9911796707
TMI Blog1993 (12) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... erved that the assessee received ₹ 84 lakhs as licence fee from Grasim Industries Ltd., Birlanagar, as per leave and licence agreement dated 26-7-1984 for the period from 1-4-1985 to 31-3-1986 and also additional licence fee on addition of plant and machinery pursuant to supplementary agreement dated 1-1-1986. The total receipt was ₹ 84,78,300 on account of the licence fee for the assessment year 1986-87. 3. The Assessing Officer considered the claim of investment allowance for the addition of plant and machinery and worked out the investment allowance for the above assessment year at ₹ 32,53,797. 4. For the assessment year 1986-87, the Assessing Officer applied the provisions of section 80VVA of the Act and allowed deduction only of ₹ 19,74,076 out of the said amount. In the following assessment year 1987-88 also, the Assessing Officer applied the provisions of section 80VVA and adjusted the balance of ₹ 12,79,721 including the investment allowance for the current year at ₹ 25,81,132. 5. The Commissioner called for the records for the above assessment years. Looking into the same it was found by him that the investment allowance had bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e section stipulated that the plant and machinery should not only be used for the purpose of business but for the purpose of the business carried on by him. Since in this case, the spinning unit was not used by the assessee-company for the purpose of the business carried on by it but was given out on hire, he was of the view that the assessee could not be given the benefit of investment allowance under section 32A of the Act. Distinguishing the decisions in the case of CIT v. Prem Chand Jute Mills Ltd. [1978] 114 ITR 769 (Cal.) and CIT v. Vinod Bhargava [1988] 169 ITR 549 (AP) and the decision of the Special Bench in the case of ITO v. First Leasing Co. of India Ltd. [1985] 13 ITD 234 (Mad.) cited before him, the Commissioner came to the conclusion that the assessee was not entitled to investment allowance and, accordingly, directed the Assessing Officer to redo the assessments for the above two assessment years. 6. Aggrieved by the said order, the assessee took up the matter in appeal before the Tribunal and, the Tribunal allowed the claim as follows: We have carefully considered the rival submissions in the light of the material placed on the record. From the facts narrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f business, the Special Bench further observed as follows: The further requirement of the nature of the business which the assessee concerned should be carrying on has been specifically incorporated by the Legislature as far as ship or aircraft is concerned. Such a requirement is absent in respect of other machinery or plant and, therefore, on a plain reading of the provision one cannot spell any requirement that the assessee should itself carry on the industrial undertaking where the requisite articles or things are manufactured. Therefore, there is no requirement of section 32A(2) which would be violated if investment allowance is granted to an assessee which leases out machinery or plant provided the lessee uses such machinery or plant for purposes specified. Again the reference to the undertaking in section 32A(4) has to be construed harmoniously to make the section workable. When there is no bar according to the provisions of sections 32A(1) and 32A(2) to the grant of investment allowance to a leasing company, the term for the purposes of business of the undertaking used in section 32A(4) has to be construed as to mean the same type of business as entitled the assessee ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (2), there shall be allowed a deduction by way of investment allowance provided the following conditions are satisfied: (i)the plant or machinery shall be owned by the assessee; (ii)such plant and machinery is wholly used for the purpose of the business carried on by the assessee; and (iii)the machinery or plant must be such as are specified in section 32A(2). 10. Section 32A(2) lays down that the machinery or plant to which the investment allowance is to be applicable shall be the following: (a)The new machinery or plant must be installed after 31-3-1976. (b)Such machinery or plant which are installed must be for the purposes of the business of construction, manufacture, production of any article or thing not being an article or thing specified in the list in the 11th Schedule. 11. It is not in dispute that the assessee is carrying on the business in the manufacture and sale of staples and synthetic blended yarn. It is also not in dispute that due to adverse condition in the demand and supply of staples and synthetic blended yarn due to recession in textile industry and due to increase in the cost of inputs, the assessee gave the said manufacturing uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive of the manner in which that asset was exploited by the assessee. The radar equipment, a commercial asset, was exploited by the assessee wholly for its business even though some benefit or advantage was extended to other compa- nies for a consideration. Therefore, the assessee was entitled to claim development rebate under section 33 of the Act in respect of the weather radar equipment. 14. Dr. Pal did not dispute that the requirement that the assessee should be carrying on the business for which the subject plant and machinery is to be allowed the investment allowance. But there is nothing in section 32A(2) which prohibits the grant of investment allowance to an assessee who leases out machinery or plant to a third party for use in business of manufacture of the permitted goods. The investment allowance is available even where they are leased out provided the lessee uses such machinery or plant for the purpose specified in the said section. 15. The Commissioner in his order under section 263 has himself pointed out that in the present case it is not in dispute that the leasing out of plant and machinery was a business activity on the part of the assessee and the lease fee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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