing the assessed filed revised estimates. he further submitted that the estimates could be revised up to the date of payment of the last instalment. in this connection, he relied on the decision of the honble calcutta high court in the case of cit vs. indian tube co. ltd. (1993) 197 itr 522 , wherein it is observed that 'when an assessed is required to file a statement of advance-tax under s. 209a (1) (a), he is not to estimate his current income. he is to comply with the provisions of furnishing a statement in accordance with s. 209(1) (a) or cl. (d)(i) of that section. to comply with the aforesaid provision, no estimate of the current income is required to be made by the assessee. he merely calculates his advance-tax on the basis of his total income of the latest regular assessment or on the basis of the total income on the basis of the return subsequently filed where there is payment under s. 140a of the act, whichever is higher. hence, interest which is levied under s. 216 cannot be attracted to a case where the assessed is required to file a statement under s. 209a (1). sec. 216 is attracted only in a case where the assessed has to estimate his current income and such estimate is found to be an underestimate compared to the later estimate filed by him in the last instalment'.11.4 the learned departmental representative relied heavily on the orders of the tax authorities.11.5 we have carefully considered the rival submissions on this issue and have also perused the orders of the tax authorities. we have also seen the case law relied upon by the learned counsel as also the provisions of s. 209a. we feel that the submission made by the learned counsel have force and that the same are supported by the aforesaid decision of the honble calcutta high court reported in (1993) 197 itr 522 (supra). further, the provisions of sub-s. (4) of s. 209a show that if by reason of current income being likely to be greater than the income on which the advance-tax payable by the assessed has been computed or for any other reason, the amount of advance-tax computed in the manner laid down in s. 209 on the current income (which shall be estimated by the assessee) exceeds the amount of advance-tax so payable by him by more than 33/1/3 per cent of the latter amount, he shall on or before the date on which the last installment of advance-tax is payable by him send to the ao an estimate of the current income and the advance-tax payable by him on current income calculated in the manner laid down in s. 209. he shall also pay the amount of advance-tax as accords with his estimate on the date applicable in his case under s. 211 as has not expired, by installments which may be revised according to s. (5). it is further observed that sub-s. (5) specifies that the assessed may send a revised estimate of the advance-tax payable by him on or before any of the dates specified under s. 211 and adjust any excess or deficiency in respect of any installment already paid in a subsequent installment or in subsequent installments. in view of the foregoing provisions and the aforesaid judgment of the honble calcutta high court we feel that the assessed has substantially complied with the provisions and set aside the order of the learned cit (a) and delete the interest levied under s. 216.12. ground no. 8 urged by the assessed relates to set off of deficiency under s. 80j during the assessment year under consideration.12.1 the assessed claimed deduction under s. 80j on the ground that the glass unit i.e., universal glass ltd. had been amalgamated with the assessee-company w.e.f. 1st january, 1980. the ao disallowed the claim and the cit (a) observed that if any unabsorbed claim under s. 80j in respect of universal glass ltd. was to be considered it would be in the asst. yr. 1981-82 and if any unabsorbed claim remained, the same addition could be carried forward as per law. he held that in the case of the assessee, no such unabsorbed claim under s. 80j had been carried forward and, thereforee, no such claim could be allowed in the year under consideration.12.2 the learned counsel for the assessed submitted that this ground was consequential to the decision in appeal for asst yr. 1981-82. he further submitted that the amalgamation had taken place in the previous year relevant to the asst. yr. 1981-82.12.3 the learned departmental representative however, referred to the provisions of s. 72a of the it act and submitted that the said section does not mention anything about deficiencies to be carried forward and set off with reference to the provisions of s. 80j. he further submitted that the provisions of s. 80j themselves do not permit such carry forward in case of mergers and transfers.12.4 we have carefully considered the rival submissions on this issue and we feel that the claim of the assessed will have to be considered in the light of the decision of the tribunal in relation to the asst. yr. 1981-82 and we direct the ao to consider the claim of the assessed in the light of such decision.13. in the result, the appeal of the assessed is allowed in part.

Judgment:
ORDER

B. S. SALUJA. J.M. :

The assessed is in appeal against the order of CIT (A)-VIII, New Delhi, dt. 25th March, 1988, on various grounds.

