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TMI Blog2009 (11) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... of the specified category are fulfilled, Section 32A will be attracted - Where business of the assessee is of leasing, even according to the learned counsel for the revenue there will be no difficulty in view of judgment in Shaan Finance. Where the income so derived is assessed as business income, in our view, the same principle will apply - Accordingly, the questions referred are answered against the revenue and in favour of the assessee - 365 & 366 of 1995 (O&M) - - - Dated:- 4-11-2009 - ADARSH KUMAR GOEL and GURDEV SINGH JJ. Ms. Urvashi Dhugga, Advocate, for the revenue. Mr. Animesh Sharma, Advocate, for the assessee. JUDGMENT 1. Following questions of law have been referred for the opinion of this Court by the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he concluding words of the paragraph "to ensure proper and smooth working of the factory during the leave and licence period" are significant and clearly indicate that the lessor had certain definite obligations towards the lessee and due to the disturbed conditions in Punjab (as summarised in the submission of the counsel) and this obligation was discharged by the appellant company by constructing the quarters for workers and which quarters were lateron used by the workers of the appellant company itself, after the lease period was over in 1986..." 4. The Tribunal affirmed the above view. 5. As regards investment allowance, the Tribunal followed its earlier order dated 4.3.1993 in cross appeal of the assessee for the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or its business. Learned counsel for the revenue submitted that the investment allowance was not permissible when the machinery was not used for business purpose by the assessee. Reliance has been placed on the judgment of Hon'ble Madras High Court in Commissioner of Income Tax Vs. Sivananda Colour Works (1997) 142 CTR (Mad) 32 and judgment of the Hon'ble Supreme Court CIT Versus Narang Dairy Products (1996) 219 ITR 478 9. On the other hand, learned counsel for the assessee submits that the machinery was let out as a part of the plant and the income so derived was treated as business income in which case the machinery will be treated to be used for business of the assessee, as held by the Tribunal. Reliance has been placed on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Vinod Bhargava (supra), wherein it was held that leasing out of machinery is a mode of carrying of business, therefore, development rebate was admissible. Judgment in Narang Dairy Products was distinguished in Shaan Finance (supra), by observing that therein the leasing out was for the purpose of sale. In Commissioner of Income Tax v. Maharashtra Apex Corporation Ltd. (1998) 234 ITR 484, the Karnataka High Court dealt with the said question and observed as under:- "...In our opinion, the section should be construed in the context of modern times and having regard to various modes of business currently adopted by the businessman. Giving plant and machinery on lease or hire is one of the recognized modes of doing business. Even in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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