TMI Blog2006 (8) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness, is fully satisfied. As the plant and machinery are used for the business, section 32A(1) would apply with full force and as the plant and machinery are coming within the purview of section 32A(2)(b)(iii), the assessee would be entitled to the investment allowance - - - - - Dated:- 25-8-2006 - Judge(s) : R. S. GARG., M. R. SHAH. JUDGMENT The judgment of the court was delivered by R. S. GARG J.-The Income-tax Appellate Tribunal, Ahmedabad Bench "B", at the instance of the assessee, has made this reference on the following question for the opinion of this court in relation to the assessment years 1986-87 and 1987-88 relating to the I. T. A. No. 4129 and 4130/Ahd/90: "Whether on the facts and in the circumstances of the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of the investment allowance in both the years. Being aggrieved by the order passed by the Assessing Officer, the assessee took up the matter in appeal before the Commissioner of Income-tax (Appeals), who, in his turn, relying upon various decisions, held that the assessee was entitled to the claim of investment allowance and accordingly, he directed the Assessing Officer to allow the same. The Revenue, being aggrieved by the order passed by the Commissioner of Income-tax (Appeals), preferred an appeal before the Income-tax Appellate Tribunal. The Revenue relied upon the judgments in the matter of Builders Associations of India v. UOI [1994] 209 ITR 877 (SC) and CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412 (SC). The Tribunal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Co. [1993] 204 ITR 412 was misunderstood and misapplied by the Tribunal to the facts of the case. Learned counsel for the Revenue on the other hand supported the order submitting, inter alia, that from the very language of section 32A, it would clearly appear that the assessee would not be entitled to any investment allowance. Section 32A(2)(b)(iii) provides that machinery or plant referred to in sub-section (1) of section 32A shall be as detailed in sub-section (2) of section 32A. Sub-clause (iii) of clause (b) provides that any new machinery or plant installed after the March 31, 1976, in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said case, which were apparent from the relevant clause in the contract. The Division Bench, in the said matter, held that the said assessee was entitled to the investment allowance. In that matter also, the assessee was engaged in the activity of mining and excavating lignite. The last word of the Supreme Court in the matter of mining is in the matter of CIT v. Sesa Goa Ltd. [2004] 271 ITR 331 ; [2004] 3 RC 645. The Supreme Court observed that extraction and processing of mineral ore would amount to "production" within the meaning of the word in section 32A(2)(b)(iii) of the Income-tax Act, 1961. Itwas also observed that investment allowance was deductible in respect of a plant installed by the assessee after March 31, 1976, in the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried on by him...". It was never in dispute that the plant and machinery owned by the assessee are wholly used in mining and excavation and the said activity is the active business of the assessee. The precondition of section 32A that the plant and machinery specified in sub-section (2), which is owned by the assessee and is wholly used for the purposes of business, is fully satisfied. As the plant and machinery are used for the business, section 32A(1) would apply with full force and as the plant and machinery are coming within the purview of section 32A(2)(b)(iii), the assessee would be entitled to the investment allowance. The order passed by the Tribunal is based on misconstruction of the provisions of law. The reference is answere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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