TaxTMI 
TaxTMI 
2009 (11) TMI 2
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....as right in law in allowing depreciation @ 40% under section 32 (1) (iv) on the workers' quarters constructed by the assessee when the land had been leased out to another concern and the asessee was not required to keep any workers after leasing out its assets ? R.A. No. 289 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing investment allowance on the plant and machinery leased out by the assessee to another concern ?" 2. The assessee company was in manufacturing business. It acquired new machinery and leased out the same alongwith plant to another entity. The dispute before the Assessing Officer, which still survives, is whether in respect of the claim for depreciation of cost of wo....
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....h Court in the case of Vinod Bhargave 69 CTR (AP) 41 where under similar circumstances development rebate was held to be allowable to the owner of the lessor company. It was also urged that the provisions regarding development rebate and investment allowance under section 22A of the Act were in pari materia. Once the income from the leased out properties is held to be business income, the necessary corolary is that investment allowance u/s 32A should also be admissible as held by the Hon'ble Andhra Pradesh High Court in its judgment referred to above. We are, therefore, inclined to hold that the assessee is entitled to investment allowance u/s 32A..." 6. We have heard the learned counsel for the parties. Re: (1) 7. It has not been ....
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....tentions. 11. As held by the Hon'ble Supreme Court in Shaan Finance (supra), there are three requirements for attracting Section 32 A:- (i) the machinery should be owned by the assessee; (ii) it should be wholly used for the purposes of business by the assessee; and (iii) it must be covered by one of the categories specified under sub section (2) of Section 32A. 12. Where machinery is leased out, it was observed that even in such a situation use of machinery can be treated to be for the purpose of assessee's business. No doubt in Shaan Finance (P) Ltd., the business of the assessee was leasing out the machinery. Notwithstanding the said difference, the principle will be attracted to the present case when lease of the machinery is part ....
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.... the Tribunal." Appeal against the said judgment was dismissed by the Hon'ble Supreme Court in Commissioner of Income-Tax v. Maharashtra Apex Corporation Ltd. (2002) 254 ITR 98. 14. Learned counsel for the revenue, however, submits that in Sivananda Colour Works (supra), different view was taken by the Madras High Court. Therein machinery was leased out to a sister concern. It was held that since the use of the machinery was not for the purpose of the business of the assessee, the assessee was not entitled to investment allowance. 15. We are of the view that once three conditions of owning a machinery, use for the purpose of business of the assessee and the nature of machinery being of the specified category are fulfilled, Section 32A wi....