- (1.) THE matter here concerns the assessee's claim for investment allowance in respect of additions made in the machinery account during the assessment year 1978-79.
(2.) ACCORDING to the assessee, the reserve for investment allowance was created on July 18, 1980, by crediting a sum of Rs. 10,282 to the investment allowance account and by corresponding debit to the investment account. The investment allowance claimed was Rs. 54,832. The Inspecting Assistant Commissioner disallowed the claim holding that the investment allowance should have been created during the accounting period relevant to the assessment year in question. The Commissioner of Income-tax (Appeals) held otherwise, namely, that it was not necessary that the reserve should have been created during the accounting year relevant to the assessment year and that by creating the reserve on July 18, 1980, before the assessment was made, the condition for the creation of the reserve had been fully met.
(3.) ON appeal, the Tribunal approved the view taken by the Commissioner of Income-tax (Appeals ). It is in this factual background that the following question of law came to be referred to this court for its opinion : "whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing the claim of the assessee for investment allowance under Section 32a (4) (ii) of the Income-tax Act, 1961 ?";