COMMISSIONER OF INCOME TAX Vs. SURAJ THEATRE

JUDGEMENT

(1.) THIS is a reference under s. 256(1) of the IT Act, 1961 (for short, 'the Act'), at the instance of the Revenue in which Income -tax Appellate Tribunal, Chandigarh Bench (for short, 'the Tribunal'), has referred the following question of law for the opinion of this Court : "Whether, on the facts and in the circumstances of the case, the learned Tribunal was right in law in allowing the investment allowance to the generator installed for business other than those specified in s. 32A -

(2.) THE facts relevant for the decision of the aforesaid question may be noticed thus : The assessee purchased generator for running of its theatre at the cost of Rs. 1,06,700 and had claimed investment allowance under s. 32A of the Act at the rate of 25 per cent of the cost of the generator. The said claim of the assessee was disallowed by the AO on the ground that it is neither engaged in the business of generation or distribution of electricity or any other form of power nor was carrying on the business of manufacture or production of any article or thing. On appeal, CIT(A) reversed the decision of the AO and allowed the claim of investment allowance to the assessee. The appeal of the Revenue was dismissed by the Tribunal.

(3.) SHRI Rajesh Bindal appearing for the Revenue contended that the assessee was neither engaged in the business of generation or distribution of electricity nor was carrying on any activity of manufacture or production of any article or thing which could entitle the assessee deduction on account of investment allowance under s. 32A of the Act. He submitted that the apex Court in CIT vs. Venkateswara Hatcheries (P) Ltd. etc. etc. (1999) 153 CTR (SC) 105 : (1999) 237 ITR 174 (SC), while dealing with the aforesaid provision, has held that an assessee in order to entitle him to deduction of investment allowance under s. 32A of the Act, should be carrying on the business of manufacture or production of article or thing and unless these conditions are fulfilled, the assessee shall not be held entitled for investment allowance within the meaning of s. 32A of the Act. Learned counsel then submitted that the AO has recorded a finding that the assessee derives income from exhibition of motion pictures and, therefore, it does not fall within the parameters of s. 32A of the Act.