COMMISSIONER OF INCOME TAX Vs. PRATIK PRINTS

JUDGEMENT

(1.) The Income Tax Tribunal, Ahmedabad Bench "A", Ahmedabad has referred the following question for the opinion of this Court under Section 256(1) of the Income Tax Act, 1961 (the Act) at the instance of the applicant - Revenue.

(2.) The Assessment Years are 1977-78 and 1978-79 and the corresponding accounting periods are the Financial Years ended on 31st March 1977 and 31st March 1978. The assessee, a partnership firm, was granted investment allowance of Rs.1,55,293=00 and Rs.81,000=00 for Assessment Years 1977-78 and 1978-79 respectively. However, the assessing officer, acting under provisions of Section 155(4A) of the Act, withdrew the investment allowance originally granted on the ground that, as the firm was dissolved on 31st March 1978, the assets in question had been transferred to the partner, who had taken over the same from the assessee firm; and the second ground was that, under Section 32A(5)(b), it was not possible for the assessee firm to utilize the reserve within the statutory period of ten years for purchasing new machinery or plant as required by the section.

(3.) The assessee carried the matter in appeal for both the years and succeeded before the Commissioner of Income Tax (Appeals). The Revenue carried the matter in second appeal before the Tribunal. The Tribunal, for the reasons stated in its order dated 31st December 1990, upheld the order of the Commissioner (Appeals), holding that there was no justification for withdrawing the investment allowance granted to the assessee.