2014 (1) TMI 1407 - HC - Income Tax

Investment Allowance - Held that - The benefit of Investment Allowance is available to the assessee and it cannot be denied on the ground that they have not been put to use - The Tribunal has rightly allowed the Investment Allowance on machines for Milk Division having found that they have already been installed by the assessee - The installation of machinery at milk division was even duly certified by the District Industries Centre, Dewas - As regard the machinery of Soya Division, as details were not available, the AO was directed for making verification as to whether the same was installed or not - Decided against Revenue.

Summary

Issues:
1. Allowance of Investment Allowance on plant and machinery not put to use.

Analysis:
The appeal under Section 260-A of the Income Tax Act, 1961 was directed against the order passed by the Income Tax Appellate Tribunal, Indore Bench. The appellant argued that the Tribunal was not justified in allowing the Investment Allowance when the plant and machinery were not being put to use. The Tribunal observed that the Investment Allowance was disallowed by the Assessing Officer as it was claimed before the machinery was erected, installed, and production started. However, the CIT (A) allowed the claim stating that the allowance was permissible once the machinery was installed. The Tribunal found that the Investment Allowance had been claimed on the plant and machinery installed in the Milk Division and Soya Division. While the machinery in the Milk Division was already installed and certified by the District Industries Centre, Dewas, the details regarding the machinery in the Soya Division were unclear. The Tribunal directed the Assessing Officer to verify if the machinery in the Soya Division was installed. The Tribunal confirmed the order of the CIT (A) regarding the machinery in the Milk Division.

In the judgment, it was emphasized that the Investment Allowance is available upon the installation of machinery, as per Section 32A, regardless of whether the machinery has been put to use. The Tribunal correctly allowed the Investment Allowance on the machines in the Milk Division since they were installed and certified. However, due to unclear details about the machinery in the Soya Division, verification was deemed necessary. The High Court upheld the Tribunal's decision, stating that once the machines are installed, the Investment Allowance cannot be denied merely because they have not been put to use. Therefore, the High Court dismissed the appeal, finding no grounds for interference in the Tribunal's order.