THE C.I.T vs. M/S RAJ STEEL ROLLING MILLS

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ITR/202/1995HC Punjab & HaryanaPHHC01032262199514 November 2006Bench: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court of Punjab and Haryana at Chandigarh held that the question of law referred to it is covered by its previous judgment dated September 20, 2006, in ITR No. 118 of 1996 (The Commissioner of Income Tax, Patiala v. M/s. Hindustan Wire Products Limited, Patiala). Following this precedent, the Court answered the question against the revenue and in favour of the assessee. The operative direction is that the reference is disposed of accordingly, implying that the ITAT's decision allowing the deduction under Section 32AB on the assembled machine is upheld. The ratio decidendi is that an assembled machine, in the context of Section 32AB, is considered eligible for the deduction if it meets the criteria of new plant and machinery as per the established legal interpretation.

What were the facts?

The Commissioner of Income Tax, Patiala (Revenue) has referred a question of law to the High Court of Punjab and Haryana at Chandigarh arising from an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, dated April 11, 1994. The ITAT's order was in appeal No. 829/Chandi/89 concerning the assessment year 1988-89. The dispute pertains to the allowance of deduction under Section 32AB of the Income Tax Act, 1961, on a machine assembled by the assessee, Raj Steel Rolling Mills, Mandi Gobindgarh. The Revenue is challenging the ITAT's decision to uphold the Commissioner of Income Tax (Appeals) [CIT(A)] order.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in upholding the decision of the CIT(A) allowing deduction under section 32AB on the machine assembled by the assessee when section 32AB intends the use of investment only for purchase of new plant and machinery? The Revenue's contention, as implied by the question referred, is that Section 32AB is intended for the purchase of new plant and machinery, and therefore, an assembled machine should not qualify for the deduction. The Assessee's contention, as implied by the ITAT upholding the CIT(A)'s decision, is that the assembled machine constitutes 'new plant and machinery' and thus qualifies for the deduction under Section 32AB.

Which sections of the Income-tax Act were involved?

Section 32AB

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.202 of 1995 Date of decision:14.11.2006 The Commissioner of Income Tax, Patiala

....Petitioner versus Raj Steel Rolling Mills, Mandi Gobindgarh ....Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present: Dr. NL Sharda, Advocate, for the revenue. Mr. Akshay Bhan, Advocate, for the respondent-assessee. JUDGMENT: Following question of law has been referred for the opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short, 'the Tribunal) arising out of its order dated 11.4.1994 in ITA No.829/Chandi/89, for the assessment year 1988-89:- “Whether on the facts and in the circumstances of the case, the ITAT was right in law in upholding the decision of the CIT(A) allowing deduction under section 32AB on the machine assembled by the assessee when section 32AB intends the use of investment only for purchase of new plant and machinery?” The question referred is covered by judgment of this Court dated 20.9.2006 in ITR No.118 of 1996 (The Commissioner of Income Tax, Patiala v. M/s. Hindustan Wire Products Limited, Patiala). Accordingly, the question is answered against the revenue and in favour of the assessee. Reference is disposed of accordingly. (Adarsh Kumar Goel) Judge November 14 , 2006 (Rajesh Bindal) 'gs' Judge

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