Books as "Plant" for Investment Allowance under Income-tax Act

The High Court held that books containing technical know-how could be considered as "plant" under section 32A(1) of the Income-tax Act, 1961. The court interpreted "installed" broadly, determining that the books were placed for use in the factory building, not the office premises, making them eligible for investment allowance. The assessee was granted the allowance, ruling in favor of the assessee and against the Revenue.

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Issues:
Whether the assessee is entitled to investment allowance under section 32A(1) of the Income-tax Act, 1961 for the cost of technical know-how, considering the location of the books containing technical know-how.

Analysis:
The case involved a dispute regarding the eligibility of the assessee for investment allowance under section 32A(1) of the Income-tax Act, 1961 for the cost of technical know-how. The Income-tax Officer had disallowed the claim, citing that the books containing technical know-how were installed in the office premises, which would exclude them from the provision of section 32A(1). However, the Commissioner of Income-tax (Appeals) allowed the deduction, and the Tribunal upheld the decision but on different grounds. The Tribunal held that the word "installed" in the proviso to section 32A(1) could not apply to books containing technical know-how, as they were to be treated as plant.

The High Court analyzed the definition of "plant" under section 43(3) and concluded that books could be considered as "plant" within the meaning of section 32A(1) of the Act. The court emphasized that the word "installed" should be interpreted broadly, not necessarily meaning fixed in position but also in the sense of "placed for use." Referring to a Supreme Court decision, the court explained that "installed" means to place in position for service or use. In this case, since the factory and office buildings were the same, the books containing technical know-how were considered to be installed in the factory building, not the office premises. Therefore, the proviso to section 32A(1) was deemed inapplicable.

The court held that the assessee was entitled to investment allowance for the books containing technical know-how under section 32A(1) of the Act. The judgment favored the assessee, ruling in affirmative to the question referred, and against the Revenue. The reference was disposed of with no order as to costs.

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