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Issues Involved:
1. Withdrawal of Investment Allowance under Section 32A(5) of the Income-tax Act, 1961. 2. Applicability of Section 155(4A) for recomputation of total income. 3. Levy of interest under Section 234B(4) following the withdrawal of investment allowance. Detailed Analysis: 1. Withdrawal of Investment Allowance under Section 32A(5): The primary issue in both appeals was whether the Commissioner of Income-tax (Appeals) [CIT(A)] was justified in confirming the action of the Assessing Officer (AO) in withdrawing the investment allowance already granted under Section 32A(5) of the Income-tax Act, 1961. The appellant argued that the transfer of Fertilizer and Fibres Undertakings as going concerns did not fall within the purview of Section 32A(5) because the plant and machinery continued to be utilized in the same undertakings. However, the Tribunal found that the sale of the entire divisions, including the plant and machinery, constituted a transfer under Section 32A(5), as the ownership and use of the assets had changed. The Tribunal referenced the Bombay High Court decision in S.M. Chemicals & Electronics (P.) Ltd. v. CIT, which held that the sale of a business as a going concern constituted a transfer of machinery for the purposes of withdrawal of investment allowance. 2. Applicability of Section 155(4A) for Recomputation of Total Income: The Tribunal upheld the AO's action in recomputing the total income under Section 155(4A) following the withdrawal of investment allowance. Section 155(4A) provides that if an investment allowance is withdrawn, the AO may recompute the total income of the assessee for the relevant previous year and make the necessary amendments. The Tribunal emphasized that the investment allowance is granted on the condition that the eligible assets should not be sold or transferred within eight years of their installation. Since the appellant had transferred the assets within this period, the investment allowance was deemed to have been wrongly allowed, necessitating recomputation of income under Section 155(4A). 3. Levy of Interest under Section 234B(4): The appellant contended that no interest was leviable under Section 155 following the withdrawal of investment allowance. However, the Tribunal clarified that the AO had not levied interest under Section 155 but had revised the amount of interest under Section 234B(4). Section 234B(4) mandates that if the amount on which interest was payable is increased or reduced as a result of an order under Section 154 or 155, the interest shall be increased or reduced accordingly. The Tribunal held that the AO was justified in revising the amount of interest following the recomputation of total income due to the withdrawal of investment allowance. The Tribunal also noted that the statutory framework requires the AO to revise the amount of interest to maintain its correlation with the assessed tax as finally determined. Conclusion: The Tribunal dismissed the appeals, upholding the CIT(A)'s orders confirming the AO's actions in withdrawing the investment allowance under Section 32A(5), recomputing total income under Section 155(4A), and revising the amount of interest under Section 234B(4). The Tribunal found that the sale of the Fertilizer and Fibres Divisions constituted a transfer of the plant and machinery, triggering the withdrawal of investment allowance and necessitating the recomputation of income and revision of interest.
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