2004 (5) TMI 531 - AT - Income Tax

Condonation of delay in filing appeal - Eligibility of investment allowance - plant and machinery - withdrawal of investment allowance u/s 155(4A) for assets leased out - HELD THAT - The delay caused in this case before the CIT (A) was of 180 days. The assessee got the chance to file rectification petition or an appeal as such because of the subsequent pronouncement of law by the hon ble Supreme Court. The pronouncement was not available on the due date. Therefore the assessee had no occasion to file an appeal within time but the assessee has filed the appeal as soon as the law has been declared by the hon ble Supreme Court. Therefore it is our view that the delay of 180 days need to be condoned. The CIT (A) has erred in not condoning the delay. As this is a matter pertaining to a very old assessment year 1989-90 we do not want to send back the file to the lower authorities and again prolong the disposal of the issue involved in this case. We cannot perpetuate the inordinate delay anymore. Therefore in the peculiar circumstances we are not sending back the file to the lower authorities. We are adjudicating the matter ourselves. We hold that the delay caused in filing the appeal before the CIT (A) is explained and therefore it is to be condoned. So the lacuna of delay is dispensed with. The next is the merit of the case. The law has been declared by the hon ble Supreme Court in the case of CIT v. Shaan Finance P. Ltd. 1998 (3) TMI 8 - SUPREME COURT therefore the Assessing Officer is directed to revise the assessment in the impugned assessment year 1989-90 by restoring the investment allowance portion pertaining to the machineries leased out by the assessee. In the result the appeal is allowed. Order accordingly.

Summary

Issues Involved:
The issues involved in this case are the eligibility of investment allowance u/s 32A for additions made to plant and machinery, withdrawal of investment allowance u/s 155(4A) for assets leased out, condonation of delay in filing appeal, and the merit of the case based on legal interpretation.

Eligibility of Investment Allowance:
The assessee made additions to its cement unit at Udaipur, claiming investment allowance u/s 32A for an amount of Rs. 3,47,89,596. The Assessing Officer granted the allowance, including Rs. 69,57,919 for additions in the Udaipur unit. However, upon selling the unit to M/s. J.K. Udaipur Udyog Limited and leasing certain machinery, the AO proposed to withdraw the entire investment allowance, citing "otherwise transfer" due to leasing of assets.

Condonation of Delay:
The assessee filed an appeal challenging the withdrawal of investment allowance for leased assets, citing the decision in CIT v. Shaan Finance P. Ltd. The appeal was filed after the due date, with a condonation petition based on the delayed availability of the relevant legal decision. The Commissioner of Income-tax (Appeals) refused to condone the delay, leading to the appeal being dismissed as barred by limitation.

Legal Interpretation and Decision:
The ITAT Mumbai held that the delay in filing the appeal was justified due to the subsequent legal interpretation by the Supreme Court. The delay of 180 days was condoned, and the ITAT directed the Assessing Officer to revise the assessment for the year 1989-90, restoring the investment allowance for the leased machineries based on the legal precedent set by the Supreme Court in CIT v. Shaan Finance P. Ltd.

Conclusion:
In conclusion, the ITAT allowed the appeal, emphasizing the legitimate right of the assessee to challenge the withdrawal of investment allowance for leased assets based on subsequent legal interpretations. The delay in filing the appeal was condoned, and the assessment was directed to be revised in favor of the assessee.