Madras High Court
Commissioner Of Income Tax vs First Leasing Co. Of India Ltd. (Cit V. ... on 12 September, 1996
Equivalent citations: (1997)140CTR(MAD)218
ORDER
.
Ratio:
When a question of law was squarely before the Tribunal, who failed to deal with it, the same question therefore, one arising out of its order.
Held:
When a question of law is raised before the Tribunal, but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it and is, therefore, one arising out of its order. In this case the question of law whether the allowance under section 32A could be granted to the assessee was squarely before the Tribunal but, the Tribunal did not actually consider one aspect of it in the light of one of the statutory conditions prescribed in section 32A(2)(b)(iii) of the Act, in relation to the buldozer hired out by the assessee. So as per the above said decision of the Supreme Court that aspect must deemed to have been dealt with by the Tribunal and, therefore, it is one arising out of its order.
Case Law Analysis:
VR. C. RM.
Adaikkappa Chettiar v. CIT (1970) 78 ITR 285 (Mad) and CIT v. Scindia Steam Navigation Co. Ltd. (1961) 42 ITR 589 (SC) followed.
Application:
Also to current assessment years.
A. Y.:
1977-78 Dt. Ord.:
12-9-1996 Income Tax Act 1961 s.32(1)(vi) Income Tax Act 1961 s.32A Investment allowance--ALLOWABILITY--In respect of a bulldozer.
Ratio:
Assessee could not claim investment allowance in respect of a buldozer under section 32A(2)(b)(iii).
Held:
Relying on the terminology used in section 32A(2)(b)(iii) buldozer cannot be considered as a "machinery or plant installed......in any other industrial undertaking for the purpose of business of construction, manufacture or production of any article or thing......". The Supreme Court so held that the assessee in that case was not entitled to the allowance under section 32A. The assessee in this Tax Case No. 1651 of 1986, is not entitled to the abovesaid investment allowance under section 32A in relation to its hiring of buldozer.
Case Law Analysis:
CIT v. N. C. Budharaja & Co. etc., (1993) 204 ITR 412 (SC) and Builders Associations of India v. Union of India & Ors. (1994) 209 ITR 877 (SC) followed.
Application:
Not to current assessment years.
A. Y.:
1977-78 Dt. Ord.:
12-9-1996 Income Tax Act 1961 s.32(1)(vi) Income Tax Act 1961 s.32A Investment allowance--ALLOWABILITY--Assessee engaged in hiring of machinery.
Ratio:
Assessee engaged in hiring of machinery is entitled to investment allowance as such hiring is not transfer for purpose of sub-section 5 of section 32A.
Held:
The assessee is wholly using the plant or machinery for the purpose of his/its business which consists of leasing it to other parties. Sub-section (1) or (2) of section 32A does not require anywhere that the plant and machinery must be installed and used by the assessee himself for the manufacture or production of priority articles. Wherever legislature intended that the assessee should itself engage in the particular business, it has so provided. This would be evident from the language of sub-section (2)(a) of section 32A which specifically requires that the assessee, in order to claim investment allowance in respect of ships or aircraft, must be "engaged in the business of operation of ships or aircraft. The fact that such a qualification does not appear in sub-section (1) or sub-section 2(b)(iii) of section 32A shows that in order to claim investment allowance for machinery or plant, the assessee need not by himself have the industrial undertaking engaged in the business or manufacture or production of articles not specified in the Eleventh Schedule. If the interpretation sought to be placed by the revenue, were to be accepted, then neither the assessee which hired out the plant or machinery nor the hirer would be entitled to investment allowance. (The hirer will not be entitled to investment allowance because it does not own the plant or machinery). Such an interpretation must be avoided because it will defeat the very purpose of enactment of section 32A. It is also settled law that giving plant or machinery on licence or hire is one of the recognised modes of doing business as much as the use of the asset by the assessee himself for the purpose of manufacture or production. Even on the footing that the term `otherwise transferred' would include such "lease" the said provision will not disentitle the assessee herein from securing investment allowance, since the said provision only speaks of `machinery' or plant transferred by the assessee "at any time before the expiry of eight years from the end of the previous year in which it was acquired or installed". The leases were only during the previous year in which the plant or machinery was acquired and not in the abovereferred to eight year period beginning from the end of the previous year. The Tribunal itself has found that the above said `lease' transaction by the assessee will not actually come under the terms `otherwise transferred' found in section 32A sub-section (5) taking into account the definition of the term `transfer' under section 2 clause (47) of the Act.
