COMMR. OF INCOME TAX (C) LDH. vs. ADARSH STEEL ROLLING MILLS
What did the High Court hold?
The High Court held that the ITAT was right in allowing the extra deduction under Section 32-AB in respect of machinery fabricated/assembled in the factory premises of the assessee. The Court referred to its earlier decision in Commissioner of Income Tax, Patiala Vs. M/S Hindustan Wire Product Ltd., Patiala, Rohtak, ITR No. 118 of 1996, decided on 20.09.2006. In that case, a similar question of law was answered against the Revenue and in favour of the assessee. Therefore, following its precedent, the High Court answered the present reference against the Revenue and in favour of the assessee. The reference was disposed of accordingly. No specific amount in dispute was mentioned. The operative direction was to answer the reference in favour of the assessee.
What were the facts?
The Commissioner of Income Tax, Ludhiana (Revenue) has filed an Income Tax Reference (ITR) No. 85 of 1997 before the High Court of Punjab and Haryana at Chandigarh. The reference arises from an order dated 26.07.1996 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, in I.T.A. No. 1774/Chandi/90. The assessment year in question is 1989-90. The dispute pertains to the allowance of extra deduction under Section 32-AB of the Income Tax Act, 1961, in respect of machinery fabricated or assembled in the assessee's factory premises, as opposed to machinery directly purchased from the market. The ITAT had allowed this deduction to the assessee, M/s Adarsh Steels Rolling Mills, Mandi Gobindergarh.
What were the issues?
1. Whether, on the facts and in the circumstances of the case, the ITAT was right in allowing extra deduction under Section 32-AB in respect of machinery fabricated/assembled in the factory premises of the assessee and not directly purchased from the market? (Question of law and fact, concerning Section 32-AB of the Income Tax Act, 1961). Assessee's Contention: The ITAT was correct in allowing the extra deduction for self-fabricated machinery. Revenue's Contention: The ITAT erred in allowing the extra deduction for self-fabricated machinery, implying it should only apply to purchased machinery.
Which sections of the Income-tax Act were involved?
Section 32-AB
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench Chandgiarh arising out of its order dated 26.7.1996 passed in I.T.A.No.1774/Chandi/90, in respect of the assessment year 1989-90. “Whether, on the facts and in the circumstance of the case, the ITAT was right in allowing extra deduction u/s 32-AB in respect of machinery fabricated/assembled in factory premises of the assessee and not directly purchased from the market? The above question has already been gone into by this Court in Commissioner of Income Tax, Patiala Vs.M/S Hindustan Wire Product Ltd., Patiala , Rohtak, ITR No.118 of 1996, decided on 20.9.2006 wherein question has been answered against the Revenue and in favour of the assessee.
In view of the above, the question referred is answered against the Revenue and in favour of the assessee.
The reference is disposed of. (Adarsh Kumar Goel)
Judge November 22,2006 (Rajesh Bindal)
Pka Judge
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