C.I.T. vs. M/S ESCORTS TRACTORS LTD.,DELHI

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ITR-45/1986HC Delhi2004:DHC:1015530 September 20042 pages
AI SummaryPartly Allowed

What did the High Court hold?

The Delhi High Court decided the reference by answering the questions posed. For the shop and canteen equipment, the Court held that the assessee was not entitled to investment allowance. This decision was based on a prior ruling by the same Court in ITR No. 18805 (Commissioner of Income Tax v. Escorts Tractors Ltd.), decided on the same day. For the remaining items, namely, air conditioning equipment and miscellaneous equipment, which were installed within the factory premises, the Court held that the assessee was entitled to the grant of investment allowance under Section 32A of the Income Tax Act, 1961. The reference was disposed of accordingly, with no order as to costs. The ratio is that while shop and canteen equipment may not qualify, plant and machinery installed within factory premises for the purpose of business, such as air conditioning and miscellaneous equipment, would be eligible for investment allowance.

What were the facts?

This case concerns Income Tax Reference No. 45 of 1986, decided on September 30, 2004, by the Delhi High Court. The reference was made at the instance of the Revenue against an order of the Income Tax Appellate Tribunal, New Delhi, for the assessment year 1979-80. The core of the dispute revolves around the assessee company's entitlement to investment allowance under Section 32A of the Income Tax Act, 1961, for certain items installed in its factory premises. The specific items in question are air conditioning equipment, shop and canteen equipment, and miscellaneous equipment. The procedural history involves a reference to the High Court under Section 256(1) of the Act to decide a specific question of law.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal, New Delhi was justified in law in holding that the assessee company was entitled to the grant of investment allowance under Section 32A of the Income Tax Act, 1961 on air conditioning equipment installed at the factory premises? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal, New Delhi was justified in law in holding that the assessee company was entitled to the grant of investment allowance under Section 32A of the Income Tax Act, 1961 on shop and canteen equipment installed at the factory premises? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal, New Delhi was justified in law in holding that the assessee company was entitled to the grant of investment allowance under Section 32A of the Income Tax Act, 1961 on miscellaneous equipment installed at the factory premises? Assessee's Contention: The assessee contended that it was entitled to investment allowance under Section 32A for the specified items installed in its factory premises. Revenue's Contention: The Revenue contested the assessee's claim for investment allowance on these items.

Which sections of the Income-tax Act were involved?

Section 32A,Section 256(1)

AI-generated summary — verify with the full judgment below

I+ Vo T 1, , 3. o ITR No.45 of 1986 DECIDED ON : Septembe'r 30"2004' Throug! h/h'.R.D'Jo11y, Mrs' hem Llta Bansal' v Mr.sanjeev Khanna" fuh'Sanjeev iabharwal, h{r.S'C'sharma and Ms.Rashmi ChoPra, Advocates' Vsrsus iWs Escorts Tractors Ltd"""" """Re'spondent to be answered bY this Tlrrnugh:Idr'R.'M'Mehtawithlvls.GeetaujaliMolran, Advocates' CI}RAM: IION'BLE THE CHIEF' JUSTICE non.BLE Vrn. ruiflcu naoan DURREZ A-IIMED l{Ihether the Reporters of Local Papers may be allowed to see the judgrnent To be referreilto the Reporter or not? r,rlfr"ift.i *te jud gment should be reported in the Digest? R.C.Prf,TEL. C..I. (ORAL) 1. For the assessment Year the Income Tax APPellate Ttihunal' made at the instance of the Revenue Tax Act, 1961- 2. iTANo.45D6 19?9-80, against the order made bY New l)elhi, the Present rcference is under Secticjn 256(1) of the Income The following question is required Page I of2 2004:DHC:10155-DB

Court:- ..Whether on thefacts and in the circumstances of the ca\e? ttre Appellate Tribunal, New Delhi was justified in law in holding that the assessee company was entitled to the grant of inviment allowance under Section 32A of the Income i* Act, l 96l on the following items installed ar , the frctory Premises: air conditioni ng equiPment, shop and canteen equiPment; and mi scell aneous equiPment ?' il (i) (ii) (ii i) 3.Sofarasshopandcanteenequipmerrtsareconoerned,inview of the decision given by us today in tTR No-18805 (Commissioner of Income Tax v. Escrnls Tractoffi [,td-), the answer is required to be given in favour of the revenue and for rest of the items, namely' air conditioning and miscellaneous equipment (as equipments are installed in the factory premises itself), the answet is required to be given in favour of the assessee and against the Revenue' The refetence is disposed of 'T 't' n accotdingly with no order as to cosf's' e/ry-' -L- CHIEF TUSTTCN September 3O,2O04 as W BADAR DURREZ AHMF,D, J^ iTANo-45D6 Page2 ot2 2004:DHC:10155-DB

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