(1.) FOLLOWING two questions have been referred by Tribunal, Ahmedabad Bench 'B' under Section 256(2) of the IT Act, 1961 at the instance of the CIT, Surat: 1. Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was right in holding that by crediting the partners, capital account by the amount standing to the credit of the investment allowance reserve account does not result in distribution by way of profit of such reserve in a case where assessee has utilised the amount credited to the investment allowance reserve account for the purpose of acquiring new machinery and plant for the purpose of the business of the undertaking?
(2.) WHETHER on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that if out of three conditions as prescribed by the provisions of Section 32A(5), one condition in Sub -clause (b) is satisfied and the other two conditions as mentioned in sub -clause (a) and Clause (c) are not satisfied even then in that case the provisions of Section 155(4A) will not be applicable? 2. The assessment years are 1979 -80 and 1980 -81. The corresponding accounting periods are Samvant years 2034 and 2035. It appears that investment allowance was granted in asst. yrs. 1978 -79, 1979 -80 and 1980 -81 to the assessee, a registered partnership firm. The assessee had created investment allowance reserve as required by provisions of Section 32A(4) of the Act to the tune of Rs. 9,38,000 for asst. yr. 1978 -79, Rs. 1,54,000 for asst. yr. 1979 -80 and Rs. 1,79,601 for asst. yr. 1980 -81. The AO made an order under Section 155(4A) of the Act on 6th Oct., 1989 withdrawing investment allowance for all the three assessment years on the ground that investment allowance reserve had been utilized for distribution as profits amongst the partners of the firm before the expiry of ten years, namely in Samvant year 2041. The AO, therefore, withdrew a sum of Rs. 9,93,090 for asst. yr. 1978 -79, Rs. 1,56,625 for asst. yr. 1979 -80 and Rs. 1,93,125 for asst. yr. 1980 -81 which was the investment allowance granted in the respective years.
(3.) THE Revenue carried the matter in second appeal before the Tribunal. The Tribunal, for the reasons stated in order dt. 2nd Dec, 1993, upheld the order made by the CIT(A) by placing reliance on decision of this Court in the case of CIT v. Karamchand Premchand (P) Ltd. : [1993]200ITR281(Guj) .