Law:

Section:

Section 32A of the Income-tax Act, 1961 - Investment allowance - Assessment year 1986-87 - Whether investment allowance was allowable to assessee on generator installed in its business of manufacturing and sale of surgical and plastic products - Held, yes FACTS The assessee- firm was engaged in the business of manufacturing and sale of surgical and plastic products. It installed a generator and claimed investment allowance thereon. The Assessing Officer disallowed the claim on the ground that it was not a machinery for the purpose of manufacturing etc. as it was only used for generating electricity which was the substitute of power. The Commissioner (Appeals) allowed the assessee's claim following the orders relating to earlier assessment years. The order ofCommissioner (Appeals) was upheld by the Tribunal. On reference: HELD From a reading of sub-clause (ii ) of clause (b) of section 32A(2), it is clear that any machinery or plant which has been installed for the purpose of business of manufacture or production of any article or thing not falling under the second proviso to section 32A is entitled for investment allowance. The words 'business of manufacture' or 'production' are very wide terms and would encompass the whole set of machinery and plant which is used for the purpose of manufacture of any article or thing. Thus, the generator which was used in the business of manufacture or production of any article or thing by the assessee clearly fell within the aforesaid clause and the Tribunal had rightly upheld the allowance of the investment allowance. -Decision was in favour of assessee. A.N. Mahajan for the Applicant. JUDGMENT The Income-tax Appellate Tribunal, Delhi, has referred the following question of law under section 256(1) of the Income-tax Act, 1961, for opinion to this court: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal erred in law in holding that the investment allowance was allowable to the assessee under section 32A on generator?" The reference relates to the assessment year 1986-87. Briefly stated, the facts giving rise to the present reference are as follows: The respondent-assessee has been…

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