2. Ground No. 1 urged by the assessed relates to disallowance of investment allowance to the extent of Rs. 2,99,040 in relation to plant and machinery added during the year in the administrative division.

2.1 The assessed claimed investment allowance at Rs. 4,55,884 on the new machinery installed during the previous year on total cost of Rs. 18,23,537. The AO disallowed the claim of investment allowance on the following items :

Rs.

(a) Malt thermax boiler

6,02,836

(b) Transformer

2,697

(c) Tubewells

5,90,625

The AO disallowed the claim on the ground that the aforesaid machinery was used primarily for the liquor division and item No. 1 of the 11th Schedule to the IT Act specifically excluded investment allowance on such machinery.

2.2 On first appeal, the learned counsel for the (sic) contended that the boiler as well as tube-wells were used for the generation of the steam which had been used in the distillery division as well as malted milkfood division. The learned CIT (A) observed that on the basis of steam consumption chart prepared by the assessee-company, it had been claimed that 72 per cent of steam had been consumed by the distillery division and the balance 28 per cent by the malted milkfood division He further observed that the learned counsel conceded that the boiler and tubewells installed during the year had been used for the distillery division and that the assessed is not entitled to investment allowance in view of item No. 1 in the 11th Schedule The learned CIT (A) noted that the learned counsel, however, contended that the claim may be allowed to the extent that steam had been used for the malted milkfood division. The learned CIT (A) did not accept this contention. In the process, he observed that the machinery installed by the assessed during the year had been primarily intended for liquor division and has been used for the manufacture of liquor. He also observed that merely because a part of the steam had also been fed to the malted milkfood division, it would not confer the benefit of investment allowance on the assessee-company. He also observed that the addition of machinery to the malted milkfood division during the year was of Rs. 6,28,000 only, whereas in the distillery division, the machinery of the value of Rs. 28 lakhs had been added during the year. He, thereforee, concluded that the tubewells and boiler installed during the year under the so-called administrative division were primarily meant for the distillery division and had been installed as a necessary adjunct to the distillery division. He also observed that the analysis of the figures of production as well as turnover clearly indicated that the predominant thrust of the manufacturing activities of the assessed was for the sale of liquor (Indian made foreign liquor) and that out of total sale of Rs. 33 crores and odd in the previous year, the sale of liquor was Rs. 25 crores and odd. He, thereforee, concluded that the main business of the assessed was of liquor and the other lines of manufacture like malted milkfood were secondary in importance and magnitude. He, thereforee, upheld the disallowance of investment allowance. The learned CIT (A) also referred to the provisions of s. 32A (2A) and held that the investment allowance would be allowable if the machinery was used wholly or mainly for the purposes of manufacture of articles not included in the 11th Schedule. He also added that if the machinery was wholly or mainly used for the production of articles of 11th Schedule, investment allowance in respect of such machinery would be denied.

3. The learned counsel for the assessed Shri M. S. Syali invited our attention to para 9 of the assessment order and submitted that the case of the assessed before the AO was that the use of the machinery was meant only for malted milkfood division and its use in the liquor division was only incidental. He further submitted that the AO, however, took the figures of purchases, production, sales, etc., from page 17 of the printed accounts and observed that liquor formed a major part of the activity. He, thereforee, disallowed the investment allowance on the plant and machinery in question. He further invited our attention to para 11.1 of the order of the learned CIT (A) and submitted that the plant and machinery in question was used for the generation of steam which had been used in both the distillery division as also the malted milkfood division. He also submitted that malt is a common product for liquor as also for milkfood. He further submitted that it is not in dispute that the administrative division of the assessed is a separate unit. The contentions of the learned counsel were mainly to the following effect, namely :

(a) That steam is an independent product and it is not necessary to examine as to how the steam is used in the manufacture of other products;

(b) That the steam generated is being used in malted milkfood division and also the liquor division; and

(c) That the real controversy is with reference to the interpretation of the word 'mainly' as used in s. 32A(2A).

