INCOME TAX ACT, 1961

Section 32AB

Investment deposit allowance - Allowability - Purchase of pipes, steel plates, M.S. angles etc. - AO denied relief on the ground that items purchased were not plant and machineries

Assessee-company claimed relief under section 32AB. AO denied such relief on the ground that the items purchased by the assessee were not plant and machineries and they were only pipes, steel plates, M.S. angles, etc., and those items did not support purchase of any new plant or machinery and therefore, the same would not be classified under section 32AB. Held: After referring to the dictionary meaning of 'purchase', it was found that such transaction would not only be direct buying of the plant or machinery for consideration, which was contemplated by the term 'purchase' and the purchase could include either buying the item concerned directly or obtaining it by labour or acquiring by other means. Accordingly, it was concluded that the relief under section 32AB should be granted to the assessee. However, the matter was remanded to the AO with a direction to verify the evidences to be furnished by the assessee, to show that the purchase of machinery was made during the period under consideration, so as to be eligible for deduction of claim under section 32AB.

REFERRED :

FAVOUR : Matter remanded

A.Y. :

INCOME TAX ACT, 1961

Section 41

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