ORDER
Shri George Cheriyan, Accountant Member
1. There are two appeals by the assessee. The appeals relate to the assessment years 1974-75 and 1975-76. The assessee has considerable agricultural holdings to the extent of almost 75 acres. He does not have any other business and other income is from dividends, etc. There is very short point involved in the present appeals and that relates to the question as to whether exemption is available under section 5(1) (ix) in respect of the value of a lathe machine. The value of this machine in the assessment year 1974-75 is Rs. 25,484 and in the assessment year 1975-76 is Rs. 32,717. The WTO denied the exemption which was claimed and the AAC also held that under the provisions of section 5(1) (ix) such exemption was not available.
2. The admitted facts are that this lathe was purchased by the assessee solely for the purposes of repairing his agricultural implements, pump sets, pipe-lines and the tractor which was used for agricultural purposes. But for having the lathe at the agricultural farm, the assessee would have had to take the agricultural implements to a distant place for repairing them and making them operational. The lathe was not used for any purpose other than what we have detailed above.
3. The submission of the learned counsel was that under the provisions of section 5(1) (ix), the lathe was an implement or equipment used for cultivation or raising of agricultural produce, etc., and, therefore, its value was exempt. The learned departmental representative, on the other hand, opposed this plea.
4. The learned counsel for the assessee placed reliance on the decision of the Calcutta High Court in CWT v. Anglo-American Direct Tea Trading Co. Ltd. [1968] 69 ITR 260. His contention was that the court had observed in that judgment that the electrical machinery and welding machinery (including telephones and dusting machinery) could also be tools and implements which would qualify for exemption if it was established that they were used for the raising of agricultural produce. The learned departmental representative, on the other hand, relied on the judgment of the same Court in Kanan Devan Hills Produce Co. Ltd. v. CWT [1968] 67 ITR 823 (Cal.) which was followed in the decision relied on by the learned counsel for the assessee. According to the learned departmental representative, merely because the lathe was used collaterally for repairing agricultural implements, it would not qualify for exemption.
5. We have considered the rival submissions. In Anglo-American Direct Tea Trading Co. Ltd. (supra), the High Court restored to the Tribunal for examination whether, on facts, the electrical machinery, grinding mills, etc., were used for raising agricultural produce as this aspect had not been gone into earlier. The Court only held that such items could also be tools and implements, but the Court cautioned that, that alone would not entitle the assessee to claim exemption unless they were utilised for raising agricultural produce.
6. The provisions of section 5(1) (ix) read as under :
“The tools, implements, and equipment used by the assessee for the cultivation, conservation, improvement or maintenance of agricultural land, or for the raising or harvesting of any agricultural or horticultural produce on such land.
Explanation : For the purposes of this clause, tools, implements and equipment do not include any part or machinery used in any tea or other plantation in connection with processing of any agricultural produce or in the manufacture of any article from such produce.”
7. In Kanan Devan Hills Produce Co. Ltd. v. CWT (supra), the Calcutta High Court has stated as under :
“Tools and implements, which may include modern scientific and mechanised implements like transformers or switch-gear, may qualify for exemption, if used for raising agricultural produce. But implements which are collaterally or partly used to energise agricultural tools or implements will not so qualify.”
8. A tool or implement even if sophisticated would qualify for exemption if used for raising agricultural produce. There is, therefore, no absolute ban on the grant of exemption even to a lathe. But, the question is could it be said, looking to the user to which the lathe is put in the present case, that it is used for raising agricultural produce ? The Calcutta High Court has cautioned that implements which are collaterally or partly used to energise agricultural tools or implements will not qualify for exemption. To energise a tool or implement means to put such tool or implement into action. The lathe is used for repairing agricultural tools or implements. In that context, it is machinery which is used not directly for energising the tools or implements, but only collaterally, in the sense that it comes into use when the tools or implements suffer damage or have a defect. It is not machinery which is necessary to run the tool or implement directly from day to day or, in other words, it is not machinery on which the tool or implement is directly dependent for functioning from day to day. It is machinery on which the tool or implement becomes dependent only when there is a break-down or there is a damage. The value of the lathe, therefore, in our view, will not fall for exemption under section 5(1) (ix).
9. The appeals are, accordingly, dismissed.