Court directs Tribunal to address hotel business investment allowance & disallowance issues. Need for comprehensive consideration emphasized.

The court partially allowed the applications, directing the Tribunal to refer questions regarding the entitlement of a hotel business to investment allowance under section 32A of the Income-tax Act and the deletion of disallowance under section 40A(5) for decision. The court emphasized the need for a reference for all relevant years to ensure comprehensive consideration of the issues raised by the assessee. The judgment concluded with the disposal of the applications without any order as to costs.

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Issues:
1. Entitlement to investment allowance under section 32A of the Income-tax Act for a hotel business.
2. Whether the issue regarding the hotel business being covered under section 32A arises out of the order of the first appellate authority.
3. Disentitlement to the investment allowance scheme due to the creation of a requisite reserve.
4. Deletion of disallowance under section 40A(5).

Analysis:

1. The primary issue in this judgment revolves around the entitlement of a hotel business to investment allowance under section 32A of the Income-tax Act. The court noted a divergence of opinion in various judicial decisions and deemed it a question of law requiring reference. The Tribunal was directed to refer the question for all relevant years, seeking clarification on whether the hotel business qualifies for investment allowance under section 32A.

2. Another related question raised by the assessee was whether the issue of the hotel business falling under section 32A arose from the order of the first appellate authority. The Tribunal's refusal to address this question for certain years prompted the court to direct a reference for those specific assessment years to ensure comprehensive consideration of the matter.

3. The judgment also addressed the issue of disentitlement to the investment allowance scheme due to the creation of a requisite reserve by the assessee. The court found that the necessary reserve had been created before the close of the relevant previous year, and since the section did not specify a specific time for creating the reserve, it concluded that no legal question arose in this regard, declining to refer this issue.

4. Lastly, the court considered the deletion of a disallowance made under section 40A(5) as another question of law. The Tribunal was directed to refer this question for decision, seeking clarification on whether the deletion of the disallowance was justified based on the facts and circumstances of the case.

In conclusion, the judgment partially allowed the applications, directing the Tribunal to submit a consolidated statement of the case for all relevant years and refer the identified questions for the court's decision. The applications were disposed of with no order as to costs.

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