BHASKAR BHATTACHARYA,J. - (1.) THESE two appeals were heard analogously as points involved in these two appeals are identical and there is one additional point required to be decided in IT Appeal No. 182 of 2004 which is not involved in IT Appeal No. 181 of 2004.
(2.) IT Appeal No. 181 of 2004 is at the instance of an assessee and is directed against an order dt. 25th Nov., 2003, passed by the Tribunal, "E" Bench, Kolkata, in ITA No. 502/Kol/2002 for the asst. yr. 1989-90 while IT Appeal No. 182 of 2004 is at the instance of the selfsame assessee and is directed against order dt. 25th Nov., 2003, passed by the Tribunal, "E" Bench, Kolkata in ITA No. 500/Kol/2002, relating to the asst. yr. 1992-93. A Division Bench of this Court while admitting IT Appeal No. 181 of 2004 formulated the following substantial questions of law : "(i) Whether in view of the fact that the assessee has transferred the entire undertaking of the fertilizer division and the fiber division and did not transfer the plant and machinery in that respective divisions as such, it can be said that the provisions of S. 32A(5) of the Act are attracted as the plant and machinery has been the subject of sale or transfer otherwise ? (ii) Whether having regard to the object and scheme of S. 32A(5) of the Act if the plant and machinery is not separately transferred out of the business but such plant and machinery remains fully in the business or the undertaking which has been transferred, the provisions of S. 32A(5) are applicable ?" In IT Appeal No. 182 of 2004, a Division Bench formulated the following three substantial questions of law : "(i) Whether in view of the fact that the assessee has transferred the entire undertaking of the fertilizer division and the fiber division and did not transfer the plant and machinery in that respective divisions as such, it can be said that the provisions of S. 32A(5) of the Act is attracted as the plant and machinery has been the subject of sale or transfer otherwise ? (ii) Whether having regard to the object and scheme of S. 32A(5) of the Act if the plant and machinery is not separately transferred out of the business but such plant and machinery remains fully in the business or the undertaking which has been transferred, the provisions of S. 32A(5) is applicable ? (iii) Whether the fiction created under S. 32A(5) of the Act can be extended for the purpose of attracting the provisions of S. 234B for imposition of interest without even any consideration that it was not possible for the assessee to foresee in the previous year whether the said assets would be transferred so as to attract S. 32A(5) of the Act and whether such imposition of interest under S. 234B of the Act without any such consideration is permissible in law ?" Therefore, the first two questions of IT Appeal No. 182 of 2004 are the same as those formulated in IT Appeal No. 181 of 2004 and the question No. (iii) formulated in IT Appeal No. 182 of 2004 is the additional point which is, however, a consequential one, depending on the answer to the first two questions.
(3.) THE facts giving rise to filing of these two appeals may be summed up thus : (a) The AO while perusing the return of the assessee found that the assessee had sold/transferred certain items of plant and machinery of fertilizer division and fiber division during the relevant year ended 31st March, 1994. He also found that the assessee had capitalized Rs. 12,85,69,303 worth of plant and machinery in the asst. yr. 1989-90 in the fertilizer division which was subsequently sold/transferred in the year ended 31st March, 1994. (b) On the capitalized value, the investment allowance of Rs. 2,57,13,859 was granted to the assessee in the asst. yr. 1989-90. The assessee had similarly capitalized Rs. 1,43,85,716 worth of plant and machinery in the asst. yr. 1989-90 in the fiber division, which was sold/transferred in the year ended 31st March, 1994. On this capitalized value also, the investment allowance of Rs. 28,77,143 was granted in the asst. yr. 1989-90. Thus, the total investment allowance granted to the assessee in the asst. yr. 1989-90 was Rs. 2,85,91,002. (c) Since the plant and machinery of fertilizer division and fiber division were sold/transferred within eight years of their installations, the AO invoked the provisions of S. 32A(5) and S. 155A of the Act and withdrew the investment allowance already granted in the asst. yr. 1989-90 by his order dt. 23rd March, 1995. (d) As a consequence of the aforesaid order, the AO carried out the necessary rectifications so as to give the consequential effect to the investment allowance to be carried forward to subsequent assessment years which resulted in the creation of demand of Rs. 4,36,23,595 for the asst. yr. 1992-93 including interest charged. (e) Aggrieved by the aforesaid orders of the AO the assessee preferred appeals for both the assessment years before the CIT(A). As far as asst. yr. 1989-90 is concerned, the assessee contended before the CIT (A) that since the assessee company had not transferred the plant and machinery per se out of the fertilizer and fibres undertakings, the transfer of the above two undertakings did not fall within the mischief of S. 32A(5) and hence, the investment allowance already granted to the assessee during the last eight years wherever applicable could not be withdrawn under S. 32A(5) of the Act. (f) In the appeal for asst. yr. 1992-93, the assessee further contended that notwithstanding and without prejudice to the aforesaid submission, even if the AO was justified in recalling the investment allowance granted to the assessee company for the plant and machinery, there was no interest leviable according to s. 155 of the Act under which the AO had carried out the rectification of earlier assessments. (g) Both the appeals were, however, dismissed and being dissatisfied, the assessee preferred two appeals before the Tribunal. (h) By the order impugned in these two appeals, the Tribunal below dismissed both the appeals preferred by the assessee. Being dissatisfied, the assessee has come up with these two appeals. ;