Investment allowance rules: motor car treated as road transport vehicle, while generator claim survived on valid reserve creation.

Section 80J relief was left for fresh consideration because its outcome depended on the pending effect of the retrospective amendment and related Supreme Court guidance. For section 32A, a motor car was treated in its ordinary sense as a road transport vehicle, so investment allowance was not available. Investment allowance on a generator was allowed because the machinery was eligible and the statutory reserve requirement was satisfied where the initial reserve matched the return claim and the additional reserve was created within the permitted time when the assessed allowance increased.

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Issues: (i) Whether the assessee's claim under section 80J should be decided finally or restored for fresh consideration in view of the pending challenge to the retrospective amendment; (ii) whether a motor car is a road transport vehicle for the purpose of section 32A so as to exclude investment allowance; and (iii) whether investment allowance was admissible in respect of the generator notwithstanding that the additional reserve was created in the succeeding year.

Issue (i): Whether the assessee's claim under section 80J should be decided finally or restored for fresh consideration in view of the pending challenge to the retrospective amendment.

Analysis: The relief under section 80J depended on the validity and effect of the retrospective amendment made by the Finance (No. 2) Act, 1980. Since the same question was already being considered in connected years and the matter was to be decided in conformity with the Supreme Court's eventual ruling, a final adjudication on merits was not made in the appeal year under consideration.

Conclusion: The matter was remitted to the first appellate authority for fresh decision.

Issue (ii): Whether a motor car is a road transport vehicle for the purpose of section 32A so as to exclude investment allowance.

Analysis: The expression "road transport vehicle" was construed in its ordinary sense and not by importing the technical definition from the Motor Vehicles Act. A motor car is a vehicle used on roads for transporting passengers and, on that basis, falls within the broad concept of a road transport vehicle for section 32A. The distinction suggested between vehicles used for hire and those used for the assessee's own purposes was held to be immaterial for this purpose.

Conclusion: Investment allowance on the motor car was not admissible.

Issue (iii): Whether investment allowance was admissible in respect of the generator notwithstanding that the additional reserve was created in the succeeding year.

Analysis: The generator was eligible machinery, and the original reserve created in the relevant previous year was sufficient to match the claim made in the return under section 139. Where a higher allowance emerged on assessment, the Explanation to section 32A(4) permitted the assessee to create the additional reserve within the permitted time. On the facts, that requirement was satisfied, and the later reserve creation did not defeat the claim.

Conclusion: Investment allowance on the generator was admissible.

Final Conclusion: The appeal succeeded only to the extent of the generator claim, while the section 80J issue was sent back for reconsideration and the motor car claim was rejected.

Ratio Decidendi: For section 32A, a motor car used on roads is treated as a road transport vehicle for exclusion from investment allowance, and the statutory reserve requirement is satisfied where the reserve created in the return matches the original claim and the further reserve is created within the time allowed under the Explanation when a higher allowance emerges on assessment.

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