2005 (7) TMI 608

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....s. 22,60,913. Thereupon, the assessee-company claimed an amount of Rs. 5,65,228 by way of deduction under investment allowance. In order to qualify to make the said claim, the assessee had made a corresponding investment allowance reserve for an amount of Rs. 4,30,000. In the assessment the deduction as claimed by the assessee was allowed by the assessing authority. According to the assessee-company, in compliance with the provisions of section 32A(4), the assessee had utilised the said amount of reserve in acquiring specified assets during the previous years relevant to the assessment years 1991-92, 1992-93 and 1993-94. The machinery purchased by the assessee-company were computers and other allied equipment. The said machinery were acq....

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....Commissioner of Incometax in invoking the provisions of section 155(4A) of the Act, thereby withdrawing the investment allowance of Rs. 5,65,228 on the alleged ground that the appellant had utilized the investment allowance reserve of Rs. 4,30,000 for purposes prohibited by section 32A of the Act." We heard Shri Nitesh Joshi, learned counsel appearing for the assesseecompany and Shri Ravi Jain, the learned Departmental Representative appearing for the Revenue. Shri Nitesh Joshi contended that the transfer entry was inadvertently passed by the assessee-company during the previous year relevant to the assessment year 1990-91 and in fact the said entry did not reflect any utilisation of the "investment allowance reserve" amount other than i....

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....ssessment years 1991-92, 1992-93 and 1993-94. It is true that the assessee had passed a misleading accounting entry. But whether the said entry may be justified in the context of the accounting policy followed by the assessee-company or for the requirements under the Companies Act, the entry is not relevant here. As held by the hon'ble Supreme Court in the case of Kedarnath Jute Manufacturing Co Ltd. v. CIT [1971] 82 ITR 363 it is not the accounting entries that decide a matter for the purpose of computation of income under the Income-tax Act. It is the substance that has to be looked into. An income does not cease to be income or an expense does not cease to be expense only for the reason that the assessee has passed a wrong accounting ....