ITAT affirms CIT(A)'s decision, dismissing Revenue's appeal on unabsorbed investment allowance. Assessee meets conditions for section 32A(6) claim. (A)

The ITAT upheld the CIT(A)'s decision and dismissed the Revenue's appeal against the deletion of the addition made on account of unabsorbed investment allowance. The ITAT found that the assessee had satisfied the conditions of section 32A(6), warranting the allowance of the claim.

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Issues:
Appeal against deletion of addition made on account of unabsorbed investment allowance.

Analysis:
The appeal pertains to the deletion of an addition of Rs. 4,18,31,075 on account of unabsorbed investment allowance for the assessment year 1995-96. Initially, the Assessing Officer disallowed the claim, which was upheld by the CIT(A). However, the Tribunal directed the AO to allow the benefit of unabsorbed investment allowance in accordance with section 32A(6) of the Income-tax Act, 1961. The AO issued a show cause notice to the assessee to substantiate compliance with the conditions specified in section 32A(6). The assessee responded by referring to the order of the AO for the year 1989 in the case of Flowmore Polyester Limited. Despite the assessee's explanations, the AO disallowed the claim due to insufficient evidence regarding compliance with the specified conditions.

Subsequently, the matter reached the CIT(A), where the assessee contended that it had fulfilled the conditions of section 32A(6) and provided proper evidence. The CIT(A) observed that the AO had erroneously focused on section 72A instead of section 32A(6) and allowed the claim of the assessee. The Revenue challenged this decision before the ITAT.

During the hearing, the Revenue failed to counter the CIT(A)'s findings. The ITAT noted that once the assessee had satisfied the conditions of section 32A(6), the claim deserved to be allowed. Therefore, the ITAT found no merit in the Revenue's appeal and dismissed it.

In conclusion, the ITAT upheld the CIT(A)'s decision and dismissed the Revenue's appeal against the deletion of the addition made on account of unabsorbed investment allowance.

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