9911796707
TMI Blog2000 (11) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... are that the aforesaid Zinc Cell House was installed as well as brought to use on March 26, 1988, falling within the previous year corresponding to the assessment year 1988-89. It is also a fact that in the assessment year 1988-89, the assessee claimed and was also allowed deduction under section 32AB of the amount of Rs. 19.05 lakhs (maximum amount permissible under the said section) on account of addition to the machinery and plant amounting to Rs. 2,564.54 lakhs which also included the aforesaid amount of Rs. 2,325.43 lakhs relating to Zinc Cell House. The Assessing Officer after discussing the provisions of the related sections, disallowed the claim of the assessee on the following two grounds : (i) The Zinc Cell House was installed and also brought into use during the period corresponding to the assessment year 1988-89 and hence investment allowance under section 32A would not be available to the assessee on the cost of the Zinc Cell House in its assessment for the year 1989-90 ; (ii) In view of the provisions of section 32AB(10) inasmuch as the assessee had been allowed deduction under section 32AB in the assessment year 1988-89, the assessee cannot be allowed further de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of both the sections 32A and 32AB and also the various clauses of the Central Board of Direct Taxes Circular No. 559, dated May 4, 1990 relating to the amendments made by the Direct Tax Laws (Amendment) Act, 1989. Let us first of all, try to examine the provisions of section 32AB(10) introduced by the Direct Tax Laws (Amendment) Act, 1989, with effect from April 1, 1989, the first portion of which reads as under : (10) Where a deduction has been allowed to an assessee under this section in any assessment year, no deduction shall be allowed to the assessee under sub-section (1) of section 32A in the said assessment year (hereinafter referred to as the initial assessment year) and a block of further period of four years beginning with the assessment year immediately succeeding the initial assessment year. On a plain reading of this particular sub-section, it would appear, in the first place, that the departmental contention that inasmuch as the assessee had been allowed deduction under section 32AB in the assessment year 1988-89, no further deduction on the same expenses would be allowed to it under section 32A in the assessment year 1989-90, is correct. The use of the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had entered into a contract for the purchase of such machinery or plant with the manufacturer or owner of, or a dealer in, such machinery or plant, or had, where such machinery or plant has been manufactured in an undertaking owned by the assessee, taken steps for the manufacture of such machinery or plant : Provided that nothing contained in sub-section (1) shall entitle the assessee to claim deduction in respect of a ship or aircraft or machinery or plant referred to in this clause in any previous year except the previous year relevant to the assessment year commencing on the first day of April, 1989. Clause (b) to the above mentioned sub-section (8B) of section 32A provided for continuation of investment allowance in respect of a new ship or new aircraft acquired or any new machinery or plant installed after March 31, 1988, but before such a date to be notified later on. So far as the case before us is concerned, it is an undisputed fact that the plant and machinery concerned were acquired by the assessee before March 31, 1988. It has also been admitted by the Revenue that the assessee had entered into a contract for purchase of the aforesaid plant and machinery on Octobe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88-89, could exercise an option to claim deduction under section 32A in the assessment year 1989-90. In this connection, it may be clarified that since investment allowance (section 32A) has been reintroduced with effect from the assessment year 1989-90 and an option between section 32A and section 32AB has been made available for the first time from the assessment year 1989-90 only, the assessment year 1989-90 shall be the first initial assessment year for the purposes of exercising the option between the two sections. Thus an assessee, who had claimed deduction under section 32AB during the assessment year 1987-88 or assessment year 1988-89, can exercise the option for claiming deduction either under section 32A or under section 32AB in the assessment year 1989-90. Where any such option is exercised in the assessment year 1989-90, that will be the initial assessment year for the claim for which option is exercised. It is clear from the clarification provided by the Central Board of Direct Taxes in the aforesaid clause of the Circular No. 559 (see [1990] 184 ITR (St.) 91) that so far as the provisions of section 32AB(10) are concerned the initial assessment year has got to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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