TMI Blog2008 (9) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... t was delivered by AJAY TEWARI, J. - This is a reference made by the Tribunal on the following questions of law :- "1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in cancelling the order of the Commissioner of Income-tax passed under section 263? 2. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing the Investment allowance of Rs.4,06,822/- and interest of Rs.18,575/-." 2. The assessee claimed investment allowance under Section 32A (2) of the Income Tax Act, 1961 (for short "the Act") for the year 1977-78. The Assessing Officer came to the conclusion that the assessee was entitled to the said investment allowance. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the assessee contended that Section 32A(b) (ii) of the Act speaks of investment allowance with regard to the business of construction, manufacture or production of any one or more of the articles or things specified in the list in the Ninth Schedule to the Act. She submitted that item No.8 in the Ninth Schedule is 'industrial and agricultural machinery'. She further contended that 'industrial and agricultural machinery' has not been defined in the Act. Therefore, one has to take in aid the provisions in the other relevant Acts and if that be done, the First Schedule to the Industries (Development and Regulation) Act, 1951 becomes relevant and of assistance. In item 8 the First Schedule to the Industries (Development and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance and when on such facts the Income-tax Officer came to the conclusion that the allowance was properly claimed and allowed it, he was acting in accordance with law. 6. Learned counsel for the assessee also referred to the speech of the Finance Minister, dated 15.3.1976 wherein he introduced the investment allowance in place of the `development rebate' in the following terms ([1972] 102 ITR (ST.) 93,95) :- " .... I have, therefore, decided to introduce a scheme of investment allowance for certain priority industries. The present scheme of initial depreciation allowance will be replaced by a system of investment allowance. The investment allowance will be allowed at the rate of 25 per cent of the cost of acquisition of new machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which the aforesaid expenditure was incurred and for which the development rebate was claimed by the assessee are clearly machinery and, when installed in the ring-frames, would constitute a self-contained unit for spinning. Though, therefore, they by themselves may not be said to be a self-contained unit, they must be held to be "machinery" and the spindles must also be held to have been installed for the purposes of the second paragraph of clause (vi) and clause (via) and, consequently, the expenditure incurred in their purchase and in substituting them for the old spindles would be entitled to development rebate." 9. Learned counsel for the revenue relied on a Division Bench judgment of Karnataka High Court in Assistant Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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