3.1 In support of the proposition that steam being generated is an independent product, the learned counsel relied heavily on the decision of the Honble Gujarat High Court in the case of Ambalal Sarabhai Enterprises Ltd. vs . Union of India : 1991(54)ELT30(Guj) wherein it has been held that steam is to be considered as 'goods' being known in the market as a source of power. It is further observed in the said decision that if gas is considered as goods, there is no reason why steam which is one form of gas should not be considered as goods and that is a property which can be weighed, its pressure can be measured. In this connection, the learned counsel also referred to the demand show cause notice issued by the Superintendent Central Excise, Kapurthala, on 30th August, 1986 (page 8 of the paper book). He further referred to the order of the Asstt. Collector, Central Excise, Jalandhar, dt. 2nd January, 1987, placed at pages 8-13 of the paper book and referred to the observations at page 2 of the said letter wherein it has mentioned that 'steam', prior to the restructuring of Central excise tariff, was classifiable under TI 68 and was exempt only for captive consumption under Notification No. 118/75-CE, dt. 30th April, 1975. Notification No. 195/86 CE, dt. 13th March, 1986, exempts steam from whole of the duty of excise. Though Notification No. 195/86 CE, dt. 13th March, 1986, was issued during the period 3rd March, 1986, to 7th August, 1986, as laid down under the said Act, it does not bring at par the level of exemption as it existed prior to 1st March, 1986, or 28th February, 1986, inasmuch as, steam was exempt under Notification No. 118/75-CE, dt. 30th April, 1975, only if it was used actively whereas under Notification No. 195/86-CE dt. 13th March, 1986, it is wholly exempt for all clearance without any condition for captive consumption'. The learned counsel further invited our attention to the copy of Notification No. 195/86-CE, dt. 13th March, 1986, placed at page 14 of the paper book. He further, invited our attention to the order of the CIT (A)-XIII, New Delhi, dt. 8th December, 1995 for asst. yr. 1990-91 in the case of the assessee, wherein similar arguments were made before the learned CIT (A) on behalf of the assessed that steam was an independent item which itself was marketable and that the steam was used exclusively for captive consumption, i.e., for producing electricity, light and power. It was also urged on behalf of the assessed that machineries installed in the administrative division were not for liquor division but were for production of electricity and, thereforee, the machineries were independent and were not used for the production of liquor. It was also urged before the learned CIT (A) that activity relating to Generation of electricity is not incidental to the production of liquor and that if the assessed had not generated electricity it would have bought the same from outside parties, and that the activity was thus a different activity and did not come under Sch. 11. The learned CIT (A) observed that the AO had not examined the issue from this angle while refusing investment allowance. The learned CIT (A), thereforee, restored the matter to the file of the AO for reconsideration. He also observed that in case the assessed was engaged in generating electricity, then on the basis of the decisions relied upon by the assessee, it was entitled to investment allowance on the unit engaged in generation of electricity. In view of the foregoing, the learned counsel urged that though a new argument has been taken but no investigation of new facts is involved and, thereforee, the Tribunal which has a wider jurisdiction can decide the issue in the light of the aforesaid decision of the Honble Gujarat High Court reported in 1991 (54) ELT 30 (supra). He also mentioned that no fresh additional evidence was required for deciding the issue. The learned counsel, however, further submitted that he has no objection if the matter Is examined afresh by the AO in the light of the new arguments now taken before the Tribunal.

3.2 The learned counsel further invited our attention to the decision of the Tribunal (Bombay Bench 'C') in the case of Good lass Nerolac Paints Ltd. vs. ITO (1985) 22 TTJ (Bom) 29 : (1985) 11 ITD 767 (Bom). In the said case, the assessee-company was basically manufacturing pigments and paints and had also manufactured synthetic resins which were used in the manufacture of paints. A question arose that whether synthetic resins were manufactured in a separate plant whether investment allowance on plant and machinery used in the manufacture of synthetic resins was admissible to the assessee, irrespective of the fact that pigments and paints were included in the 11th Schedule of the IT Act. The Tribunal held that 'merely because the assessed was a manufacturer of paints and pigments, it could not be contended that it was not entitled to investment allowance in respect of the new plant set up for manufacture of synthetic resins'. The learned counsel thereforee, urged that the assessed is also manufacturing steam for the generation of electricity and power, which was being used in the two divisions and, thereforee, the investment allowance ought to be allowed to the assessed in view of the said decision.

