Investment allowance on tools and dies allowed, but double claim on the same asset was barred; reserve requirement was satisfied.

Investment allowance was available for tools and dies manufactured by the assessee and capitalised as assets, but the benefit could not be claimed twice on both the machinery used to make those tools and dies and the tools and dies themselves. The allowance was therefore confined to the asset on which the claim was properly admissible. The reserve requirement was also satisfied, as the reserve had been created in adequate measure and debited to the profit and loss account. The reference was thus resolved substantially in favour of the assessee, subject to the limitation against double allowance.

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Issues: (i) Whether investment allowance was allowable in respect of tools and dies manufactured by the assessee and capitalised by it, and whether such allowance could also be claimed on the machinery used to manufacture those tools and dies; (ii) Whether the assessee had created an adequate reserve and duly debited it to the profit and loss account for the purpose of investment allowance.

Issue (i): Whether investment allowance was allowable in respect of tools and dies manufactured by the assessee and capitalised by it, and whether such allowance could also be claimed on the machinery used to manufacture those tools and dies.

Analysis: Investment allowance was held to be available on the tools and dies manufactured by the assessee and capitalised as assets. However, the same benefit could not be claimed twice, namely on the machinery used to manufacture those tools and dies as well as on the tools and dies themselves when put to use for further manufacture. The allowance was therefore confined to the asset on which the claim was actually admissible.

Conclusion: The assessee was entitled to investment allowance on the tools and dies, subject to the condition that no such allowance had already been granted on the machinery used for their manufacture.

Issue (ii): Whether the assessee had created an adequate reserve and duly debited it to the profit and loss account for the purpose of investment allowance.

Analysis: On the facts recorded, the reserve had been created in adequate measure and had been debited to the profit and loss account as required.

Conclusion: The finding in favour of the assessee on the reserve requirement was upheld.

Final Conclusion: The reference was answered substantially in favour of the assessee, with the investment allowance claim allowed subject to the stated limitation and the reserve requirement held to have been satisfied.

Ratio Decidendi: Investment allowance cannot be claimed twice on the same economic asset and is available only where the statutory conditions, including the reserve requirement, are satisfied.

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