Assessee denied investment allowance for leased agricultural equipment; Tribunal upholds AO's decision.

The Tribunal held that the assessee was not entitled to investment allowance for kolhus and pans leased to farmers for agricultural activities as the items were not used in industrial undertakings for manufacturing or production purposes. Despite the AAC's support for the claim, the Tribunal emphasized that the purpose of investment allowance is to promote industrial development, not agricultural endeavors. The Tribunal distinguished this case from previous judgments and upheld the Assessing Officer's decision, denying the investment allowance for the leased equipment.

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Issues:
- Entitlement to investment allowance for kolhus and pans given on hire to farmers.

Analysis:
1. The appeal pertains to the assessment year 1985-86, focusing on whether the assessee is eligible for investment allowance concerning kolhus and pans provided on hire to farmers. The Assessing Officer initially denied the claim, stating that since the kolhus and pans were not utilized by the assessee itself for production, the investment allowance was not applicable.

2. Upon appeal, the learned AAC supported the assessee's claim, highlighting that the kolhus and pans were used by farmers for production, even though not directly by the assessee. The AAC directed the Assessing Officer to allow the investment allowance as per the law.

3. The departmental representative argued that as the assessee did not use the kolhus and pans for production and instead leased them out, the investment allowance should not apply. It was contended that the farmer's activity of running a kolhu for processing sugarcane into 'gur' was agricultural, not industrial or business-related.

4. The Tribunal considered the arguments presented. It referenced a previous case, establishing that it was not necessary for the assessee to use the plant and machinery themselves; it was sufficient if the items were being used by the hirer for the specified purposes. The Tribunal held that this should not be a basis for rejecting the assessee's claim.

5. Section 32A allows investment allowance only for machinery installed in industrial undertakings for manufacturing or production purposes. In this case, the kolhus and pans were leased to farmers for agricultural activities, not industrial or business-related. The purpose of investment allowance is to promote industrial development, not agricultural or trading activities.

6. The Tribunal differentiated the present case from previous judgments cited by the assessee. It clarified that those cases dealt with different provisions of law and did not support the assessee's claim in this scenario. Ultimately, the Tribunal concluded that the assessee was not entitled to investment allowance for the kolhus and pans leased to farmers for agricultural operations. The Assessing Officer's decision was reinstated, and the appeal was allowed.

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