3.3 The learned counsel further submitted that both the AO and the learned CIT (A) have gone by the figures of total turnover in relation to liquor and malt and have held that the steam has been used mainly for manufacture of liquor. In this connection, he invited our attention to page 17 of the Annual Report, 1981 in the case of Jagatjit Industries, wherein the value of quantity of malt and malt extract produced has been shown at Rs. 23,94,485 and the value of quantity of liquor produced has been shown at Rs. 14,61,31,826. Similarly, the value of quantity of malted milkfood has been shown at Rs. 4,17,32,883. The learned counsel submitted that in terms of quantity malt and malt extract were produced at 485 tons and malt milkfood was produced at 1950 tons. As against this, the liquor was 7,295 kilo-litres. He submitted that the production of malt and malt products is much more than that of liquor and that the said products are not hit by the provisions of 11th Schedule. He further submitted that the provisions of s. 32A(2A) provide that the deduction under sub-s. (1) shall not be denied in respect of any machinery or plant installed and used mainly for the purpose of business of production of any article or thing, not being an article or thing specified in the 11th Schedule, by reason only that such machinery or Plant is also used for the purposes of production of any article or thing specified in the said list. He submitted that the main activity related to production of malt and malt products and, thereforee, in terms of the said provisions of sub-s. (2A), the investment allowance should not be denied to the assessee. In this connection, he also referred to the para 30.3 of CBDT Circular reported in (1978) 112 ITR 20 , which clarifies the provisions of new s. (2A). It is mentioned therein that 'As investment allowance is not intended to be denied in such cases, a new sub-s. (2A) has been inserted in s. 32A to provide that investment allowance will not be denied by reason only that machinery or plant installed or used mainly for the purposes of production of any article or thing not specified in the list in the 11th Schedule is also used for purposes of manufacture or production of any article or thing specified in the said list'. In view of the foregoing, he submitted that the tax authorities have erred in comparing the figures of turnover of malt and liquor and that the turnover in the case of liquor could be on account of higher margin of profit in the said commodity. He emphasised that the steam generated has been used mainly for the production of malt and malt products and, thereforee, terms of the provisions of sub-s. (2A), the assessed ought to be allowed the investment allowance as claimed.

4. The learned Departmental Representative, Shri P. K. Sahu, submitted that the main arguments of the learned counsel are that steam is an independent product and that the prohibition of 11th Schedule is not applicable in the case of steam. He submitted that the Investment allowance is admissible to an industrial undertaking producing any article or thing not specified in the list in the 11th Schedule. He further submitted that the administrative division of the assessee-company is part of the integrated undertaking and the same cannot be taken as an independent division. In this connection, he referred to the decision of the Honble Supreme Court in the case of Textile Machinery Corpn. Ltd. vs . CIT : [1977]107ITR195(SC) . In the said decision, it was observed that 'the new undertaking must be an integrated unit by itself wherein articles are produced and at least a minimum of 10 persons with the aid of power and a minimum of 20 persons without the aid of power have been employed'. It is further observed that for the purpose of s. 115C the industrial unit set up must be new in the sense that new plants and machinery are erected for producing either the same commodities or some distinct commodities and that in order to deny the benefit of s. 15C the new undertaking must be formed by reconstruction of the old business. The learned Departmental Representative further referred to page 6 of the paper hook where in the note on investment allowance it has been mentioned that the assessee-company is having a common utilities department called administrative division at the works at Hamira. which provides services and other things like steam and electricity used in the manufacturing process in the various divisions. He, thereforee, submitted that the administrative division is part of one integrated industrial undertaking and the other division are interdependent. In this connection, he also invited our attention to page 11 of the paper book, wherein in the first para it is mentioned that M/s. Jagatjit Industries Ltd., Hamira, had manufactured and cleared for captive use in the factory certain quantity of steam for the period from 1st March, 1986, to 12th March, 1986, valued at Rs. 66,91,104. He further referred to page 17 of the annual report in the case of the assessed and submitted that the figures of sales in the case of liquor are much more than in the case of malt and malt products. He further submitted that under the provisions of s. 32A (2A) only a minor concession is made if the main activity is with reference to items other than prohibited items. He also submitted that the assessed has not raised any ground with reference to the setting aside of the matter to the AO and that plea now taken by the assessed with reference to new arguments may not be taken into account for the purposes of restoring the matter to the file of the AO.

