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2006 DIGILAW 466 (KER)

Ishwardas Sons v. The Commissioner of Income Tax

2006-07-26

K.S.RADHAKRISHNAN, V.RAMKUMAR

body2006
Judgment :- Radhakrishnan, J. This appeal is preferred by the assessee against the order in ITA.No.429(Coch)/96 on the files of the Income-tax Appellate Tribunal, Cochin Bench. Following question of law arise for consideration: 1. Whether on the facts and in the circumstances of the case the Tribunal is correct in law in confirming the enhancement of Rs.48,140/- made to the assessed income ordered by Commissioner of Income-tax (Appeals) being a part of the claim of deduction under section 32AB of the Act? 2. Whether on the facts and circumstance of the case the Tribunal is correct in law and fact in holding that the profits qualifying for deduction under section 32AB of the Act have not been utilized fully for the purchase of the asset even though the asset is purchased and put to use? 3. Whether on the facts and in the circumstances of the case the Tribunal is correct in law in holding that the profit has not been utilized as a part of the purchase price is outstanding when the appellant is following the mercantile system of accounting? Assessment year in question relates to 1989-90. While filing the return of income assessee made a claim under section 32AB of the Income-tax Act amounting to Rs.72,810/-. Commissioner (Appeals) took the view that as per section 32AB the assessee is eligible for deduction only if the sums have been actually deposited in the deposit amount or the sum has been actually utilised for the purpose of purchase of plant or machinery. Therefore an addition of sum of Rs.48,140/- was made on this account. Appeal was accordingly partly allowed, against which the matter was taken up in appeal before the Tribunal. Tribunal also concurred with the view of the commissioner. 2. We are of the view Section 32AB(1)(b) is very clear which says that where an assessee, whose total income includes incomes chargeable to tax under the head “profits and gains of business of profession”, has out of such income utilised any amount during the previous year for the purchase of any new ship, … ..etc. can claim the benefit of section 32AB if such amount is not deposited in the deposit account, under clause (a), maintained by him with the Development Bank before the expiry of six months or before furnishing the return of income, whichever is earlier. can claim the benefit of section 32AB if such amount is not deposited in the deposit account, under clause (a), maintained by him with the Development Bank before the expiry of six months or before furnishing the return of income, whichever is earlier. The assessee’s claim that the requirement of utilization of the amount for the purpose of specific machinery is to be considered in a broader manner and the word ‘utilised’ should be interpreted so as to include the amount payable cannot be accepted. 3. We are of that the Tribunal has correctly applied section 32AB which calls for no interference in this appeal. Appeal therefore lacks merits and the same would stand dismissed.