1989 (9) TMI 139 - AT - Income Tax

Summary

Issues:
1. Claim for investment allowance on Scanner and Pacer machines under section 32A of the Income Tax Act.

Detailed Analysis:
The appeal before the Appellate Tribunal ITAT BOMBAY-A involved the sole issue of the assessee's claim for investment allowance on Scanner and Pacer machines under section 32A of the Income Tax Act. The assessee, an individual Pathologist, had claimed the investment allowance in the return of income for the assessment year 1982-83. The Income Tax Officer (ITO) rejected the claim stating that the provision of section 32A mainly applied to business and not profession, and none of the conditions under sub-section (2) were satisfied by the assessee. The assessee appealed before the AAC, citing precedents where the profession could be treated as a business for claiming investment allowance. The AAC upheld the ITO's decision, emphasizing that the machines were used to run the laboratory efficiently and did not involve commercial or industrial activity.

The assessee further appealed to the Tribunal, reiterating the submissions made before the IT authorities. The Tribunal considered the submissions and referred to previous Tribunal decisions, finding merit in the assessee's contentions. The Tribunal disagreed with the reasoning of the AAC, stating that the production of "Reagents" and "Ingredients" through the chemical process using the machines should suffice for claiming deduction under section 32A. The Tribunal held that it was not necessary for the manufactured items to be saleable in the market, as long as they were used in some way. Therefore, the Tribunal directed the ITO to allow the investment allowance to the assessee, subject to fulfilling the conditions stipulated in section 32A.

In conclusion, the Tribunal allowed the appeal, overturning the decisions of the lower authorities and directing the allowance of investment allowance on Scanner and Pacer machines to the assessee, provided the conditions under section 32A were met.