Case Law analysis:
CIT v. Shaan Finance (P) Ltd. (1992) 109 CTR (Karn) 209 : (1993) 199 ITR 409 (Karn), CIT v.
Pandiyan Bank Ltd. (1969) 71 ITR 707 (Mad), CIT v.
Eastern Spinning Mills & Industries (1995) 125 Taxation 353 (Cal), CEPT v. Shri Lakshmi Silk Mills Ltd. (1951) 20 ITR 451 (SC) and Ajodhpya Prasad Tara Chand Khokra v. CIT (1967) 66 ITR 576 (All) relied on.
Blue Bay Fisheries (P) Ltd. v. CIT (1987) 166 ITR 1 (Ker) distinguished.
A. Y.:
1977-78 Dt. Ord.:
12-9-1996 Income Tax Act 1961 s.32(1)(vi) Income Tax Act 1961 s.32A Depreciation--INITIAL DEPRECIATION--Leasing of machinery.
Ratio & Held:
Assessee engaged in leasing out machinery was entitled to initial depreciation.
Application:
Not to current assessment years.
A. Y.:
1977-78 Dt. Ord.:
12-9-1996 Income Tax Act 1961 s.32(1)(vi) Income Tax Act 1961 s.32A ORDER ABDUL HADI, J. :
In all these tax case references under S. 256(1) of the IT Act, 1961, hereinafter referred to as the Act, one common question is involved (apart from certain other questions in one or other of the said cases) and hence they are heard together.
2. Of these, one alone, viz., TC No. 786 of 1986 is by the assessee since the Tribunal below therein held against the assessee on the above said question. The other five tax case references are by the Revenue. The Tribunal, in the respective orders therein, held against the Revenue on the above said question.
2(a) TC Nos. 491 and 492 of 1986, arising out of the said order dt. 8th May, 1985 of the Tribunal, in the appeal by the Revenue as well as cross-objection by the assessee, relate to the asst. yr. 1977-78. The assessee therein is the same as in TC No. 786 of 1986, which relates to the asst. yr. 1979-80 and arises out of the order dt. 31st Oct., 1983 of the Tribunal. TC No. 1651 of 1986 relates to another assessee in relation to the asst. yr. 1980-81 and arises out of the order dt. 30th Aug., 1985 of the Tribunal. TC No. 1242 of 1991 which relates to the asst. yr. 1983-84 and TC No. 1243 of 1991, which relates to the asst. yr. 1984-85, both arise out of the order dt. 8th Feb., 1990 of the Tribunal. Both these later two cases relate to yet another assessee.
3. The abovesaid "common question" is about the investment allowance under S. 32A of the Act, which is one of the deductions allowed in computing "total income" chargeable to tax under the Act. The abovesaid allowance is given w.e.f. 1st April, 1976, the said provision having been inserted in the Act, by the Finance Act, 1976 and the said allowance has taken the place of development rebate allowance which was given earlier. The said allowance under S. 32A is given inter alia, in respect of plant and machinery. All the above said assessees, who admittedly owned the plant or machinery in question, only hired out the same to another for being exploited by the later. Therefore, the contention of the Revenue is that the assessee was not entitled to the said allowance, it having not exploited the said plant or machinery, itself. On the other hand, the contention of the above said assessees is that despite the above said fact, each one of that was entitled to the allowance under the said section. In view of these rival contentions, the above said question is whether the assessees were entitled to the above said investment allowance under the above said section in the above said relevant assessment years, in respect of the respective plant or machinery, which admittedly was owned by the respective assessees but hired out during the relevant previous years, as stated above.
4. With reference to the said "common question" the sole question of law referred to us in TC No. 786 of 1986 runs as follows :
"Whether the Tribunal was right in holding that the assessee was not entitled to investment allowance under S. 32A of the Act ?"
