Investment allowance under section 32A extends to construction equipment and leased machinery used in business, not just directly operated plant.

Section 32A investment allowance was held to extend to dumpers, tippers and hydraulic excavators because their dominant function is construction or earth-moving, so they are not road transport vehicles merely due to incidental road movement. The provision's exclusion for road transport vehicles therefore did not apply. The allowance was also held available where the machinery is owned by the assessee and hired to an industrial undertaking, because section 32A requires ownership and business use, not direct personal operation by the assessee. Leasing or hiring activity carried on as business can satisfy the statutory condition. On that basis, entitlement to investment allowance was sustained.

---

---

Issues: (i) Whether dumpers, tippers and hydraulic excavators are road transport vehicles within the meaning of section 32A so as to be excluded from investment allowance; (ii) Whether investment allowance under section 32A is available where the machinery is owned by the assessee and given on hire to an industrial undertaking.

Issue (i): Whether dumpers, tippers and hydraulic excavators are road transport vehicles within the meaning of section 32A so as to be excluded from investment allowance.

Analysis: Section 32A grants investment allowance for specified machinery or plant owned by the assessee and wholly used for the business carried on by him, while excluding office appliances and road transport vehicles. The machinery in question was examined in the light of the motor vehicle definition and the later statutory recognition of construction equipment vehicles as non-transport vehicles. The Court applied the principle that vehicles whose dominant function is off-highway excavation or earth-moving do not become road transport vehicles merely because they may move on roads incidentally. On that basis, dumpers, tippers and hydraulic excavators were treated as construction equipment vehicles and not as road transport vehicles.

Conclusion: The exclusion for road transport vehicles did not apply, and investment allowance was available on these machines.

Issue (ii): Whether investment allowance under section 32A is available where the machinery is owned by the assessee and given on hire to an industrial undertaking.

Analysis: The language of section 32A does not require the assessee himself to put the machinery to direct productive use. The relevant inquiry is whether the machinery is owned by the assessee and is used for the purposes of the business carried on by him, which may include leasing or hiring activity carried on as business. The Court relied on the beneficial character of the provision and held that machinery leased or hired to another industrial undertaking for use in manufacture or production can still satisfy the statutory condition.

Conclusion: Investment allowance was allowable even where the machinery was let out on hire as part of the assessee's business.

Final Conclusion: The Revenue's challenges failed because the impugned machinery was not hit by the road transport vehicle exclusion and the hiring arrangement did not defeat entitlement under section 32A; the Tribunal's allowance of investment allowance was sustained.

Ratio Decidendi: For the purposes of section 32A, machinery used principally as construction or earth-moving equipment is not a road transport vehicle merely because it may move on roads incidentally, and investment allowance is not denied where the owned machinery is deployed through a business of leasing or hiring to an industrial undertaking.

---