1994 (11) TMI 152 - AT - Income Tax

Summary

Issues:
1. Denial of grant of investment allowance under s. 32A for plant and machinery in a pathological laboratory.
2. Disallowance of motor car and sundry expenses in specific assessment years.
3. Disallowance of unpaid municipal taxes under s. 43B in a particular assessment year.

Analysis:
Issue 1: The primary issue in the appeals was the denial of investment allowance under s. 32A for plant and machinery in a pathological laboratory. The Assessing Officer disallowed the claim, stating that the assessee's income was derived from a profession, not manufacturing or production. The CIT(A) also questioned the eligibility of the items for investment allowance. However, the counsel for the assessee argued that the diagnostic center constituted an industrial activity, distinct from trading, and the reports prepared using the equipment qualified as "article or thing" under s. 32A. The tribunal referred to previous decisions and held that the conditions for investment allowance were met, allowing the grant on all plant and equipment used in the diagnostic center.

Issue 2: In the assessment year 1984-85, the appeal included a challenge to the disallowance of motor car and sundry expenses. The tribunal decided to restrict the disallowance of motor car expenses to 1/6th instead of 1/4th, and deleted the disallowance of sundry expenses due to lack of specific instances of disallowable expenditure.

Issue 3: For the assessment year 1985-86, the issue involved the disallowance of unpaid municipal taxes under s. 43B. The tribunal noted that the orders of the authorities did not discuss the basis for disallowance. The assessee argued that the taxes paid during the year should be allowed as a deduction. The tribunal directed the matter to be sent back to the Assessing Officer to verify if the taxes were paid in the relevant year and allow deduction accordingly.

In conclusion, the tribunal allowed the appeal for the assessment year 1983-84 and partly allowed the appeals for the subsequent years, addressing the various issues raised by the assessee regarding investment allowance, expenses disallowance, and unpaid municipal taxes.