Investment allowance under Section 32A denied for construction activity; guarantee commission treated as revenue expenditure without referable question of law.

Investment allowance under Section 32A was unavailable because the construction activity in question fell outside the scope of the provision as governed by the Supreme Court decision, so the issue was decided in favour of the Revenue. Guarantee commission paid for purchase of a capital asset was treated as revenue expenditure on the basis of an earlier Court decision, and the Tribunal's view did not give rise to a referable question of law, so this issue also went against the Revenue.

---

---

Issues: (i) Whether the assessee was entitled to investment allowance under Section 32A of the Income-tax Act, 1961. (ii) Whether guarantee commission paid on the purchase of capital asset was allowable as revenue expenditure and whether a referable question of law arose on that issue.

Issue (i): Whether the assessee was entitled to investment allowance under Section 32A of the Income-tax Act, 1961.

Analysis: The allowance was held to be unavailable in view of the governing Supreme Court decision, which excluded construction activity of the kind involved from the scope of Section 32A.

Conclusion: The answer was in the negative and in favour of the Revenue.

Issue (ii): Whether guarantee commission paid on the purchase of capital asset was allowable as revenue expenditure and whether a referable question of law arose on that issue.

Analysis: The Tribunal had followed an earlier decision of the Court allowing deduction of guarantee commission as revenue expenditure. On that basis, it was held that no referable question of law arose from the Tribunal's order.

Conclusion: The answer was in the affirmative and against the Revenue.

Final Conclusion: The reference was answered partly in favour of the Revenue, with the investment allowance issue decided against the assessee and the guarantee commission issue not giving rise to a referable question of law against the assessee.

---