5. Likewise, in both TC Nos. 1242 and 1243 of 1991 the question of law referred to us, runs as follows :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee is entitled to investment allowance under S. 32A on items of machinery and plant which have been leased out to others ?"
6. In TC No. 1651 of 1986 the question of law referred to us runs as follows :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was entitled to investment allowance under S. 32A on the bulldozer purchased and hired to outsiders, even though the assessees business was only hiring of compressors and bulldozers ?"
(With reference to this question, another question also has to be considered in the light of the arguments advanced, viz., whether in respect of bulldozer, the assessee in the said case could claim the said allowance. This aspect would be considered after considering the above referred to "common question").
7. In both TC Nos. 491 & 492 of 1986, actually speaking, two questions of law have been referred to us and the above said "common question" involved is reflected only in the second of the above said question referred to us, which runs as follows :
"Whether the Tribunal was correct in law in holding that the assessee is entitled to investment allowance under S. 32A and initial depreciation under S. 32(1)(iv) of the Act on machinery leased out ?"
(In the above question, referred to S. 32(1)(iv) is not correct; it must read as S. 32(1)(vi). The said question refers to initial depreciation. As per learned counsel for Revenue, the arguments advanced in respect of investment allowance would apply to the said initial depreciation also and the decisions to be given in respect of investment allowance in regard to the actual question at issue would also equally apply to initial depreciation). Then, the first of the above said two questions referred to us, runs as follows :
"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding and had valid materials to hold that the reopening of the assessment under S. 147(b) of the Act was without jurisdiction and, therefore, invalid ?"
Regarding this first question, learned counsel for the Revenue submitted that if the above said "common question" is answered in favour of the assessee there may not be any necessity to answer this first question and so saying he deferred his arguments on the said first question till our decision is given on the abovereferred to common question. However, we may at this stage itself state that, since in view of the reasons given below we are going to decide in favour of the assessee on the above said common question, there is no necessity to answer the above referred to second question and the said second question has to be returned unanswered.
8. Let us now deal with the above said "common question" first. The material portions of the said S. 32A of the Act run as follows :
"32A(1). In respect of a ship or an aircraft or machinery or plant specified in sub-s. (2) which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction in respect of the previous year in which the ship or aircraft, was acquired or the machinery or plant was installed.....
......
......
.......
.......
.........
of a sum by way of investment allowance equal to 25 per cent of the actual cost of the ship, aircraft, machinery or plant to the assessee...
(2) The ship or aircraft or machinery or plant referred to in sub-s. (1) shall be the following namely :
(a) a new ship or new aircraft acquired after the 31st day of March, 1976, by an assessee engaged in the business of operation of ships or aircraft;
(b) any new machinery or plant installed after the 31st day of March, 1976, -
(i)................................... (ii)..................................
(iii) in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule;
(Note : This Eleventh Schedule contains non-priority articles or things).
(2A)............... (2B)............... (2C)............... (2D)............... (3)................
(4) The deduction under sub-s. (1) shall be allowed only if the following conditions are fulfilled, namely :
(i)...... .........
(ii) an amount equal to 75 per cent of the investment allowance to be actually allowed is debited to the P&L a/c and credited to a reserve account..... to be utilised -
(a) for the purpose of acquiring, before the expiry of a period of ten years next following the previous year in which..... the machinery or plant was installed, a..... new machinery or plant.... for the purposes of the business of the undertaking and
(b)..... ..........
(5) Any allowance made under this section in respect of any machinery or plant shall be deemed to have been wrongly made for the purposes of this Act -
(a) if the..... machinery or plant is sold or otherwise transferred by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired or installed; or
(b)..... .......... (c)..... .........."
9. Thus, the main conditions to be satisfied as per S. 32A(1) and (2) are :
(1) the subject-matter is to be owned by the assessee;
(2) is wholly used for the purpose of business of the assessee; and (3) the subject-matter should come under any of the enumerated categories of S. 32A(2)."
That the plant or machinery in the present case is owned by the assessee is not disputed.
10. As regards the second condition the assessee is wholly using it for the purpose of his/its business which consists of leasing it to other parties. Sub-s. (1) or (2) of S. 32A does not require anywhere that the plant and machinery must be installed and used by the assessee himself for the manufacture or production of priority articles.
