Investment allowance for leased machinery: lessor can claim relief without personally using cranes in manufacturing activity.

The lessor of cranes leased on hire was entitled to investment allowance under section 32A of the Income-tax Act even though the machinery was not personally used by the owner in manufacturing activity. The Tribunal accepted that the cranes were used by Government companies for purposes recognised by the Act, and the claim could not be denied merely because the equipment had been leased out. The position was supported by Supreme Court authority holding that a lessor of equipment may claim investment allowance without direct manufacturing use by the owner.

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Issues: Whether the lessor of cranes leased out on hire to other concerns is entitled to investment allowance under section 32A of the Income-tax Act, 1961, even though the assessee did not herself use the machinery in manufacturing activity.

Analysis: The Tribunal accepted the finding that the cranes were utilised by Government companies for purposes recognised by the Act and that the owner's claim could not be denied merely because the machinery had been leased out. The decision was supported by the Supreme Court's ruling that the lessor of equipment is entitled to investment allowance under section 32A and that personal use of the machinery by the lessor in manufacturing activity is not necessary.

Conclusion: The assessee was entitled to investment allowance on the leased cranes.

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