Commissioner of Income Tax vs Smt. S. Devaki

R. Jayasimaha Babu, J.—The question referred to us at the instance of the Revenue is as to whether the Tribunal was right in holding that the

assessee is entitled to investment allowance on cranes leased out on hire to other concerns by the'' assessee. The question arises out of the

assessment of the respondent''s income for the year 1980-81.

The assessee had appealed to the Commissioner against the order of the Income Tax Officer denying the relief claimed by her. The

Commissioner, in the course of his order, allowing the appeal held that the cranes in respect of which the appellant claimed investment allowance

had been utilised by Government companies like BHEL, SAIL, ICF, DOC and TANSI and none of those Government companies could have

claimed investment allowance in respect of the machinery on which investment allowance is allowable u/s 32A of the Income Tax Act. He, further

held that ""the cranes have been put to purposes recognised by the Act as eligible for relief u/s 32A"". He allowed the appeal on the ground that it

would be patently unjust to deny relief to the owner of the cranes as also to the lessees and that such unjust result should not be allowed to be

brought about by denying the claim of the lessors for investment allowance.

Before the Tribunal, the Revenue contended that the assessee had not used the cranes herself, but, had only let them out on hire. The Tribunal

agreeing with the Commissioner held that the fact that the assessee had not herself used the crane for manufacturing purpose would not disentitle

her from claiming the investment allowance, having"" regard to the fact what the Commissioner had stated in his order. The Tribunal held that the

Commissioner was justified in issuing the direction given by him.

We find no error in the order of the Tribunal so made. It has been held by the Supreme Court recently in the case of Commissioner of Income

Tax, Karnataka, Bangalore Vs. M/s. Shaan Finance (P) Ltd., Bangalore, , which affirmed the decision of this court in the case of Commissioner of

Income Tax Vs. First Leasing Co. of India Ltd. and others, , that the lessor of the equipment is entitled to investment allowance u/s 32A of the Act

and that it was not necessary that such lessor should himself utilise the machinery in manufacturing activity.

We, therefore, answer the question referred to us in favour of the assessee and against the Revenue. The assessee is entitled to costs in a sum of

Rs. 500.