1993 (2) TMI 128 - AT - Income Tax

Summary

Issues:
1. Allowance of deduction under section 32A of the Income-tax Act, 1961.
2. Deletion of addition of unexplained cash credit under section 68A of the Act.
3. Admission of fresh evidence for the assessee's claim of investment allowance.

Detailed Analysis:

1. Allowance of deduction under section 32A of the Income-tax Act, 1961:
The appeal by the revenue was against the order of the DCIT(A) regarding the allowance of deduction under section 32A for the assessment year 1989-90. The dispute focused on the eligibility of the assessee, a partnership firm engaged in manufacturing, for investment allowance on machineries purchased and put to use. The DCIT(A) allowed the claim based on the fulfillment of conditions specified in sub-clause 8B of section 32A. The Tribunal analyzed the dates of purchase, installation, and relevant provisions, concluding that the assessee was entitled to deduction for four items of machinery but not for a Chilling Plant purchased after the specified period. The judgment clarified the conditions for claiming investment allowance under section 32A, emphasizing the importance of evidence to support the eligibility criteria.

2. Deletion of addition of unexplained cash credit under section 68A of the Act:
The revenue challenged the deletion of an addition made on account of unexplained cash credit under section 68A. The DCIT(A) deleted the addition after considering the submissions and evidence presented, stating that there was no material to link the cash credits in the partner's account to concealed income of the firm. The judgment upheld the decision, citing precedent and emphasizing the need for a nexus between the cash introduced and undisclosed income. The deletion was deemed appropriate, and the total income of the firm was reduced accordingly.

3. Admission of fresh evidence for the assessee's claim of investment allowance:
The revenue contested the admission of fresh evidence regarding the placement of orders for the assessee's claim of investment allowance. The Tribunal noted that the assessee had submitted documents evidencing the dates of order placement, which were not initially provided to the Assessing Officer. The judgment directed the Assessing Officer to verify the documents and consider the claim based on the newly presented evidence. The decision highlighted the importance of proper verification before allowing the claim based on additional evidence.

In conclusion, the judgment addressed the issues of deduction under section 32A, deletion of unexplained cash credit addition, and admission of fresh evidence for investment allowance, providing detailed analysis and clarifying the legal principles governing each issue.