2008 (1) TMI 377

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....ribunal in I.T.A. No. 561/Bang/1995. 3. The appeal has been admitted on as many as four questions of law. But during the course of the arguments, the learned counsel for the appellant submitted that only question No. (b) may be answered. Question No. (b) reads as hereunder: "(b) Whether the Tribunal was right in law in holding that the claim for investment allowance has to be made during the relevant assessment year and not when the appellant has adequate funds for the creation of the reserve for the purpose of investment allowance ?" 4. The brief facts material to decide the said appeal are mentioned hereinbelow: 5. The appellant-assessee (hereinafter referred to as "the assessee") had filed a return for the assessment year 199....

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....ment allowance to be actually allowed is to be created by debiting such amount to the profit and loss account of any previous year in respect of which the deduction is to be allowed under section 32A(3) of the Act or any earlier previous year not being a previous year earlier than the year in which the plants and machineries were first put to use. The relevant provision of section 32A(4)(ii) (a) and (b) of the Act reads as hereunder: "32A.(4) The deduction under sub-section (1) shall be allowed only if the following conditions are fulfilled, namely :-... (ii) 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 th....

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....e plants and machineries installed during the said assessment years did not arise. It was submitted that the assessee had filed return of profit income for the assessment year 1991-92. The assessee had profit for the first time in that year. After filing the initial return, a revised return was filed in which investment allowance to the extent of 75 per cent. was kept. 10. The purpose of amendment as brought by the Finance Act, 1990, retrospectively from April 1, 1976, was to enable the assessee to create a reserve in any of the years between the year of installation of plant and machinery and the year of actual deduction. As a result the assessee need not create a reserve in the year of installation. If there is no sufficient profit, it....