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TMI Blog2015 (8) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 32AB(6) of the Act. Thus, to the extent of the benefit derived under section 32AB of the Act such amount stands reduced from the actual cost of the plant and machinery, and as such, the question of double deduction would not arise. As is apparent on a plain reading of sub-section (8B) of section 32A of the Act the provisions of that section have been made applicable to any new machinery or plant installed after March 31, 1987, but before April 1, 1988, if the assessee furnishes evidence to the satisfaction of the Assessing Officer that he had, before June 12, 1986, entered into a contract for the purchase of such plant or machinery 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. Thus, the intention of the Legislature clearly was to give the benefit of investment allowance in respect of plant or machinery installed during the period March 31, 1987, to April 1, 1988. If the contention of the appellant- Revenue were to be accepted, the provisions of sub-section (8B) of section 32A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1987-88 both the claims, that is, investment allowance under section 32A and investment deposit account under section 32AB were in operation, however, the assessee had consciously chosen to claim the benefit of investment deposit account under section 32AB for the assessment year 1987-88 and for the assessment year 1988-89 the scheme for investment allowance under section 32A was not in operation. The Assessing Officer was of the view that since the assessee had been allowed deduction under the scheme of investment deposit account under section 32AB of the Act for the assessment year 1988-89, it was not entitled to claim deduction under section 32A(8B) for the same assets. That since the assessee had already been allowed deduction to the extent of ₹ 26.97 crores under section 32AB of the Act in the assessment years 1987-88 and 1988-89, if the claim for investment allowance as made by the assessee for the assessment year 1988-89 were to be allowed in respect of assets which were installed during the previous year relevant to the assessment year 1988-89 and in respect of which deduction under section 32AB had already been allowed, it would amount to double deduction, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under section 32AB of the Act had already been claimed in the earlier years. It was, accordingly, urged that the impugned order not being in consonance with the above referred to provisions of the Act the question is required to be answered in favour of the Revenue and against the assessee. 5. On the other hand, Mr. J. P. Shah, learned counsel appearing on behalf of respondent-assessee, invited the attention of the court to the provisions of sub-section (8B) of section 32A of the Act to submit that the same nowhere provides that in case where deduction has already been claimed in earlier years in respect of such plant and machinery as described in the said sub-section, the investment allowance under section 32A of the Act was not allowable in the assessment year 1989-90. It was submitted that while the assessee had claimed deduction under section 32AB of the Act for the assessment years 1987-88 and 1988-89, such a deduction had not been claimed in respect of the plant and machinery in the year under consideration. That the figures of ₹ 39.55 crores and ₹ 11.80 crores, respectively, for the assessment years 1987-88 and 1988-89 clearly show that the assessee had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to point out that reduction is to be made from the actual cost of plant and machinery installed, for that part of such cost which has been met out of the amount released under section 32AB(6), that is, from the Development Bank deposit. It was argued that under section 32A(8B) of the Act the assessee is entitled to investment allowance on the assets which have been installed during the previous year relevant to the assessment year 1988-89 and that such claim does not amount to double deduction. It was contended that the assessee-company has satisfied all the conditions as laid down under section 32A(8B) of the Act and is, thus, entitled to investment allowance even on those assets which have been installed during the previous year relevant to the assessment year 1988-89, though investment on those assets had been made in the earlier years. It was, accordingly, urged that the impugned order passed by the Tribunal, being just, legal and proper does not warrant interference by this court. 