Law:

Section:

Section 32A, read with item 1 of the Eleventh Schedule, of the Income-tax Act, 1961 - Investment allowance - Whether manufacturing of industrial spirit would come within ambit of item 1 of Eleventh Schedule which mentions 'beer, wine and other alcoholic spirit' - Held, no - Whether even if machinery is partially used for manufacturing of article or thing specified in list in Eleventh Schedule, investment allowance shall still remain admissible and would not be denied if assessee is able to show that said plant and machinery is primarily used for purpose specified in sub-section (2A) of section 32A - Held, yes - Whether, therefore, where assessee was mainly engaged in manufacturing industrial spirit it would be entitled to investment allowance notwithstanding fact that plant and machinery was partially used for manufacturing IMFL which is an item covered by Item of Eleventh Schedule - Held, yes Circular and Notification : CBDT Circular No. 229, dated 9-8-1977 FACTS The assessee was manufacturing industrial spirits as well as items like Indian Made Foreign Liquor (IMFL), country liquor, etc. It claimed investment allowance under section 32A in respect of machinery and plant used by it. The Assessing Officer disallowed the claim of the assessee on the ground that since the assessee was manufacturing rectified spirit and country spirit, i.e., IMFL its case was fully covered by item 1 of Eleventh Schedule. On appeal, the Commissioner (Appeals) sustained the order of the Assessing Officer. On second appeal, the Tribunal held that since the assessee was mainly engaged in the manufacturing of industrial spirit, it would be entitled to the investment allowance. On reference : HELD Entry 1 of Eleventh Schedule mentions 'beer, wine and other alcoholic spirits'. The first aspect that would require determination would be as to whether the manufacturing of industrial spirit would come with the ambit of aforesaid item. The words 'other alcoholic spirits' have to take colour from the preceding expression used in the item namely 'beer and wine'. 'Beer and wine' are meant for human consumption and, therefore, applying the maxim noscitur a sociis,the expression 'other alcoholic…

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