1998 (4) TMI 45

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....held to be allowable to machinery leased out. On the Revenue's appeal, the Tribunal confirming the order of the Commissioner of Income-tax (Appeals) held that the assessee was entitled to investment allowance on the machinery leased out. It is on these facts, the question as below at the instance of the Commissioner of Income-tax, Tamilnadu-V, Madras, ad been referred to this court for its opinion : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee is entitled to investment allowance on machinery leased out, though the assessee was not engaged in any manufacturing activity ?" Arguments of Mr. R. Sivaraman, learned counsel representing Mr. C. V. Rajan, learn....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....in CIT v. Shaan Finance (P.) Ltd. [1998] 231 ITR 308. In the case of First Leasing Co. of India Ltd. [1995] 216 ITR 455 a Division Bench of this court expressed that under section 32A of the Incometax Act, 1961, the present investments allowance has replaced the former development rebate allowance provided under section 33 of the Act. The main conditions to be satisfied under section 32A(1) and (2) are : (1) the subject-matter is to be owned by the assessee ; (2) it is to be wholly used for the purpose of business of the assessee ; and (3) the subject-matter should come under any of the enumerated categories of section 32A(2). Sub-section (1) or (2) of section 32A does not require anywhere that the plant and machinery must be installe....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....upreme Court said in paragraphs 9 and 10 which is relevant for the purpose of the present case is reflected as under : "Sub-section (2) of section 32A, however, requires to be examined to see whether there is any provision in that sub-section which requires that the assessee should not merely use the machinery for the purposes of his business, but should himself use the machinery for the purpose of manufacture or for whatever other purpose the machinery is designed. Subsection (2) covers all items in respect of which investment allowance can be granted. These items are, ship, aircraft or machinery or plant of certain kinds specified in that sub-section. In respect of a new ship or a new aircraft, section 32A(2)(a) expressly prescribes th....