6. The Tribunal in the impugned order, after recording the facts of the case and the rival contentions, has recorded its findings thus : 9. We heard the assessee's counsel and the Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the withdrawal of investment allowance, with effect from April 1, 1987, created an adverse situation for entrepreneurs, who were not able to get the benefit of section 32AB for the reasons of absence or inadequacy of profit in the year of investment. The Government, therefore, decided to reintroduce investment allowance in respect to new ship or aircraft acquired or new machinery or plant installed after March 31, 1988. The investment allowance could be claimed as an option to the deduction allowable under the investment deposit account scheme (section 32AB) and was to be allowed on the same lines as was being allowed earlier prior to its withdrawal, with the modification that the admissible deduction would be 20 per cent. of the cost of the new asset as against 25 per cent. allowed earlier. Since the investment allowance had been withdrawn earlier in respect of new ship or aircraft acquired or new machinery or plant installed after March 31, 1987, and it was being revived in respect of such assets acquired or installed after March 31, 1988, the result was that assessees would not have been eligible to claim investment allowance in respect of these assets acquired or installe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder, the provisions of this section shall apply in respect of,-. . . (ii) any new machinery or plant installed after the 31st day of March, 1987, but before the 1st day of April, 1988, if the assessee furnishes evidence to the satisfaction of the Assessing Officer that before the 12th day of June, 1986, he had purchased such machinery or plant or 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 1st day of April, 1989 ; (b) a new ship or new aircraft acquired or any new machinery or plant installed after the 31st day of March, 1988, but before such date as the Central Government, if it considers necessary or expedient so to do, may, by notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d section 33AB to provide that deduction under that section would be allowable only for the assessment years 1986-87 and 1987-88, the said provisions of sub-section (10) of section 32AB were no longer necessary and were to be deleted. 6.6 Further, since the Amending Act, 1989, has amended section 32A to reintroduce investment allowance, as discussed in the pre ceding paras, and has substituted a new sub-section (8C) in that section to provide that deduction for investment allowance will be an option to the deduction for investment deposit account scheme under section 32AB and the option, once exercised, would be valid for five assessment years, it was necessary that a corresponding provision should be made in section 32AB also. Therefore, the old sub-section (10) has been substituted by a new sub-section, which now contains provisions similar to those of sub-section (8C) of section 32A. The new sub-section (10) provides that where a deduction under the investment deposit account scheme under section 32AB has been allowed to the assessee for any assessment year (called as the initial assessment year), no deduction shall be allowed to him in respect of investment allowance under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee had claimed deduction under section 32A up to assessment year 1993-94. In case of an option for claiming deduction under section 32A is exercised by the assessee for the first time during the assessment year 1990-91, that will become the initial assessment year for claim under section 32A and in that case the assessee would be able to switch over to the claim under section 32AB from the assessment year 1995-96, notwithstanding that the assessee had claimed deduction under section 32A up to the assessment year 1994-95. 6.9 The first initial assessment year for the purposes of exercising the option between sections 32A and 32AB.-Doubts have been raised as to which will be the first initial assessment year for the purposes of exercising the option between the investment allowance (section 32A) and investment deposit account scheme (section 32AB) and in view of the fact that section 32AB has been in force since the assessment year 1987-88, whether an assessee, who had claimed deduction under section 32AB during the assessment year 1987-88 or assessment year 1988-89, could exercise an option to claim deduction under section 32A in the assessment year 1989-90. In this connection, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Where any such option is exercised in the assessment year 1989-90, that will be the initial assessment year for the claim for which the option is exercised. 15. In the aforesaid backdrop, what emerges is that upon reintroduction of the scheme of investment allowance under section 32A of the Act the intention of the Legislature was to grant the benefit thereunder in respect of plant and machinery installed after 1988 as also to plant and machinery installed during the period April 1, 1987, to March 31, 1988. However, with a view to take care of a situation whereby the cost of such machinery had been met with out of the amount released to the assessee from the Development Bank, an Explanation came to be introduced below sub-section (1) of the section which provides that for the purposes of investment allowance, actual cost shall mean the actual cost of the ship, aircraft, machinery or plant to the assessee as reduced by that part of such cost which has been met out of the amount released to the assessee from the Development Bank in accordance with the provisions of section 32AB(6) of the Act. Thus, to the extent of the benefit derived under section 32AB of the Act such amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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