Commissioner of Income Tax vs Gem Granites

N.V. Balasubramanian, J.—The Income Tax Appellate Tribunal has stated a case and referred the following questions of law for our

consideration :

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee is entitled to

relief u/s 80HHC relying upon the Board''s Circular No. 729, dated November 1, 1995 (see [1995] 216 ITR 141), which was not applicable for

the assessment year under consideration, i.e., 1987-88 ?

Whether having regard to the fact that depreciation on fork lifts has been granted at a higher rate applicable to road transport vehicles, the

Appellate Tribunal was right in law in holding that fork lifts are also entitled to investment allowance ?

The assessment year involved is 1987-88.

In so far as the first question of law referred to us is concerned, learned senior counsel for the Revenue submits that the issue raised in the

question is covered in favour of the Revenue by the decision of the Supreme Court in Stonecraft Enterprises Vs. Commissioner of Income Tax, ,

as well as by the decision rendered by us in T. C. No. 250 of 1998 dated November 19, 2002 ( The Commissioner of Income Tax Vs. Pooshya

Exports (P) Ltd., ). Learned counsel for the assessee has not seriously disputed the same. Accordingly, following the judgment of the Supreme

Court in Stonecraft Enterprises Vs. Commissioner of Income Tax, , as well as the judgment in T. C. No. 250 of 1998 dated November 19, 2002

( The Commissioner of Income Tax Vs. Pooshya Exports (P) Ltd., ), the first question of law referred to us is answered in the negative, against the

assessee and in favour of the Revenue.

As far as the second question of law is concerned, we find that the Appellate Tribunal has not given any finding at all that the depreciation was

granted at a higher rate on the fork lifts and the question has been framed as if there is a finding by the Appellate Tribunal that higher depreciation

was granted on the fork lifts on the basis that they are the road transport vehicles. In the absence of any finding by any of the authorities or by the

Appellate Tribunal that the depreciation on fork lifts was granted at a higher rate as applicable to the road transport vehicles, the second question

as framed does not arise out of the order of the Tribunal. We also find that the Tribunal has found as a matter of fact that the machinery in question

was engaged in the manufacture of articles and the machinery was eligible for the investment allowance claimed by the assessee. We find that the

said finding of the Tribunal is arrived at on the basis of the appreciation of evidence and materials on record and there are no reasons to interfere

with the said findings of the Appellate Tribunal, as far as the second question of law is concerned. Accordingly, the second question of law referred

to us is answered in favour of the assessee and against the Revenue. However, in view of the divided success, there will be no order as to costs.