COMMISSIONER OF INCOME TAX Vs. VAYITHRI PLANTATIONS LIMITED

JUDGEMENT

(1.) THE following question has been referred to this court under s. 256(1) of the I.T. Act, 1961 :

(2.) THE assessee is a company, which owns a tea plantation and also a tea factory. THE assessment year under consideration is 1971-72, the previous year ending on March 31, 1971. In submitting the return for this year, the assessee claimed an allowance of Rs. 75,000 as development rebate under s. 33(1) of the Act. THE ITO did not allow the claim on the ground that the machinery in respect of which this claim had been made, was only installed and had not been used in the year of account and that the amount would be allowed as a deduction in the next year when the machinery was actually brought into use. THE assessee appealed to the AAC, who held that the assessee had fulfilled the requisite conditions prescribed for the development rebate and he, therefore, directed the ITO to allow it. THE ITO appealed to the Tribunal. THE Tribunal after considering the facts, came to the conclusion that when the machinery was kept ready for use and could not be used in the relevant accounting year, because of extraneous circumstances, then it would amount to passive user and, under the law, the allowance would be admissible to the assessee. THE Commissioner of Income-tax has questioned this conclusion of the Tribunal in the form of the question extracted already.

(3.) THE ITO himself has stated in his order that he would allow it in the next year, when according to him, the regular production of tea with the aid of the machinery commenced. We shall now examine the claim of the assessee in the light of the relevant provisions.