Dies and moulds treated as machinery for s.32A, but s.80J(6A) audit report lapse kills deduction

HC upheld the Tribunal's view that dies and moulds formed part of "machinery" and, since the machinery was installed after 31.03.1976, the assessee was entitled to investment allowance under s. 32A on the entire cost, irrespective of the date of purchase. The corresponding question was answered in the affirmative, in favour of the assessee and against the Revenue. However, on the deduction for a new industrial undertaking under s. 80J, HC held that filing the prescribed audit report along with the return is a mandatory precondition under s. 80J(6A). Non-compliance rendered the claim inadmissible, and this question was answered in favour of the Revenue.

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Issues involved:
1. Interpretation of investment allowance u/s 32A for machinery and dies and moulds.
2. Compliance with the requirement of filing audit report u/s 80J(6A) along with the return of income.

Interpretation of investment allowance u/s 32A:
The case involved a dispute over the assessee's claim for investment allowance under section 32A of the Income-tax Act, 1961, for machinery purchased before and installed after March 31, 1976. The machinery and dies and moulds were valued at Rs. 1,82,254. The Income-tax Officer and the Appellate Assistant Commissioner allowed the investment allowance only for machinery purchased during the assessment year, not for dies and moulds. However, the Tribunal held that dies and moulds were part of machinery and as the machinery was installed after April 1, 1976, the entire amount was eligible for investment allowance. The Tribunal's decision was based on the clear provision that machinery or plant referred to in section 32A should be installed after March 31, 1976. Therefore, the first question was answered in favor of the assessee.

Compliance with audit report requirement u/s 80J(6A):
The second issue pertained to the requirement of filing the audit report along with the return of income as mandated by section 80J(6A). The provision explicitly states that the deduction claimed shall not be admissible unless the audit report is furnished along with the return. The court concluded that this requirement is mandatory. Consequently, the second question was answered in favor of the Revenue and against the assessee. The reference was disposed of without any order as to costs.

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