COMMISSIONER OF INCOME TAX Vs. VINDHYA TELELINKS LTD

JUDGEMENT

(1.) The Tribunal, Jabalpur Bench, Jabalpur in R.A. No. 82/Jab/1997 by order dt. 29-9-1997 has referred following question for the opinion of this Court under section 256 of the IT Act:

(2.) Per contra, Shri Shrivastava, learned senior counsel appearing on behalf of assessee submitted that earlier provision was for investment allowance after purchase of machinery and making investment for the purchase of machinery, but after 1985-86, a new provision section 32AB was introduced in the statute book w.e.f. 1-4-1987 which provides that if an assessee for the purchase of machinery deposits the amount by way of earnest money or as an advance for the purchase of machinery, such amount shall be treated as an investment deposit and assessee is entitled for deduction of the said amount. He has placed reliance on judgments of a Division Bench of Bombay High Court in CIT v. Antifriction Bearings Corporation Ltd., 2000 246 ITR 295. and also on CIT v. Tribeni Tissues Ltd., 2002 258 ITR 393, CIT v. U.P. Asbestos Ltd.,2008 174 Taxman 45 and circulars of CBDT, dt, 9-7-1986 (1986) 56 CTR (St) 1) and Circular bearing No. 495, dt. 22-9-1987 1 (1988) 67 CTR (St) 1] in support of his contention. It was also submitted that the CIT and the Tribunal both have concurrently found that the assessee was entitled for such deduction and aforesaid question may be answered in favour of the assessee.

(3.) To appreciate the rival contentions of the parties, it would be appropriate if the factual position is stated.