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Commissioner Of Income Tax, Meerut & Another v. M/S Sir Shadilal Enterprises Ltd. Shamli - INCOME TAX APPEAL No. 47 of 2000 [2004] RD-AH 772 (14 September 2004)


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Court No. 37



The Commissioner of Income Tax, Meerut & another


M/s Sir Shadilal Enterprises Ltd., Shamli, district Muzaffar Nagar.

Hon'ble R. K. Agrawal, J.

Hon'ble K. N. Ojha, J.

The present Income Tax Appeal has been filed by the Commissioner of Income Tax, Meerut, Under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act) on the ground that it raises the following substantial question of law:

"Whether, on the facts and in the circumstances of the case, Ld. I.T.A.T. was legally correct in confirming the C.I.T.(A)'s decision in holding that mere passing a journal entry mentioning utilization of investment allowance reserve fulfills the requirement of provisions of Section 32A(5) of the I.T. Act, 1961."

We have heard Sri A. N. Mahajan, learned counsel for the revenue and Sri S. P. Gupta, learned Senior Counsel assisted by Sri S. D. Singh on behalf of the respondent- assessee.

This appeal and other connected appeals relate to the Assessment Year 1978-79 to 1986-87. During these Assessment Years the respondent- assessee claimed and was granted the following amount towards investment allowance:

Accounting Year Asstt. Year Deduction U/s 32A claimed. Amt. Credited to investment allowance reserve a/c Credit balance as at the close of year

1976-77 1978-79 33,488 25,116 25,116

1977-78 1979-80 1,56,881 1,17,660 1,42,776

1978-79 1980-81 2,09,105 1,56,829 2,99,605

1979-80 1981-82 25,486 25,486 3,25,091

1980-81 1982-83 3,10,448 3,10,448 6,35,539

1981-82 1983-84 3,57,874 3,57,874 9,93,413

1982-83 1984-85 9,351 9,351 10,02,764

1983-84 1985-86 46,761 46,761 10,49,525

1984-85 1986-87 18,54,002 18,54,002 29,03,527

While passing assessment order for the Assessment year 1978-79 the Assessing Officer found that the reserve so credited in the earlier assessment years had continued to remain in the Books of Accounts unutilized and the same was written back and therefore, he was of the view that the provisions of Section 32A(5) of the Act had been violated and action under Section 155(4-A) of the Act was required. He accordingly withdrew the investment allowance granted earlier in respect of each of the assessment years in question.

Feeling aggrieved the respondent- assessee preferred separate appeals before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) found that during the Assessment Year 1988-89 the respondent - assessee had purchased plant and machinery, which was much more in value than the amount standing in the investment allowance reserved i.e. the machinery, was purchased for Rs. 57,93,122/- whereas the amount standing in the investment allowance reserved was only Rs. 29,03,527/-. He accordingly allowed the appeal and deleted the withdrawal of the investment allowance. The revenue's appeals before the Tribunal have failed.

From the perusal of the order of the Tribunal we find that the Tribunal has recorded a categorical finding that there has been addition to the extent of Rs. 57,93,122/- in the fixed assets under the head ''Plant and Machinery' during the assessment year 1988-89, which exceeded the amount standing in the investment allowance reserved. Thus the amount in the investment allowance reserve has been used for purchase of plant and machinery and the provisions of Section 32A(5) of the Act is not at all attracted. The aforesaid finding has been arrived at after appreciation of evidence and materials on the record. The finding being pure finding of fact cannot be interfered under Section 260A of the Act, which lies only on substantial questions of law and not even on questions of law. In this view of the matter the present appeal does not give rise to any substantial question of law. In any event the provisions of Section 32A(5) of the Act has not been contravened.

Moreover, the revenue has not disputed that the respondent-assessee had made addition to plant and machinery to the extent of Rs. 57,93,122/- during the Assessment Year 1988-89.

In view of the foregoing discussions we do not find any merit in this appeal. The appeal is dismissed.

Dt/- 14.9.2004



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