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TMI Blog1989 (8) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee's income was far in excess of the claim. That is how the claim of investment allowance amounting to Rs. 4,31,210 was allowed by the assessing officer for therefore mentioned assessment year. To For the asst. yr. 1982-83 the assessee claimed a sum of Rs. 3,73,787 as loss incurred for discarding electric furnace and grinders. On the basis of the certificate from architects the scrap value of the discarded machinery was taken at Rs. 12,000 the ITO accepted the claim of the assessee subject to the rectification under s. 154 as the sale bill of the discarded machinery was not produced before the assessing officer. The reason for discarding the machinery and claim of loss was that the machinery was burnt during the accounting period relevant to the asst. yr. 1982-83 An application under s. 154 was filed by the assessee requesting for rectification of certain mistakes and one of the mistakes pointed out by the assessee was that the scrap value of plant and machinery was sold for a sum of Rs. 22,500 during the accounting period relevant to asst. yr. 1983-84 as against which a value of Rs. 12,000 was disclosed on the basis of an estimate made by the Aaron Architects Continental. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative urged that the orders passed by the assessing officer under s. 155 were in order and in accordance with the provision of the Act As such no interference was justified According to the learned Senior Departmental Representative since the assessee had sold the machinery and plant within 8 years of its installation provisions of s. 155(4A) are clearly attracted. The learned counsel has relied on the invoice on the basis of which this controversy has arisen. On the other hand, the learned Counsel for the assessee contended that the investment allowance was granted to the assessee in accordance with the provisions of the Act, i.e. s. 32A the ITO was satisfied about the conditions having been fulfilled for grant of allowance, a deduction was made in computing the income According to the learned counsel s. 155(4A) is applicable in cases where the machinery or plant is sold or otherwise transferred by the assessee before the expiry of 8 years from the end of the previous year in which the same was acquired since, in this case, the machinery was burnt it cannot be said that what the assessee sold was the machinery which was installed during the accounting period relevant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted from hydraulic Power Unit of item 3 with length of Flexible leads imported by you from Radyne Limited UK vide their invoice No. 90839 dt.18th Feb., 1980was lying burnt. On Physical examination I believe that this accident happened either by over current/voltage fluctuations which resulted in failure of some protective devices. Due to over heating of the (sic) there was a prematured lining failure which might have too resulted the Puncturing of the furnace and consequently all your tiling furnace along with water cooled cables selector switch got burnt away completely. Since they are Unserviceable they should be replaced by installing new if you so desire However I appreciate your courage by running the second furnace by replacement of the assorted pare lying with you valuing l 2000,00 mentioned on page. 3. Instead of going into repairs it would be worthwhile to import this unit from the foreign supplier who have got their own Technology and is not available indigenously. The burnt furnace along with other burnt items have got scrap value of Rs. 12,000 The IAC (A) in his order for asst. Yr. 1982-83 has dealt with the loss on account of discarded electric furnace in para 8 of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r alleged nor established. The fact that the assessee installed the electric furnace at a cost of Rs. 4,53,000 is established. If a machinery worth Rs. 4,53,000 is reduced in value to Rs. 22,500 within a year of installation that too due to damage caused to the machinery. By fire it would be reasonable to suggest that what the assessee sold was not machinery but machinery scrap. Thus, we are of the firm view that the entire evidence leads to one and the only plausible conclusion i.e. what the assessee had sold was a scrap of a machine and not the machinery that was installed during the accounting period relevant to the asst. yr. 1981-82. 7. Now, coming to the next question as to whether s. 155 (4A) is applicable in cases where the assessee does not sell the machinery as such, but per force of circumstances, is compelled to sell the scrap of the said machinery. It may be useful to reproduce s. 32A and s. 155 (4A) for ready reference: "32A. Investment Allowance (1) In respect of a ship or an aircraft or machinery or plant specified in sub-s. (2), which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall in accordance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of any assets outsideIndiaor for any other purpose which is not a purpose of the business of the undertaking; and the provisions of sub-s. (4A) of s. 155 shall apply accordingly: Provided that nothing in clause (a) shall apply (i) where the ship, aircraft, machinery or plant is sold or otherwise transferred by the assessee to the Government, a local authority, a corporation established by a Central, State or Provincial Act or a Government company as defined in s. 617 of the Companies Act, 1956 (1 of 1956); or (ii) where the sale or transfer of the ship, aircraft, machinery or plant is made in connection with the amalgamation or succession, referred to in sub-s. (6) or sub s. (7)." Section 155 (4A) Where an allowance by way of investment allowance has been made wholly or partly to an assestee in respect of a ship or on aircraft or any machinery or plant in any assessment year under s. 32A and subsequently: (a) at any time before the expiry of eight years from the end of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed, the ship, aircraft, machinery or plant is sold or otherwise transferred by the assessee to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed the rebate was called development rebate and in order to achieve this object a condition was put that if the assessee did not utilise it in his own business, the rebate would be forfeited or deemed to have been allowed wrongly, i.e. not really for development purposes. He said that by a sale to the Government this object was not defeated because the legislature assumes that the Government will Act in the public interest in our opinion, there is no discrimination which is hit by Art. 14 of the Constitution in this case. The legislature has directed the giving of a rebate on conditions which are exactly the same for every assessee, one condition being that if the assessee sells before the expirty of ten years from the end of the year in which it was acquired to a person other than the Government, he would forfeit such rebate This condition is applicable to every assessee and an assessee has a choice of either selling to a person other than the Government and forfeiting the rebate or selling to the Government and keeping the rebate with himself. The discrimination, if any arises on the choice made by the assessee the legislature perhaps presumes that if the machinery is offered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1981) 131 ITR 597 (SC) In this case the Hon ble Supreme Court has laid down asunder; The onus of establishing that the conditions of taxability are fulfilled is always on the Revenue A statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. Where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the legislature the court may modify the language issued by the legislature used or even do some violence to it, so as to achieve the obvious intention of the legislature and produce a rational construction. 13. In the case of CIT vs. J.H. GOTALA (1985) 48 CTR (SC) 363 (1981) 156 ITR 323 (SC) their lordships of the Supreme Court have further laid down that though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction. 14. Having regard to the principles of interpretation laid down by the Hon ble Supreme Court in the case of noted we have no hesitation to hold that provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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