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Issues: (i) Whether investment allowance under section 32A was admissible on machinery installed during the vulnerable period where the assessee had proved that purchase orders for some items were placed before the cut-off date under sub-section (8B), and whether the chilling plant was covered by that exception; (ii) Whether the deletion of addition made on account of cash credit in a partner's account was justified; (iii) Whether the assessee's supporting documents regarding placement of orders could be admitted subject to verification by the Assessing Officer.
Issue (i): Whether investment allowance under section 32A was admissible on machinery installed during the vulnerable period where the assessee had proved that purchase orders for some items were placed before the cut-off date under sub-section (8B), and whether the chilling plant was covered by that exception.
Analysis: Section 32A allowed investment allowance for new machinery installed within the relevant period, but the proviso and sub-section (8B) protected only machinery for which the assessee furnished evidence that purchase had been made or a contract had been entered into before the statutory cut-off date. The record showed proof of orders placed before the cut-off date for the first four items of machinery, so those items satisfied the statutory exception. No corresponding evidence existed for the chilling plant, which was purchased later and therefore did not fall within the protective clause. The contention that the relevant previous year did not include 1-1-1988 was rejected because the assessee's previous year for the assessment year in question covered that date.
Conclusion: Investment allowance was allowable for the first four items of machinery and disallowed for the chilling plant. The result was in favour of the assessee in part and in favour of the Revenue in part.
Issue (ii): Whether the deletion of addition made on account of cash credit in a partner's account was justified.
Analysis: The addition was made in the firm's assessment, but the credit stood in the account of a partner. In the absence of material showing that the credit represented the firm's concealed income, and in view of the separate assessability of the partner and the explanation of available cash balance, the addition in the firm's hands could not be sustained.
Conclusion: The deletion of the addition was upheld and this issue was decided in favour of the assessee.
Issue (iii): Whether the assessee's supporting documents regarding placement of orders could be admitted subject to verification by the Assessing Officer.
Analysis: The documents showing the dates of placement of orders were produced for consideration, and the Assessing Officer was directed to examine them and verify the claim before granting relief on the relevant items.
Conclusion: Admission of the documents for verification was permitted, and the allowance of investment allowance on the relevant items remained subject to such verification.
Final Conclusion: The appeal succeeded only to the limited extent of disallowance of investment allowance on the chilling plant, while the deletion of the cash-credit addition was sustained and the remaining claim was left for verification.
Ratio Decidendi: Investment allowance under section 32A is available only where the assessee satisfies the statutory cut-off and evidence requirements of the proviso and sub-section (8B), and a cash credit standing in a partner's account cannot be added in the firm's assessment without material linking it to the firm's concealed income.
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