TMI Blog1997 (12) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Supreme Court in favour of the assessee in the case of CIT v. P.J. Chemicals Ltd. [1994] 210 ITR 830/76 Taxman 611 Accordingly, this ground of appeal is rejected. 3. The next ground is in relation to the deduction under section 32AB of Rs. 2,34,349 which was allowed by the CIT (Appeals). 3.1 The Assessing Officer found that the company has claimed investment deposit benefit under section 32AB of Rs. 2,34,350 on purchase of plant and machinery made during the year. The assessee in support of its claim has filed the Auditor's report in form No. 3AA. The details of purchase was filed by the assessee before the Assessing Officer which is as follows:- ------------------------------------------------------------------------------------------------- S. No. Description Amount Date of Date of invoice actual payment ------------------------------------------------------------------------------------------------- 1. Moler Crimping tool ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o relief under section 32AB of the Act. 3.4 On the other hand, Mr. B.D. Karia, the learned counsel appearing on behalf of the assessee has relied upon the impugned order and submitted that the assessee is a limited company maintaining its accounts under the mercantile system. It has been submitted that there is no dispute in the fact that the machineries in questions were purchased during the previous year which could be apparent from the date of invoice. Of course the payments were made beyond the previous year. The machineries were purchased and the assessee-company got delivery of the same during the previous year and the company has also debited the purchase amount of the machinery in its books of account. In such circumstances, the learned counsel on behalf of the assessee submitted that the first appellate authority was correct in holding that the actual payment is not a criteria for availing benefit under section 32AB of the Income-tax Act because the assessee has already utilised its income for the purpose of purchase of machinery. 3.5 We have heard both the sides and perused the materials on record. It appears that the facts of the present issue is not in dispute that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision is also important which provides that Central Government shall prescribe scheme for the purpose of utilisation of the money under the investment deposit account. Pursuant to the said provisions Central Government has enacted Investment Deposit Account Scheme, 1986 by Notification No. G.S.R. 945(E), dated July 15,1986 which is available in IT Law, fourth Edition by Chaturvedi and Pithisaria, Vol. I pg. II 92. Clauses (3) and (4) of this Scheme has provided how the deposit has to be made with the Development Bank of India which is not relevant for the purpose of the present case. Clause (9) of the Scheme reads as follows:- "9. Utilisation of the amounts for the purpose of section 32AB-(1) an assessee, whose total income includes income chargeable to tax under the head 'Profits and gains of business or profession', may utilise- (a) the whole or any part of the amount deposited by him in a deposit account under clause (a) of sub-section (1) of section 32AB of the Income-tax Act, or (b) any amount out of such income, without depositing the same under clause (a) of subsection (1) of section 32AB of the Income-tax Act, in accordance with this Scheme, for any of the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpreted by the revenue. The only consideration which is required under section 32AB(1)(b) is that the assessee has to utilise the income for purchase of new machineries and plant during the previous year. If we interpret the provision in a restricted way to the effect that the assessee has to make actual payment of purchase that may defeat the object of the law. In this connection, the Board's Circular No. 550 dated 1-1-1990 on the scope and effect of the amendments made iii section 32AB by the Finance Act, 1989 is relevant: "14.2 To remove this anomaly, by amending section 32AB of the Income-tax Act, it has been provided that the benefit under this section shall be available to any assessee, deriving income from business or profession, who acquires new machinery or plant or deposits and utilise the deposit or the purchase of new machinery or plant to be used in the manufacture or production of priority items, i.e., items not specified in the Eleventh Schedule. For this purpose, reference to and the concept of eligible business or profession has been deleted. Further, as a consequence, the provisions for the mode of computation of profits of 'eligible business or profession' have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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