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of <h1>Court upholds investment allowance for separate chassis manufacturing, crucial machinery use for eligibility.</h1> <h3>Sundaram Industries Ltd. Versus Commissioner of Income-Tax.</h3> Sundaram Industries Ltd. Versus Commissioner of Income-Tax. - [2002] 258 ITR 38, 176 CTR 229, 131 TAXMANN 93 Issues:Claim for investment allowance under section 32A for manufacturing bus and truck bodies.Analysis:The case involved a dispute regarding the entitlement of the assessee to investment allowance under section 32A for manufacturing bus and truck bodies. The assessee argued that the purpose of investment allowance is to encourage fresh investment in plant and machinery for manufacturing articles listed in the Ninth Schedule. The court emphasized that ownership is not crucial; the key factor is the manufacturing activity carried out by an industrial undertaking with the aid of plant and machinery. The legislative intent of section 32A is to promote new investments in industries producing items listed in the Ninth Schedule. The term 'commercial vehicles' in the Ninth Schedule refers to vehicles suitable for commercial use, requiring a chassis and a body built thereon. The ownership of the chassis is not a prerequisite for claiming investment allowance on machinery used for bodybuilding. The separation of chassis manufacturing from bodybuilding does not affect eligibility for investment allowance.The court highlighted that the body built on the chassis is a manufactured item, and the ownership of the complete vehicle is not mandated by section 32A or the Ninth Schedule. The manufacturer of bus bodies, even when working on a customer's chassis, is engaged in producing a significant part of the commercial vehicle. The court clarified that the machinery's installation and use for manufacturing the items listed in the Ninth Schedule are crucial for claiming investment allowance. Referring to relevant case law, the court emphasized that the machinery's utilization for producing the listed articles is the key consideration for incentives like investment allowance.Based on the arguments presented and the interpretation of relevant laws and precedents, the court ruled in favor of the assessee, stating that the separation of chassis manufacturing from bodybuilding does not impact the eligibility for investment allowance. The court's decision favored the assessee's claim for investment allowance under section 32A for manufacturing bus and truck bodies, emphasizing the importance of machinery utilization for producing the listed articles to qualify for such incentives.
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