1988 (5) TMI 55 - AT - Income Tax

Summary

Issues:
1. Interpretation of investment allowance reserve on machinery and plant.
2. Application of conditions for investment allowance under section 32-A.
3. Jurisdiction of the ITO in giving effect to an appellate order.

Analysis:

Issue 1: Interpretation of investment allowance reserve on machinery and plant
The case involved an appeal regarding the investment allowance reserve claimed by a private limited company owning a theatre. The company sought investment allowance on various items, including machinery, A.C. plant, generator, electric fittings, furniture, accoustic, and plaster of Paris. The CIT(A) examined the issue and allowed the investment allowance on certain items based on precedents and definitions of 'plant.' The CIT(A) directed the ITO to allow investment allowance on specific items after satisfying the conditions under section 31-A.

Issue 2: Application of conditions for investment allowance under section 32-A
The ITO, while giving effect to the appellate order, found that the company did not meet the conditions specified in section 32-A for claiming investment allowance. The CIT(A upheld the ITO's decision, stating that the company failed to satisfy the conditions for investment allowance. The company contended that it was entitled to the investment allowance as per the appellate order of the CIT(A and that the ITO could not reconsider the points decided by the appellate authority.

Issue 3: Jurisdiction of the ITO in giving effect to an appellate order
The Tribunal analyzed the jurisdiction of the ITO in giving effect to an appellate order. It was emphasized that the ITO should adhere to the directions given by the appellate authority and not reassess issues already decided. The Tribunal held that the ITO had exceeded his jurisdiction by questioning the CIT(A)'s decision and that the company was entitled to investment allowance based on the appellate order. The Tribunal set aside the order under appeal and allowed the company's appeal.

In conclusion, the judgment clarified the interpretation of investment allowance on specific items, the application of conditions for claiming investment allowance under section 32-A, and the jurisdiction of the ITO in giving effect to an appellate order. The Tribunal ruled in favor of the company, emphasizing that the ITO should not reassess issues already decided by the appellate authority.