AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 399
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.... public limited company claimed investment allowance in respect of assets worth Rs. 84,69,945/-. On making inquiries it transpired that the assets in question had been purchased during the immediately preceding year i.e. 1981-82 but investment allowance had been claimed in A.Y 1982-83 on the ground that these had been put to use during the latter assessment year. The IAC(Asstt.) also found that the claim on account of investment allowance related to the assessee's new unit for manufacturing sanitaryware located at Kadi near Ahmedabad, the construction of which had started in the month of September, 1979. The IAC (Asstt.) also found that the construction of buildings, Tunnel Kiln, Intermittent Kiln as also the installation of the plant and machinery had been completed in record time and the plant commissioned on 21.07.1980 and trial production had commenced. The IAC (Asstt.) allowed investment of Rs. 1,15,337/- being 25%. 2.1 The assessee preferred an appeal before the CIT(A) who confirmed the order of IAC(Asstt.). Being aggrieved by the same, the assessee appealed before the Tribunal and the Tribunal vide impugned order accepted the assessee's claim in respect of investmen....
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....d sales of Rs. 1,62,200 in December, do provide the material on the basis of which one can reasonably infer that assessee who has acquired and installed machines and also acquired raw material, also used the same for the purpose of his business. Success or failure of venture is not the relevant consideration. It also can be reasonably inferred that assessee's contention about commencing commercial products on 1st Oct., 1987 may not be true but there is material to find that it was put to use for business only when it went into trial production, but when he did not get the standard product he did not take further production. This justified meager turnover. In these circumstances the findings reached by the Tribunal remain findings of fact based on relevant consideration. The whole burden of Revenue's contention is emphasis on showing date of commencement of commercial production, which was wholly irrelevant for the purpose of considering deduction on account of depreciation and investment allowance. What is needed is that, the machines must be used for assessee's business. Whether the assessee is able to successfully commence commercial production or commercial productio....
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....; "Under Section 32, it is necessary that the machinery is owned, wholly or partly, by the assessee and "used for the purposes of the business"; it is the interpretation of the word "use" in this phrase which would be partly determinative of this reference. Once ownership by the assessee and the lapse of the whole previous year are established, a full year of shelf-life of the machinery in question has inexorably lapsed. If it is found that during that year the machinery cannot be said to have been used for the purpose of the assessee's business, then depreciation cannot be allowed but once it is shown that the assessee has put the machinery to use, for the purpose of the assessee's business, then further inquiry about the degree or type of use is not permitted to be scrutinised by the language of the section. It might be that the assessee's use is to keep it as a stand by for the whole year; it might again be that the assessee has to use it for a trial production or in some other purpose for the assessee's business, which is not immediately productive of commercial profit; these would, again, not go against the asse....
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....hange the financial year from 01.09.1980 and all crucial dates namely change of burner and installation of same was done in 1981 and production had started on 01.03.1981. We are of the opinion that even if the argument of Mr. Mehta is accepted the actual production or maximum production has factually started on 01.03.1981 and not on 21.07.1980 as contended. 6.1 We have not lost sight of the fact that the assessee had full intention of starting the regular commercial production but could not do so on account of non availability of natural gas as it was supplied to it only from 17.09.1981. In the meantime, the assessee had imported oil burner from Germany and it was with the aid of this equipment that it was able to enter into the realm of commercial production with effect from 01.03.1981. 6.2 The Tribunal in its impugned order more particularly paras 23 & 24 has observed as under: "23. We now take up for consideration the issue pertaining to the grant of Investment Allowance on the drawings and designs obtained by the assessee from West Germany. The amount in question is Rs. 4,72,671/-. The authorities below rejec....
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....ct to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance equal to twenty- five per cent of the actual cost of the ship, aircraft, machinery or plant to the assessee: Provided that in respect of a ship or an aircraft or machinery or plant specified in sub- section (8B), this sub-section shall have effect as if for the words" twenty- five percent", the words" twenty per cent" had been substituted:] Provided further] that no deduction shall be allowed under this section in respect of- (a) any machinery or plant installed in any office premises or an residential accommodation, including any accommodation in the nature of a guest house; (b) any office appliances or road transport vehicles; (c) any ship, machinery....