TMI Blog1998 (1) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and that amount of investment allowance was adjusted as under:---- For the assessment year 1982-83: To the extent of income available i.e. Rs. 3,57,218 Balance to be carried forward and allowed in subsequent assessment year Rs. 4,77,883 Accordingly, the net income for the assessment year 1982-83 was computed at 'nil' vide order dated 10-5-1984. While going through the return of income filed by the assessee for the assessment year 1989-90, the ITO noticed that the assessee has sold its machinery installed during the assessment year 1982-83. The ITO noted that the assessee had violated the provisions of section 32A(5)(a) of the Act as it transferred the machinery before the expiry of eight years from the end of the previous year in which it was acquired/installed and thus the ITO issued noticed under section 154 read with section 155(4A) of the Act calling upon the assessee to explain on 30-11-1990 as to why the amount of investment allowance of Rs. 3,57,218 allowed in respect of new machinery installed in the assessment year 1982-83 be not withdrawn as said machinery had been sold out before the expiry of eight years. The assessee filed written reply dated 24-1-1991 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the provisions of section 155(4A) are clearly applicable and he accordingly withdrew the amount of Rs. 3,57,218 granted to the assessee under section 32A for the assessment year 1982-83. 3. The facts for the assessment year 1983-84 are identical as in that year, the assessee was allowed Rs. 8,82,417 as investment allowance out of which Rs. 4,77,883 was on account of unabsorbed carried forward of investment allowance from the assessment year 1982-83 and remaining Rs. 4,04,534 was allowed for the year under consideration out of income and the Assessing Officer called upon the assessee to show cause as to why these amounts could not be withdrawn because the assessee sold the machinery in the previous year, relevant to the assessment year 1989-90 and the reply was the same and the ITO withdrawn Rs. 8,82,417 granted to the ITO as investment allowance in this year. 4. The assessee filed two separate appeals and it appears that the assessee further filed two more appeals relating to the assessment years 1980-81 and 1981-82 involving the same ground and the CIT(A), Jammu, disposed of all the four appeals vide order dated 15-9-1992. It was contended before the CIT(A) that one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Range, Amritsar, who was having no jurisdiction and the orders are invalid, illegal being without jurisdiction. 6. The other plea on merit was the same as taken up by the assessee before the authorities below. Our attention was drawn to page 7 of the paper book, containing the chart depicting utilisation of investment allowance reserve for purchase of new machinery after assessment year 1980-81 which is under:---- --------------------------------------------------------------------------------------------------------------------------------------------------- Asstt. year Cost of new Amount of machinery Investment Allowance --------------------------------------------------------------------------------------------------------------------------------------------------- 1980-81 16,047 4,012 1981-82 27,705 6,925 1982-83 23,40,404 8,35,101 1983-84 16,18,136 4,04,534 1986-87 5,70,035 1,42,510 -------------------- ------------------- 55,72,327 13,93,083 -------------------- ------------------- --------------------------------------------------------------------------------------------------------------------------------------------------- On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f two interpretations, a view which is favourable to the subject (assessee) should be adopted and reliance was placed on several decisions by the learned counsel for the assessee which are:--- (1) CIT v. Madho Pd. Jatia [1976] 105 ITR 179 (SC) (2) Travancore Sugars Chemicals Ltd. v. CIT [1990] 185 ITR 558 (Kar.) (3) CIT v. Smt. Radha Devi Poddar [1990] 185 ITR 544/[1989] 47 Taxman 344 (Cal.) (4) State of MP v. G.S. Dall Flour Mills [1991] 187 ITR 478 (SC) (5) CIT v. G.K. Devarajulu [1991] 191 ITR 211/56 Taxman 85 (Mad.) (6) CIT v. Cellulose Products of India Ltd. [1991] 192 ITR 155/59 Taxman 138 (SC) (7) Gwalior Rayon Silk Mfg. Co. Ltd.'s case. The emphasis of the learned counsel was that provisions of section 32A(5)(a) and (b) were capable of giving different interpretations and the one, which is favourable to the assessee has to be applied as the assessee had already utilised the amount of investment reserve account for purchase of new machinery and thus complied the provisions of section 32A(5)(b) and no withdrawal of the investment allowance was required and the orders of the authorities below should be reversed. 9. As against it, the learned D.R. pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted out of assessed income of that year and balance of Rs. 4,77,883 was carried forward to be allowed in the subsequent assessment year. For the assessment year 1983-84, the facts are also not in dispute to the extent that in that year, the assessee was allowed investment allowance of Rs. 8,82,417 out of which unabsorbed carried forward of investment allowance of Rs. 4,77,883 from the assessment year 1982-83 was adjusted and remaining Rs. 4,04,534 was allowed further out of the assessed income for that year. It is also a fact and not disputed from the side of the assessee that the assessee had sold the machinery purchased in 1982-83 and 1983-84 in the previous year, relevant to the assessment year 1989-90 for which the assessee was allowed investment allowance. Now the contention of the authorities below is that the assessee had violated the provisions of section 32A(5)(a) and thus it should be deemed that assessee was allowed investment allowance wrongly for the assessment years 1982-83 and 1983-84 and was rightly withdrawn through order recorded under section 154 read with section 155(4A) while the contention of the assessee is that the assessee had purchased new machinery worth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividends or profits or for remittance outside India as profits or for the creation of any assets outside India or for any other purpose which is not a purpose of the business of the undertaking," and the provisions of sub-section (4A) of section 155 shall apply accordingly: The above provisions provide three specific conditions when investment allowance so granted under the relevant provision shall be deemed to have been wrongly made. 15. So far as the facts as stated above, are concerned, undisputedly the assessee had violated the provisions of section 32A(5)(a) of the Act as admittedly the assessee had sold the machinery purchased in the assessment years 1982-83 and 1983-84 in 1989-90, that is before the expiry of 8 years of the years from the end of the previous years in which these machineries were acquired and installed. 16. Now the contention of the assessee is to be examined. The only plea from the assessee is that the assessee purchased new machinery of Rs. 16,18,136 in the previous year, relevant to the assessment year 1983-84 and worth Rs. 5,70,035 in the assessment year 1986-87 and this goes to show that the amount of new machinery purchased in the subsequent ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been wrongly made. The second condition in section 32A(5)(b) relates to utilisation of 'Investment Allowance Reserve Account' and that is to be utilised before the expiry of 10 years from the end of the previous year in which the investment allowance was granted and violation thereof shall result into withdrawal of the investment allowance and sub-section (5)(c) of section 32A provides the misutilisation of investment allowance reserve account for the purpose other than provided in the Act. So these three conditions are not related to one thing but relating to the different situations as one to the property, the other for utilisation of reserve account and the third one about misuse of the reserve account and thus these are separate one, that is why the Legislature in its wisdom has used the word 'or' in between the three situations and not used the word 'and'. If we accept the argument of the learned counsel for the assessee then it will amount to adding word land' in between clause (a), clause (b) of sub-section (5) of section 32A, which is unwarranted and against the spirit of the Legislative intent. On the basis of the above, we are of the considered view, that in case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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