5. We have carefully considered the rival submissions on this issue and have also perused the orders of the tax authorities and other relevant record to which our attention was drawn during the course of hearing. We have also seen the case law relied upon by both the parties. It is observed that in view of the decision of the Honble Gujarat High Court in the case of Ambalal Sarabhai Enterprises Ltd. vs. Union of India (supra), there is no doubt that steam constitutes goods and that it has to be treated as an article or 7thing produced by the assessee-company in terms of provisions of s. 32A (2) (iii). The decision of the Tribunal (Bombay Bench) in the case of Good lass Nerolac Paints Ltd. vs. ITO (supra) also supported the contention of the learned counsel that the investment allowance could not be denied in respect of the intermediate product, as in the case of the assessee, the intermediate product is steam used for the generation of electricity and power. It is also observed from page 17 of the annual report of the assessee-company that whereas in terms of quantity the production of malt and malt products is much more than the production of liquor (though it is given in terms of kilo-litres) the sale price of liquor is much more as compared to the sale price of malt and malt products. The plea of the learned counsel that this could be on account of higher margin of profit in the case of liquor cannot be overlooked. It is also observed that this issue has been restored to the file of the AO by the learned CIT (A) in relation to the asst. yr. 1990-91 in view of the new plea taken by the assessed in relation to steam being an intermediate product and eligible for investment allowance. It is also observed that the intention underlying the provisions of s. 32A (2A) is that where the assessed is mainly producing articles or things which are not specified in the 11th Schedule the benefit of investment allowance cannot be denied to him, if incidentally the intermediate product-in this case the steam-is also used in the production of any article or thing specified in the last in the 11th Schedule In this connection, we feel that the plea of the learned counsel that in terms of production of the quantity of the related products, the quantity of liquor is much less when compared to the quantity of malt and malt products needs further verification, as the quantity of liquor is given in terms of kilolitres. We, thereforee, feel that it will be just and fair to restore this Issue to the file of the AO, who may reexamine the same in the light of the foregoing submissions of the learned counsel after giving reasonable opportunity of being heard to the assessee.

6. Ground No. 2 relating to the addition of Rs. 7,87,358 on account of cash assistance was not pressed by the learned counsel. The same is, thereforee, rejected.

7. Ground No. 3 urged by the assessed relates to disallowance of Rs. 1,08,860 towards provision for doubtful debts and doubtful advances.

7.1 The learned counsel was fair enough to mention that this ground may have to be decided against the assessed as the arbitration award was made in November, 1982. The said ground is, thereforee, rejected.

8. Ground No. 4 urged by the assessed relates to disallowance of Rs. 14,212 on account of entertainment expenses incurred in the glass division of the company.

8.1 The AO treated the expenses of Rs. 14,212 debited in the glass unit as entertainment expenses and disallowed the same under s. 37(2A).

8.2 On first appeal, the learned CIT (A) observed that the said amount included, inter alia, an amount of Rs. 8,695 as payment to various clubs. He also observed that the said amount of Rs. 8,695 included membership fee paid to clubs amounting to Rs. 768 and sustained the balance amount of Rs. 7,927 as entertainment expenditure. He further observed that an amount of Rs. 4,375 had been spent by the company for providing refreshment to the shareholders attending the general meeting of the company. He held that the said amount is entertainment expenditure and is clearly hit by the provisions of s. 32(2A) Expln. (2). The learned CIT (A), thereforee, upheld the disallowance to the extent of Rs. 13,444.

8.3 The learned counsel invited our attention to the details of entertainment expenditure (page 24 of the paper book) and submitted that the amount of Rs. 4,375 had been spent on the meeting of the shareholders, wherein the employees of the company had also participated. He, thereforee, prayed that reasonable relief may be allowed on account of employees participation.

8.4 The learned Departmental Representative relied heavily on the orders of the tax authorities.

8.5 We have carefully considered-the rival submissions an this Issue and we feel that it will be reasonable to allow 35 per cent of the expenses of Rs. 4,375 on account of participation of employees in the shareholders meeting. The AO is directed to allow appropriate relief to the assessed on the said basis.

