9911796707
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Issues:
1. Disallowance of investment allowance on machineries. 2. Disallowance under section 40(c) of the Income-tax Act, 1961. Detailed Analysis: 1. Disallowance of Investment Allowance: The appeal concerns the disallowance of investment allowance claimed by the assessee on machineries used for its business activities. The assessee, engaged in sales and service of navigational electronic equipment and hydrographic survey operations for O.N.G.C., installed tellurometers and generators during the relevant year. The claim for investment allowance was rejected by both tax authorities. The CIT(A) concluded that since the assessee was not engaged in producing any article or thing, and the equipment was not used for production purposes, the investment allowance was not applicable under section 32A. The tribunal upheld this decision, emphasizing that the equipment used by the assessee did not result in the production of any article or thing. The tribunal found no merit in the argument that the survey activity contributed to oil production, as the assessee itself did not produce oil, and the end product was generated by O.N.G.C. The tribunal also noted that the tellurometers were used for survey operations and did not lead to the delivery of any tangible output like a print-out or report, distinguishing the case from precedents involving different types of machinery. 2. Disallowance under Section 40(c): The second ground of appeal pertained to the disallowance of certain expenditures under section 40(c) of the Income-tax Act, 1961. The assessing officer considered depreciation on flat and furniture, repairs and maintenance of flat, and depreciation on air-conditioner for disallowance under section 40A(5). However, the CIT(A) applied section 40(c) instead, specifically focusing on the amenity provided to a director-employee of the assessee-company. The tribunal supported the CIT(A)'s decision, rejecting the assessee's argument that the expenditures were not subject to disallowance. The tribunal referenced a Bombay High Court decision related to a different section but applicable in this case, as the relevant provision under section 40(c) was akin to section 40A(5)(a)(ii). Therefore, the tribunal upheld the disallowance under section 40(c) for the specified expenditures, dismissing the appeal on this ground as well. In conclusion, the tribunal found no merit in the appeal and dismissed it, affirming the decisions of the tax authorities regarding the disallowance of investment allowance and expenditures under section 40(c) of the Income-tax Act, 1961.
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