TMI Blog1994 (11) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... asis that it had installed new machinery or plant in an industrial undertaking for the purpose of the business of manufacture or production of an article or thing?" The assessee is a private limited company running a 4-star hotel in Colaba, Bombay, called "Fariyas Hotel". In its assessment for the assessment year 1978-79, the assessee claimed investment allowance of Rs.27,600 under section 32A of the Income-tax Act, 1961 ("the Act"), on plant and machinery used by it in its hotel. The Income-tax Officer rejected the claim of the assessee on the ground, inter alia, that the running of a hotel did not amount to "manufacture or production of any article or thing" as required by section 32A(2) of the Act. The appeals of the assessee to the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed section 32A of the Act and the decision of this court in CIT v. Berry's Hotels Pvt. Ltd. [1994] 207 ITR 615. We find that there is a fallacy in the above submission which is apparent from a conjoint reading of sub-sections (1) and (2) of section 32A. These two sub-sections read : "32A. Investment allowance.--(1) In respect of a ship or an aircraft or machinery or plant specified in sub-section (2), which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed .... of a sum by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, manufacture or production of any one or more of the articles specified in the list in the Ninth Schedule ; and (ii) in a small-scale industrial undertaking for the purposes of business of manufacture or production of any articles or things. For the above purposes, an industrial undertaking is deemed to be a small-scale industrial undertaking if the aggregate value of the machinery or plant installed for the purposes of the business of the undertaking does not exceed ten lakh rupees. Investment allowance under section 32A of the Act is thus available subject to other conditions only in respect of machinery which is used for the "purpose of manufacture of articles or things". It is not available in respect of machinery installed for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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