TMI Blog2008 (3) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... ble under section 32AB, without appreciating the fact that para 17.3 of Circular No. 461 was only applicable when a deposit was made with a designated Development Bank , and not otherwise. 2. Whether, the Hon ble ITAT was justified in following the decision of the Bombay High Court in the case of CIT v. Antifriction Bearing Corporation Ltd. 246 ITR 295, without considering the full text of the Circular No. 461, thus leading to a question whether for purposes of interpretation of a provision, a circular has to be read in entirely, or only part portions there off can be used to interpret a particular provision. 2. The brief facts of the case giving rise to the present revision are that the opposite party (hereinafter referred to as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter depreciation, whichever is less. 4. In appeal, it was submitted before the ld. Commissioner of Income-tax (Appeals) by the assessee that even if the delivery of the plant machinery was taken in subsequent year, the amount was utilized by making actual payment to the supplier in the year under consideration. The Commissioner of Income-tax (Appeals), however, did not agree with the contentions raised before him. He upheld the action of the Assessing authority. He, therefore, confirmed the action of the Assessing authority and upheld the disallowance of ₹ 4,31,459. 5. Being aggrieved by the order of the Commissioner of Income-tax (Appeals), assessee filed appeal before Tribunal. The Tribunal by the impugned order accepted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned under section 32AB, we restore the matter to the Assessing Officer to examine the details of such payments and to consider the claim of the assessee accordingly, as per law. 6. Heard Sri D.D. Chopra, learned Standing Counsel appearing on behalf of the revenue and learned counsel appearing on behalf of the assessee. Section 32AB reads as follows : Investment deposit account.-(1) Subject to the other provisions of this section, where an assessee, whose total income includes income chargeable to tax under the head Profits and gains of business or profession , has, out of such income,- (a )deposited any amount in an account (hereafter in this section referred to as deposit account) maintained by him with the Development Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purchase of plant and machinery amounts to utilization in the year in which the advance was made and the deduction under section 32AB is admissible. The Division Bench of the Bombay High Court held as follows: Section 32AB was introduced to replace investment allowance under section 32A by a new scheme of investment deposit account. This was one of the measures introduced by way of corporate tax reform. Pursuant to the said change, the modality of allowing deduction for encouraging investments in new plant and machinery came to be introduced. Hence, it is clear that section 32AB was a substitute for section 32A. The new scheme was made applicable to all existing types of assessees as also to professionals and leasing companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32AB it is not necessary that the assessee should become the owner of specified machinery or that the machinery should be installed or put to use during the previous year. If the assessee has placed an order for purchase and has given an advance to the supplier then the amount has been utilised for the purchase of the machinery. The delivery of the machinery may be taken in a subsequent year. If we accept the Department s contention then the scheme of section 32AB will fail. The advance is required to have a nexus with the income of the current year. If an assessee gives an advance for purchase of machinery from the current year s income, he cannot be denied the benefit of section 32AB on the ground that the advance is not utilisation beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which it has been once again clarified that acquisition of ship, or installation of plant or machinery during the previous year is a condition precedent for availing of the benefit of investment allowance whereas, deduction under section 32AB can be availed of even before the ship is acquired or plant and machinery is installed. Therefore, we cannot see as to how the benefit under section 32AB would not be allowed to an assessee who sends an advance for purchase of new machinery. In the circumstances, section 32AB(1)(b) is applicable to the facts of this case and the assessee was entitled to claim benefit of the said section. (p. 297) 9. Learned Standing Counsel is not able to show any decision to the contrary. We respectfully agree w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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