2004 (1) TMI 14

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....x Act, 1961, in coming to the conclusion that until the investment allowance is quantified and determined by the Assessing Officer, there cannot be any question of carry forward of the allowance? (iii) Whether the Tribunal is right in law in rendering a contrary decision when a Bench of the Tribunal has already rendered the provisions of section 32A of the Income-tax Act that both the right to carry forward and claim investment allowance and the duty to create the corresponding reserves are deferred to the future years?" The assessee is a co-operative society engaged in the production of milk products. The assessee claimed to deduct investment allowance in respect of the plant and machinery installed during the assessment year 1989-90....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ite reserve could not be created. The assessee also wanted to rely upon the amendment to section 32A(4)(ii) of the Finance Act, 1990, with retrospective effect from April 1, 1976, which is as follows: "an amount equal to seventy-five per cent. of the investment allowance to be actually allowed is debited to the profit and loss account of *[any previous year in respect of which the deduction is to be allowed under sub-section (3) or any earlier previous year (being a previous year not earlier than the year in which the ship or aircraft was acquired or the machinery or plant was installed or the ship, aircraft, machinery or plant was first put to use) and credited to a reserve account (to be called the "Investment Allowance Reserve Account....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....7,657 for the year 1988-89. It is pertinent to mention that this was not acted upon by the Department as they were filed out of time permitted under section 139(5) of the said Act. When once it was not taken into account, we are left only with the earlier declaration of the assessee that there was a profit in those two-years. Now, coming to the question of carry forward, it has to be quantified as required under section 32A(3) of the said Act, which is as follows: "Where the total income of the assessee assessable for the assessment year relevant to the previous year in which the ship or aircraft was acquired or the machinery or plant was installed, or, as the case may be, the immediately succeeding previous year (the total income ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....n the provisions of sections 32A(1) and 32A(2)(b)(iii) cannot be applied for subsequent years. Again if the assessee claims investment allowance and satisfies the condition admissible for investment allowance, then the same has to be quantified and if such investment allowance so quantified in an assessment year is not allowed due to insufficiency of profit, then the investment allowance has to be carried forward and an order to that effect should be made by the Assessing Officer in that year itself. Thus, it is made clear that until the investment allowance is quantified and determined in the relevant assessment year after installation of the machinery, there cannot be any question of carrying forward of the investment allowance. Such i....