TaxTMI 
TaxTMI 
2022 (12) TMI 1263
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....A.Y.' for short) 2017-18. 2. The grounds of appeal are as under: i) Whether on the facts and circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition/disallowance of a sum of Rs.14,12,48,379/- claimed as investment allowance u/s. 32AC(1A) of the Income Tax Act, 1961 ignoring that the allowance of 15% under this section of the Act is only available to any assessee which is engaged in the business of manufacturing or production of any article or thing and that the wordings of the section cannot be extended so as to include a company (assessee) which is contemplating to start manufacture or production or which is under the process of setting up of manufacturing infrastructure?" ii) Whether on....
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....essee company has not earned any trading and manufacturing activity for the year ending 31.03.2017 and that the income from manufacturing and sale of sweets and namkeen is declared as Nil. The A.O. further observed that the assessee has shown fixed asset under "capital work-in-progress" and has not claimed any depreciation on fixed assets for the impugned year. The A.O. has disallowed the claim of the assessee on the ground that the assessee has not furnished any explanation nor has it provided any supporting evidence to substantiate its claim u/s.32AC(1A) of the Act. The A.O. further held that from the balance sheet of the assessee company it is observed that no new plant and machinery was installed and held that the "capital work-in-progr....
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....ant and machinery was not shown by the assessee under the 'fixed assets' in the balance sheet for the impugned year and that section 32AC(1A) was applicable only to companies which are engaged in the business of manufacturing or production of any article or thing and does not include company which is contemplating to start manufacturer or production. The ld. DR further stated that the assessee has not proved the actual installation and that the assessee has merely produced the documentary evidence pertaining to the purchase of the said machineries. The ld. DR relied on the order of the A.O. 9. The ld. Authorized Representative (AR for short), on the other hand, controverted the same and contended that all the documentary evidences pertai....
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....alls new assets and the amount of actual cost of such new assets acquired and installed during any previous year exceeds twenty-five crore rupees, then, there shall be allowed a deduction of a sum equal to fifteen per cent of the actual cost of such new assets for the assessment year relevant to that previous year: Provided that where the installation of the new assets are in a year other than the year of acquisition, the deduction under this sub-section shall be allowed in the year in which the new assets are installed. 11. The A.O. in the present case has denied the fact of installation of the plant and machinery and has held that the assessee company was only "contemplating to start" manufacture or production and that the pro....
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....f income filed for A.Y. 2017-18. The A.O. held that since there was no installation of new plant and machinery during the impugned year and only the capital work-in-progress was shown at Rs.2,26,89,26,883/- as on 31.03.2017. The A.O. inferred that the plant and machinery was still under construction, establishing, installation, etc. and was not ready to be put to use. The A.O. also held that capital workin- progress will not include plant and machinery. The assessee controverted the same by stating that plant and machinery were shown under capital work-in-progress for the reason that the existing sales of the company was not effected during the financial year 2017 and the A.O's allegation that depreciation was not claimed by the assessee wa....
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....iminary work such as trial production of run, training of personnel, etc. much before the commencement of sale. The A.O. has only relied on the audited profit and loss account which disclosed loss due to excess of expenses and also the audited balance sheet and the return of income. It is pertinent to point out that the provision of section 32AC is a beneficial provision inserted vide Finance Act, 2014 to promote and encourage business of manufacture or production of any article or a thing by way of investment allowance for plant or machinery and for this purpose even the threshold limit of investment was reduced from Rs.100 crores to Rs.25 crores. This clearly implies that the said beneficiary provision is to be construed so as to entitle ....