Ajit K.Sengupta, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, for the assessment year 1981-82, the following question of law has been referred to this court : " Whether, on a proper appreciation of the facts of the case and on a correct interpretation of law, the Appellate Tribunal was justified in holding that the assessee was entitled to investment allowance on generators"
(2.) Shortly stated, the facts are that the assessee, a limited company was deriving income from beverages. The assessee installed a generator in its factory to supply power to the main plant during the course of failure in the supply of electricity. The assessee claimed investment allowance on the generator. The Inspecting Assistant Commissioner of Income-tax disallowed the claim on the ground that the generator at best gave indirect assistance for the manufacturing process during the period of power failure. The assessee did not manufacture or produce any article or thing as envisaged in Section 32A of the Income-tax Act, 1961.
(3.) Being aggrieved by the order of the Inspecting Assistant Commissioner of Income-tax, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) who was of the view that, as per Section 32A of the Income-tax Act, 1961, investment allowance was available to a new machinery or plant installed after March 31, 1976, in any industrial undertaking for the purpose of business of various nature specified in the list of the Eleventh Schedule. Hence, new machinery or plant installed in any industrial undertaking for the purpose of manufacturing or production was eligible for investment allowance under Section 32A of the Act and it was not required that the machinery or plant should itself manufacture but should be used for the purpose of business of manufacture. The generator set was used for the supply of power during the power failure for the purpose of production. The investment allowance was, accordingly, allowable on the said generator.;