Investment allowance denied where excavation work was treated as labour contracting rather than an independent mining operation.

Investment allowance under Section 32A(2)(b) of the Income-tax Act, 1961 was denied because the assessee's activity was found to be only removal of overburden and earth excavation to facilitate mining at the project site, not an independent mining operation. The Assessing Officer further found that the assessee was merely a labour contractor, and these findings were affirmed by the Tribunal. On that factual basis, the claim for investment allowance failed and the Department's appeal succeeded.

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Issues: Whether the assessee was entitled to investment allowance under Section 32A(2)(b) of the Income-tax Act, 1961 for the relevant assessment year.

Analysis: The assessee's asserted mining business was found by the Assessing Officer to be only an activity of removing overburden and carrying out earth excavation work for facilitating mining at the project site, and not an independent mining operation. It was further found that the assessee was merely a labour contractor. These findings were affirmed by the Tribunal and were not dealt with in the High Court's judgment.

Conclusion: The assessee was not entitled to investment allowance under Section 32A(2)(b) of the Income-tax Act, 1961, and the Department's appeal succeeded.

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