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TMI Blog1994 (10) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... lling the order under s. 155(4A) r/w s. 32A(5)." Asst. yr. 1982-83 "1. The learned CIT(A) erred in law and on facts in directing to give the investment allowance as claimed by the assessee." 3. Relevant facts for disposal of these appeals are that in asst. yr. 1978-79 the ITO completed assessment in the case of assessee on 17th March, 1982, determining total income at Rs. 24,62,630. During the course of assessment proceedings the assessee claimed investment allowance of Rs. 25,017 being 25% of actual cost of machinery of Rs. 1,00,070. On scrutiny of the assessee's file by the ITO it was observed that the assessee created investment allowance reserve at 75% of the investment allowance admissible to the assessee. But the partnership o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of South India Steel Rolling Mills vs. CIT (1982) 30 CTR (Mad) 1 : (1982) 135 ITR 322 (Mad) and passed the order withdrawing the investment allowance originally granted under s. 32A(5) of the Act for asst. yr. 1978-79. Separate orders for asst. yrs. 1979-80, 1980-81 and 1981-82 were also made in the same manner withdrawing the investment allowance granted to the assessee and for asst. yr. 1982-83, the claim of the assessee for investment allowance was rejected on the ground that assessee-firm stood dissolved vide dissolution dt. 30th June, 1981, the previous year relating to assessment year under consideration and question of granting investment allowance during this assessment year does jot arise since the condition laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce granted to the assessee in the asst. yrs. 1978-79 to 1982-83. It was also submitted by the learned Departmental Representative that once the very existence of firm was not for 10 years as it stood dissolved on 30th June, 1981, the assessee-firm was not in a position to utilise the reserves of investment allowance which was to remain in existence for a period of ten years and ITO was justified in withdrawing the investment allowance and in rejecting the claim of the assessee for the year 1982-83. As against this, the learned counsel for assessee has placed reliance on the submissions made before the CIT(A) which do find place in detail in para 3 to para 10 of the order of CIT(A) and asserted that the amount of investment allowance reserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chinery far exceeded the reserve available and the balance of reserve of investment allowance became Nil on account of purchase of new machineries and, therefore, the question of retaining the investment allowance reserves for ten years did not arise. This plea of the assessee has not been disputed by the ITO on fact and once the new machineries have been purchased in each succeeding year and the cost of new machinery is quite excessive to the amount of investment allowance reserves then the very provisions of s. 32A(5) of the Act are fully complied with as it requires that investment allowance reserve is to be utilised for the purpose of requiring a new machinery for the purpose of business before the end of 10 years. This plea was rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm was dissolved on 31st Mach, 1978 and a deed of dissolution of partnership was executed on 19th Sept., 1978. Upon dissolution, all the assets and liabilities of the assessee were taken over by one of the partners, who continued the business and ITO invoked the provisions of s. 155(4A) r/w s. 32A(4)(ii)(a) and withdrew the investment allowance in both the years in question. However, the CIT(A) on appeal, held that allotment of assets and liabilities upon the dissolution of the assessee did not amount to transfer within the meaning of s. 155(4A) and s. 32A(4) and there is no justification to withdraw the investment allowance. The Tribunal confirmed the view of CIT(A) on the basis of decision of Hon'ble Supreme Court in the case of Malabar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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