9. Ground No. 5 urged by the assessed relates to disallowance of Rs. 3,99,580 on account of consumption of moulds in glass division and directing the AO to allow depreciation on the same.

9.1 The AO noted from Schedule of the printed accounts that the assessed had debited an amount of Rs. 3,99,850 on account of moulds consumed during the year. The AO observed that 100 per cent write off of the expenditure on moulds was not permissible as the same was of capital nature and only 30 per cent is provided as depreciation under the IT Rules. He, thereforee, added back the said amount and observed that depreciation would be allowed.

9.2 On first appeal, the learned CIT (A) observed that the said issue was covered by order in Appeal No. 275/82-83 and he declined to provide any relief to the assessee. In the process he also observed that the assessed would be entitled to depreciation @ 33 per cent under item 3(ii) (d) (5) of the Appendix to the IT Rules.

9.3 The learned counsel for the assessed invited our attention to the order of the Tribunal dt. 20th September, 1990, in ITA No. 4209/Del/1987 in the case of the assessed for asst. yr. 1981-82, whereby the issue has been decided against the assessee. However, the learned counsel further invited our attention to the decision of the Honble Karnataka High Court in the case of CIT vs . Mysore Spun Concrete Pipe Pvt. Ltd. : [1992]194ITR159(KAR) , wherein it was held that replacement of moulds was not in the nature of replacement of capital machinery, but in the nature or replacing a part of the machinery and that no new asset of enduring nature came into existence and no extra capacity was added in the process. It was further held that though the initial expenditure on moulds was capitalised, the subsequent expenditure incurred on replacement of damaged moulds is revenue expenditure. The learned counsel submitted that the said decision of the Honble Karnataka High Court was not before the Tribunal and that in the light of the said decision, the Tribunal may now provide relief to the assessee.

9.4 The learned Departmental Representative relied heavily on the order of the tax authorities.

9.5 We have carefully considered the rival submissions on this issue and have also seen the decision of the Honble Karnataka High Court reported in : [1992]194ITR159(KAR) (supra) and we feel that the submissions made by the learned counsel are supported by the said decision and that the expenditure on replacement of moulds has to be allowed as revenue - expenditure. The AO, is, thereforee, directed to allow the said expenditure and allow appropriate relief to the assessee.

10. Ground No. 6 urged by the assessed relates to disallowance of investment allowance on account of increased cost of plant and machinery for which loans were obtained in foreign currency.

10.1 The AO disallowed the claim of the assessed at Rs. 1,51,385 towards investment allowance on account of increased cost of plant and machinery for which loans had been obtained in foreign currency. The liability to repay the foreign currency loan increased as on 21st December, 1981, by Rs. 6,05,546 and the assessed claimed investment allowance on this enhanced liability.

10.2 On first appeal, the learned counsel for the assessed contended that s. 43A (1) clearly envisaged that any enhancement of liability on account of change in the rate of exchange of currency was to be added to the actual cost of asset as defined in s. 43(1). He relied on the decision of the Honble Bombay High Court in the case of Addl. CIT vs . Chowgule & Co. Pvt. Ltd. : [1986]159ITR12(Bom) . The learned CIT (A) referred to the provisions of s. 43A and the provisions of s. 32A and observed that investment allowance under s. 32A is to be allowed in the previous year in which the machinery or plant was installed or if the machinery or plant was first put to use in the immediately succeeding previous year then in respect of that previous year. He further observed that in the case of the assessee, the machinery had been installed and put to use in the earlier year (1975). He, thereforee, rejected the claim of the assessee.

10.3 The learned counsel referred to various decisions of the Tribunal and submitted that the majority of the decisions was against the assessed and that the decision of the Tribunal (Madras Bench B) in the case of Southern Asbestos Cement Ltd. vs. Dy. CIT (1991) 38 ITD 449 (Mad), was in favor of the assessee. However, the learned counsel submitted that in view of the small amount involved during the year under consideration this case need not be referred to the Special Bench.

