M.A.A. Khan, Judicial Member -
(1.) THE dispute in this appeal from CITs order under Section 263 of the Income-tax Act, 1961 ('the Act') relates to the claim of the assessee for Investment Allowance under Section 32A of the Act. THE assessee a registered firm engaged in the business of construction of Dams, purchased an excavating machine on 28-3-1987 for Rs. 24,72,400 from M/s. Tata Engineering & Locomotive Company Ltd., Jamshedpur (TELCO) and the same reached assessee's place of business in Rajasthan on April 1987. THE said machine was put to use on 5-4-1987 in the construction of a Tunnel at Narwali Distributory in Rawatpura Village, Distt. Banswara (Raj.). THE assessee claimed Investment Allowance at Rs. 5,68,100 and the same was allowed at Rs. 5,19,933 by the Assessing Officer (AO). But in revisional proceedings the learned CIT took the view that since the excavating machine was not 'installed' in assessment year 1987-88, the assessee was not entitled to Investment Allowance under Section 32A in respect thereto in that year. He, therefore, held the assessment as made by the Assessing Officer, erroneous and prejudicial to the interest of Revenue and accordingly modified the assessment by directing withdrawal of the Investment Allowance allowed by the Assessing Officer. Hence this appeal by the assessee.
(2.) The main contention of Mr. Moolchand Luhadia, partner, arguing the case himself for the assessee-firm was that since the machinery was purchased on 28-3-1987 and loaded on a hired trailer on 30-3-1987 for taking to assessee's place of business, it would be considered as 'installed' for the purposes of Investment Allowance under Section 32A of the Act. This argument was supported with a large number of cases of the High Court & Supreme Court. The learned Departmental Representative, however, supported the order under appeal and further submitted that until and unless the machinery was brought to the place of business of the assessee in Rajasthan or elsewhere and placed in a position for use in assessee's business, the same cannot be considered to have been 'installed'. After hearing the parties at considerable length and on a study of the material placed before us we agree with the learned Departmental Representative.
The controversy between the parties centers around the meaning of the word 'installed' used in the language of Section 32A. In order to understand the true meaning of this term in the context it has been used in Section 32A and explained in various judicial pronouncements, which have been relied upon by the assessee, it is necessary to reproduce the relevant part of this provision. Section 32A, as is relevant for our purpose, provides as under :
Investment Allowance :
Section 32A.-(1) In respect of a ship or an aircraft or machinery or plant specified in Sub-section (2), which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance equal to twenty-five per cent of the actual cost of the ship, aircraft, machinery or plant to the assessee;
(2) The ship or aircraft or machinery or plant referred to in Sub-section (1) shall be the following, namely :-
(b) any new machinery or plant installed after the 31st day of March, 1976,-
(iii) in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule:
Provided that nothing contained in Clauses (a) and (b) shall apply in relation to,-
(i) a new ship or new aircraft acquired, or
(ii) any new machinery or plant installed, after the 31st day of March, 1987 but before the 1st day of April, 1988, unless such ship or aircraft is acquired or such machinery or plant is installed in the circumstances specified in Clause (a) of Sub-section (8B) and the assessee furnishes evidence to the satisfaction of the Assessing Officer as specified in that clause;
(8) The Central Government, if it considers necessary or expedient so to do, may, by notification in the Official Gazette, direct that the deduction allowable under this section shall not be allowed in respect of any ship or aircraft acquired or any machinery or plant installed after such date as may be specified therein.
(8B) Notwithstanding anything contained in Sub-section (8) or the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. GSR 870(E), dated the 12th June, 1986, issued thereunder, the provisions of this section shall apply in respect of,-
(ii) any new machinery or plant installed after the 31st day of March, 1987 but before the 1st day of April, 1988, if the assessee furnishes evidence to the satisfaction of the Assessing Officer that before the 12th day of June, 1986, he had purchased such machinery or plant or had entered into a contract for the purchase of such machinery or plant with the manufacturer or owner of, or a dealer in, such machinery or plant, or had, where such machinery or plant has been manufactured in an undertaking owned by the assessee, taken steps for the manufacture of such machinery or plant:
Provided that nothing contained in Sub-section (1) shall entitle the assessee to claim deduction in respect of a ship or aircraft or machinery or plant referred to in this clause in any previous year except the previous year relevant to the assessment year commencing on the 1st day of April, 1989.
(3.) IN exercise of its powers under Sub-section (8) of Section 32A, vide Notification No. GSR 870(E), dated 12-6-1986, the Central Government notified that deduction on account of INvestment Allowance shall not be allowed in respect of any ship, aircraft or plant and machinery installed after 31-3-1987. Undisputedly the assessee has not advanced its claim as per provisions of Sub-section (8B) of Section 32A which carves out a sort of exception to 32A(8).;