2000 (11) TMI 1181 - AT - Income Tax

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Eligibility for investment allowance under section 32A for Zinc Cell House.
3. Applicability of section 32AB(10) in denying further deduction under section 32A.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The delay of 19 days in filing the departmental appeal was condoned due to the Assessing Officer's sudden need to attend to his ailing wife. The learned counsel for the assessee did not object to this condonation. Consequently, the appeal was admitted.

2. Eligibility for Investment Allowance under Section 32A for Zinc Cell House:
The primary issue was whether the assessee was entitled to an investment allowance under section 32A for the Zinc Cell House, which was capitalized at Rs. 23,25,43,000. The Zinc Cell House was installed and brought into use on March 26, 1988, falling within the assessment year 1988-89. The assessee had already claimed and was allowed a deduction under section 32AB for the assessment year 1988-89. The Assessing Officer disallowed the claim for the following reasons:
- The Zinc Cell House was installed during the assessment year 1988-89, making it ineligible for investment allowance under section 32A for the assessment year 1989-90.
- Section 32AB(10) precluded further deduction under section 32A for the same capitalized expenses in the assessment year 1989-90.

The Commissioner of Income-tax (Appeals) found that the assessee had entered into an agreement with the suppliers before the specified date of June 12, 1986, making section 32A(8B)(a)(ii) applicable. The Commissioner concluded that the assessee was entitled to a deduction under section 32A at 20% on the amount of Rs. 23,25,43,967 minus Rs. 19.05 lakhs, already allowed under section 32AB for the assessment year 1988-89. The Commissioner directed the Assessing Officer to verify the relevant facts and allow the claim.

3. Applicability of Section 32AB(10) in Denying Further Deduction under Section 32A:
The learned Departmental Representative supported the Assessing Officer's decision by referring to section 32AB(10), which states that if a deduction has been allowed under section 32AB in any assessment year, no deduction shall be allowed under section 32A in the same or the next four assessment years. However, this contention was challenged by the assessee's counsel, who argued that section 32AB(10) should be interpreted in the context of other relevant provisions, indicating that the initial assessment year for section 32AB(10) should be from 1989-90 onwards.

The Tribunal examined the legislative intent and the provisions of section 32A(8B) and section 32AB(10). The Tribunal noted that the reintroduction of investment allowance under section 32A was meant to address the adverse situation created by the withdrawal of investment allowance from April 1, 1987. The Tribunal concluded that the initial assessment year for applying section 32AB(10) should be 1989-90 or later, as clarified by the Central Board of Direct Taxes Circular No. 559.

The Tribunal upheld the Commissioner of Income-tax (Appeals)'s order, allowing the deduction under section 32A for the assessment year 1989-90, subject to verification by the Assessing Officer. The Tribunal dismissed the departmental appeal.

Conclusion:
The Tribunal dismissed the departmental appeal, upholding the Commissioner of Income-tax (Appeals)'s decision to allow the investment allowance under section 32A for the Zinc Cell House for the assessment year 1989-90, subject to verification of the relevant facts by the Assessing Officer.

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