10.4 The learned Departmental Representative relied heavily on the orders of the tax authorities.

10.5 We have carefully considered the rival submissions on this issue and have also perused the various decisions referred to by the learned counsel. It is observed that the decision of the Tribunal (Delhi Bench B) dt. 28th October, 1994 in ITA No. 3883/Del/1991 in the case of Dalmia Cement is also against the assessed on this issue. It may be mentioned that the line of argument adopted by the learned CIT (A) for declining relief to the assessed is almost the same as of the Tribunal in the said decision. Accordingly, we see no reason to interfere with the order of the learned CIT (A) in this behalf. This ground is, thereforee, rejected.

11. Ground No. 7 urged by the assessed relates to charging of interest under s. 216 of the IT Act.

11.1 The AO observed in the assessment order that interest under s. 216 may be charged.

11.2 On first appeal the learned counsel for the assessed submitted that the assessed was entitled to certain refund from the Deptt. and, thereforee, the AO was not justified in charging interest under s. 216. He further submitted that the AO had not recorded any finding that there was underestimate of advance-tax payable by the assessee. In this connection, he relied on the decision of the Honble Gujarat High Court in the case of CIT vs. Nagri Mills Ltd. (1965) 57 ITR 304 . The learned CIT (A) considered the submissions and observed that the assessed furnished a statement of advance-tax under s. 209A (1) (a) on 4th June, 1981, in Form No. 28A indicating total income at Rs. 1,02,27,306 and worked out total tax at Rs. 59,06,268. He further observed that on the basis of the said statement, the assessed paid advance-tax of Rs. 19,61,999 towards the first Installment on 2nd September, 1982. He also observed that the estimate of advance-tax was filed in Form No. 29 estimating total income of Rs. 2,10,00,000 and total advance-tax was worked out at Rs. 1,18,38,750 and on the basis of such estimate, the assessed paid advance-tax amounting to Rs. 49,07,876. He also observed that with the said estimate, the assessed had written to the AO that sales in the year under consideration had been estimated at Rs. 28 crores based on sales up to June, 1981, and further by applying margin of profit of 7.5 per cent the profit worked out to Rs. 210 lakhs. The learned CIT (A) further noted that on 10th December, 1981, the assessed filed a revised estimate showing estimated total income at Rs. 305 lakhs and worked out the total tax at Rs. 1,71,94,375 and that the assessee-company paid tax of Rs. 1,02,63,500. He also noted that the assessed had written to the AO that sales in the year under consideration had been estimated at Rs. 3,250 lakhs on the basis of progressive sale figures up to November, 1981, which were of the order of Rs. 2,900 lakhs. The learned CIT (A) concluded that the assessed had underestimated the advance-tax payable in the first two installments so as to defer the payment of advance-tax. In the process he also observed that the wide disparity in the income estimated by the assessed on the three occasions could not be explained, as attempted by the assessee, by arguing that in view of the nature of business estimate of profit could not be correctly made. The learned CIT (A) declined to accept the said plea. In this connection, he further observed that when the assessed filed the estimate of advance-tax on 2nd September, 1981, a period of more than 8 months had already elapsed and that only 4 months were left for the closure of accounts. He further observed that if a company with elaborate aid of accounting staff and CA could not make the projections of the annual turnover, then it would negate the provisions of advance-tax. He, thereforee, held that on the totality of circumstances there was justification for invoking the provisions of s. 216 by the AO. The learned CIT (A), however, also observed that the first Installment had been paid on the basis of statement of advance-tax and, thereforee, s. 216 could not be invoked for computing interest with regard to the said Installment and that the interest was to be computed on the basis of the estimate filed in September, 1981, whereby the assessed had reduced the amount payable in that instalment. The learned CIT (A) also observed in the process that there was lacunae in the provisions of s. 216 as they could not be invoked with reference to the statement of advance-tax. Regarding decision of the Honble Gujarat High Court in (1965) 57 ITR 304 (supra), the learned CIT (A) observed that he had arrived at the conclusion regarding the applicability of s. 216 after hearing the learned counsel and carefully considering the relevant facts and circumstances of the case and that any irregularity committed by the AO in not recording a clear finding had been removed at the appellate stage. He, thereforee, directed the AO to recompute the interest under s. 216 in the light of the observations mentioned above.

