Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1982-83, the following questions of law have been referred to this court : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in concluding that the plant and machinery of Rs. 3,79,793 were new and the installation of them was completed during the accounting year relevant to the assessment year 1982-83 ? 2. Whether, on the facts and in the circumstances of the case and having regard to the fact that there was a change in the shareholding of the assessee-company, the Tribunal was right in law in allowing carry forward of the unabsorbed depreciation and unabsorbed investment allowance under Section 79 of the Income-tax Act, 1961?"
(2.) The assessee is a private limited company which owns a factory at Jhargram with its head office at Calcutta and had no manufacturing business of its own with its own machinery since its incorporation. By virtue of an agreement dated November 1, 1969, with M/s. Sakbry Engineering Corporation, a firm in which a director of the assessee-company was a partner, the assessee-company had agreed to work as rolling contractor to take over the charge of production and rolling of tubes and pipes at the tube mill owned by the said firm with the raw materials to be supplied by the firm under the planning, direction and control of the firm. During the year under reference, besides running the tube mill of M/s. Sakbry Engineering Corporation, the assessee-company installed some plant and machinery of its own and put them to use for production of rolling tubes and pipes in its factory premises at Jhargram. The assessee claimed investment allowances on all the machinery valued at Rs. 6,50,050. The Income-tax Officer found that, out of the machinery valued at Rs. 6,50,050, machinery valued at Rs. 3,79,793 was purchased during 1969-70 to 1974-75 accounting years and the balance of Rs. 2,70,257. was purchased in the previous year relevant to the assessment year 1982-83 which is under consideration. The Income-tax Officer, therefore, allowed investment allowance on machinery valued at Rs. 2,70,257 only. The assessee-company also claimed additional depreciation under Section 32(1)(iia) of the Act on machinery valued at Rs, 6,50,050 irrespective of their dates of purchase and claimed that the installation of the said machinery was made during the year under consideration. The Income-tax Officer did not allow additional depreciation on the machinery claimed by the assessee on the ground that the provisions of Section 32(1)(iia) of the Act were introduced with effect from April 1, 1981, and, therefore, machinery acquired prior to April 1, 1981, was not entitled to additional depreciation. Further, there was a change in the original management of the assessee-company.
(3.) Against the aforesaid order of the Income-tax Officer, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) who found that, since the purchase of the machinery, there was a change in the management of the assessee-company and the machines were under installation and the installation process was completed during the year under reference. The Commissioner of Income-tax (Appeals), therefore, directed the Income-tax Officer to allow investment allowance on the entire machinery valued by the assessee at Rs. 6,50,050 and also to allow additional depreciation under Section 32(1)(iia) of the Act apart from normal depreciation allowable to the assessee.;