ITAT Mumbai Condones 180-Day Delay, Directs AO to Revise 1989-90 Assessment and Restore Investment Allowance.

The ITAT Mumbai allowed the appeal, condoning a 180-day delay due to a subsequent Supreme Court decision. It directed the AO to revise the 1989-90 assessment, restoring the investment allowance for leased machinery. The ITAT emphasized the assessee's legitimate right to contest the withdrawal of the allowance based on updated legal interpretations.

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Issues Involved:
The issues involved in this case are the eligibility of investment allowance u/s 32A for additions made to plant and machinery, withdrawal of investment allowance u/s 155(4A) for assets leased out, condonation of delay in filing appeal, and the merit of the case based on legal interpretation.

Eligibility of Investment Allowance:
The assessee made additions to its cement unit at Udaipur, claiming investment allowance u/s 32A for an amount of Rs. 3,47,89,596. The Assessing Officer granted the allowance, including Rs. 69,57,919 for additions in the Udaipur unit. However, upon selling the unit to M/s. J.K. Udaipur Udyog Limited and leasing certain machinery, the AO proposed to withdraw the entire investment allowance, citing "otherwise transfer" due to leasing of assets.

Condonation of Delay:
The assessee filed an appeal challenging the withdrawal of investment allowance for leased assets, citing the decision in CIT v. Shaan Finance P. Ltd. The appeal was filed after the due date, with a condonation petition based on the delayed availability of the relevant legal decision. The Commissioner of Income-tax (Appeals) refused to condone the delay, leading to the appeal being dismissed as barred by limitation.

Legal Interpretation and Decision:
The ITAT Mumbai held that the delay in filing the appeal was justified due to the subsequent legal interpretation by the Supreme Court. The delay of 180 days was condoned, and the ITAT directed the Assessing Officer to revise the assessment for the year 1989-90, restoring the investment allowance for the leased machineries based on the legal precedent set by the Supreme Court in CIT v. Shaan Finance P. Ltd.

Conclusion:
In conclusion, the ITAT allowed the appeal, emphasizing the legitimate right of the assessee to challenge the withdrawal of investment allowance for leased assets based on subsequent legal interpretations. The delay in filing the appeal was condoned, and the assessment was directed to be revised in favor of the assessee.

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