11.3 The learned counsel for the assessed invited our attention to pages 28-40 of the paper book, where details of estimates filed and the plea taken by the assessed before the AO and Form Nos. 28A and 29 are placed. He further submitted that the statement of advance-tax was based on the last assessed income in terms of the provisions of s. 209A and that as the income kept on increasing the assessed filed revised estimates. He further submitted that the estimates could be revised up to the date of payment of the last instalment. In this connection, he relied on the decision of the Honble Calcutta High Court in the case of CIT vs. Indian Tube Co. Ltd. (1993) 197 ITR 522 , wherein it is observed that 'When an assessed is required to file a statement of advance-tax under s. 209A (1) (a), he is not to estimate his current income. He is to comply with the provisions of furnishing a statement in accordance with s. 209(1) (a) or cl. (d)(i) of that section. To comply with the aforesaid provision, no estimate of the current income is required to be made by the assessee. He merely calculates his advance-tax on the basis of his total income of the latest regular assessment or on the basis of the total income on the basis of the return subsequently filed where there is payment under s. 140A of the Act, whichever is higher. Hence, interest which is levied under s. 216 cannot be attracted to a case where the assessed is required to file a statement under s. 209A (1). Sec. 216 is attracted only in a case where the assessed has to estimate his current income and such estimate is found to be an underestimate compared to the later estimate filed by him in the last instalment'.

11.4 The learned Departmental Representative relied heavily on the orders of the tax authorities.

11.5 We have carefully considered the rival submissions on this issue and have also perused the orders of the tax authorities. We have also seen the case law relied upon by the learned counsel as also the provisions of s. 209A. We feel that the submission made by the learned counsel have force and that the same are supported by the aforesaid decision of the Honble Calcutta High Court reported in (1993) 197 ITR 522 (supra). Further, the provisions of sub-s. (4) of s. 209A show that if by reason of current income being likely to be greater than the income on which the advance-tax payable by the assessed has been computed or for any other reason, the amount of advance-tax computed in the manner laid down in s. 209 on the current income (which shall be estimated by the assessee) exceeds the amount of advance-tax so payable by him by more than 33/1/3 per cent of the latter amount, he shall on or before the date on which the last Installment of advance-tax is payable by him send to the AO an estimate of the current income and the advance-tax payable by him on current income calculated in the manner laid down in s. 209. He shall also pay the amount of advance-tax as accords with his estimate on the date applicable in his case under s. 211 as has not expired, by installments which may be revised according to s. (5). It is further observed that sub-s. (5) specifies that the assessed may send a revised estimate of the advance-tax payable by him on or before any of the dates specified under s. 211 and adjust any excess or deficiency in respect of any Installment already paid in a subsequent Installment or in subsequent installments. In view of the foregoing provisions and the aforesaid judgment of the Honble Calcutta High Court we feel that the assessed has substantially complied with the provisions and set aside the order of the learned CIT (A) and delete the interest levied under s. 216.

12. Ground No. 8 urged by the assessed relates to set off of deficiency under s. 80J during the assessment year under consideration.

12.1 The assessed claimed deduction under s. 80J on the ground that the glass unit i.e., Universal glass Ltd. had been amalgamated with the assessee-company w.e.f. 1st January, 1980. The AO disallowed the claim and the CIT (A) observed that if any unabsorbed claim under s. 80J in respect of Universal Glass Ltd. was to be considered it would be in the asst. yr. 1981-82 and if any unabsorbed claim remained, the same addition could be carried forward as per law. He held that in the case of the assessee, no such unabsorbed claim under s. 80J had been carried forward and, thereforee, no such claim could be allowed in the year under consideration.

12.2 The learned counsel for the assessed submitted that this ground was consequential to the decision in appeal for asst yr. 1981-82. He further submitted that the amalgamation had taken place in the previous year relevant to the asst. yr. 1981-82.

12.3 The learned Departmental Representative however, referred to the provisions of s. 72A of the IT Act and submitted that the said section does not mention anything about deficiencies to be carried forward and set off with reference to the provisions of s. 80J. He further submitted that the provisions of s. 80J themselves do not permit such carry forward in case of mergers and transfers.

12.4 We have carefully considered the rival submissions on this issue and we feel that the claim of the assessed will have to be considered in the light of the decision of the Tribunal in relation to the asst. yr. 1981-82 and we direct the AO to consider the claim of the assessed in the light of such decision.

13. In the result, the appeal of the assessed is allowed in part.