2002 (12) TMI 29 - HC - Income Tax

Deduction under section 32A - Tribunal holding that the assessee is entitled to deduction under section 32A on the plant and machinery used in construction work - Tribunal has decided the issue only on the basis of the decision of the Kerala High Court in the case of Bhageeratha Engineering Ltd. - Tribunal in the instant case has not gone into the factual matter as there is nothing in the order of the Tribunal to show the basis on which the Tribunal came to the conclusion that the assessee was entitled to investment allowance - matter is remitted to the Appellate Tribunal to consider the entire matter afresh

Summary

Issues:
- Whether the assessee is entitled to deduction under section 32A on the plant and machinery used in construction work?

Analysis:
The case involved a dispute regarding the entitlement of the assessee to claim investment allowance under section 32A of the Income-tax Act, 1961 for the assessment year 1982-83. The Assessing Officer initially allowed the investment allowance claimed by the assessee, but the Commissioner of Income-tax, exercising revision power under section 263, directed to withdraw the allowance as the assessee was engaged in construction activities. Subsequently, the Income-tax Officer withdrew the investment allowance, leading to appeals and references before the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal.

The Commissioner of Income-tax (Appeals) allowed the appeal by the assessee, considering the business of the contractor as an industrial undertaking and relied on a decision of the Orissa High Court. The Revenue, aggrieved by this decision, appealed before the Income-tax Appellate Tribunal. The Tribunal, basing its decision on a judgment of the Kerala High Court, upheld the allowance for the assessee. However, the Tribunal's decision was challenged by the Revenue, seeking a reference on the legal question, which was initially declined by the Tribunal but later directed by the High Court.

Upon hearing arguments from both sides, the High Court found that the Tribunal had not adequately considered the factual basis for granting the investment allowance to the assessee. Citing previous Supreme Court decisions, the High Court emphasized the importance of factual considerations in such matters. Therefore, the High Court remitted the case back to the Tribunal for fresh consideration, allowing parties to present fresh material and giving the Tribunal the option to refer the matter back to the assessing authority if needed.

In conclusion, the High Court disposed of all tax case references, emphasizing the need for a fresh consideration by the Tribunal with a focus on factual details. The High Court refrained from answering the legal question directly, opting to remit the matter for a thorough review.