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Issues:
1. Whether the value of motor vehicles should be considered part of the value of plant and machinery for determining a small-scale industrial undertaking under section 32A(2)(b)(ii)? 2. Whether the definition of plant in section 43(3) should apply when determining the value of an industrial undertaking as a small-scale industrial undertaking under section 32A(2)(b)(ii) of the Income-tax Act? 3. Whether the assessee is a small-scale industrial undertaking and entitled to investment allowance? Analysis: Issue 1: The Tribunal referred three questions to the court regarding the eligibility of the assessee for investment allowance under section 32A. The assessee claimed investment allowance as the plant and machinery installed were in a small-scale industrial undertaking with a value of Rs. 18,63,008. However, the Income-tax Officer found that the value of motor cars (Rs. 2,15,617) was not included, making the total value exceed Rs. 20 lakhs, disqualifying the assessee as a small-scale industrial undertaking. The Commissioner of Income-tax and the Tribunal upheld this decision. The court analyzed the relevant provisions of section 32A and concluded that the value of motor cars should not be added to the value of plant and machinery, as per the definition of plant under section 43(3). Therefore, the assessee was considered a small-scale industrial undertaking entitled to investment allowance under section 32A. Issue 2: The court examined the definition of plant under section 43(3) and its application in determining a small-scale industrial undertaking under section 32A(2)(b)(ii). It clarified that the definition of plant under section 43(3) includes vehicles, but in the context of defining a small-scale industrial undertaking, an independent definition applies. As per Explanation (2) to sub-section (2) of section 32A, a small-scale industrial undertaking is defined based on the aggregate value of machinery and plant installed, excluding certain items, not exceeding Rs. 20 lakhs. Since the independent definition applies, the value of vehicles should not be added to the value of plant and machinery, making the assessee eligible for investment allowance. Issue 3: The court disagreed with the interpretation of the authorities that included motor cars in the value of plant and machinery, leading to the disallowance of investment allowance. By emphasizing the independent definition of a small-scale industrial undertaking under section 32A, the court ruled in favor of the assessee, stating that the assessee met the criteria and was entitled to investment allowance. The court's decision was based on a strict interpretation of the relevant provisions, disregarding previous judgments cited by both parties. In conclusion, the court answered all three questions in favor of the assessee, confirming their status as a small-scale industrial undertaking eligible for investment allowance under section 32A of the Income-tax Act.
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