11. Wherever legislature intended that the assessee should itself engage in the particular business, it has so provided. This would be evident from the language of sub-s. (2)(a) of S. 32A which specifically requires that the assessee, in order to claim investment allowance in respect of ships or aircraft, must be "engaged in the business of operation of ships or aircraft". The fact that such a qualification does not appear in sub-s. (1) or sub-s. (2)(b)(iii) of S. 32A shows that in order to claim investment allowance for machinery or plant, the assessee need not by himself have the industrial undertaking engaged in the business or manufacture or production of articles not specified in the Eleventh Schedule. Further, even in S. 32A(4), which provides for keeping reserve, as a condition for securing the deduction, we do not find any phraseology to accept the contention of the Revenue.
12. The object of all interpretation is to discover the intention of the Parliament but the intention of Parliament must be deduced from the language used. Where the language is plain and admits of only one meaning, the task of interpretation can hardly be said to arise. If the interpretation sought to be placed by the Revenue, were to be accepted, then neither the assessee which hired out the plant or machinery nor the hirer would be entitled to investment allowance. (The hirer will not be entitled to investment allowance because it does not own the plant or machinery). Such an interpretation must be avoided because it will defeat the very purpose of enactment of S. 32A.
12A. The object of the enactment can also be seen from the Budget speech of the Finance Minister for the year 1976-77 while introducing S. 32A. The relevant portion of the speech is as follows :
"The present scheme of investment allowance will facilitate invest in priority industries and reduce the dependence of the corporate section on public financial institutions" [Vide (1976) 102 ITR (St) 95].
So, one object of the introduction of S. 32A is to facilitate the investment in priority industries. This object will be fulfilled whether the assessee himself makes use of the plant or machinery in question or the hirer. Further, if a person who has enough funds, acquires plant or machinery and hires it out to a person who may not have such enough funds at his command. The necessity for the letter person to seek necessary funds from public financial institutions for acquiring the plant or machinery himself may not arise and to that extent the dependence on such institutions is reduced. In this way the second object also is satisfied.
13. We may also point out that an identical question arose in CIT vs. Shaan Finance (P) Ltd. (1993) 199 ITR 409 (Kar) and the said Court has also upheld that investment allowance can be claimed by a person similarly placed as the present assessees. According to the said decision, the only requirement under S. 32(2)(b) is that the plant or machinery owned by the assessee should have been used by some one in the manner stated in the said sub-clause. It has also been held therein, in the context of the above said expression wholly used (finding place in both Ss. 33 and 32A) that the term wholly means entirely and not exclusively and that the machinery in its entirety may .... .... .... be used by its owner and it is possible for another also to use it. In this connection, the said decision also relied on similar observation of this Court in CIT vs. Pandiyan Bank Ltd. (1969) 71 ITR 707 (Mad).
14. In CIT vs. Eastern Spinning Mills & Industries (1995) 125 Taxation 353 (Cal), the Calcutta High Court also held that the abovesaid investment allowance could be granted to an assessee even when he, the owner of the plant or machinery in question, leases it out to another person. No doubt, in that case the assessees sole business was not such leasing out of plant or machinery, but, its business was actually manufacture and sale of staples and synthetic blended yarn, etc., but, due to adverse conditions the assessee decided to give the plant and machinery used by it in the above said manufacture to a third party on leave and licence basis whereby the said third party got right of exploitation of the said plant and machinery, for an initial period of three years which could be extended. Taking into account the above said special feature in the Calcutta case, learned counsel for the Revenue seeks to argue that the said Calcutta decision turned on its facts and it cannot be applied to the present cases where the sole business of the assessee is only leasing out the plant or machinery. But, we do not think any such distinction could be made. In either case the principle is the same, it being that S. 32A does not disentitle such lessor or licensor of plant or machinery from claiming the said allowance.
It must be noted that even if this investment allowance is allowed to a person who simply hires out the plant or machinery, the abovesaid objects will be fulfilled since it is also likely he will hire out the plant or machinery at a lower rent as he is going to get this allowance in computing his total income of his leasing business.
15. Any legislative provision is to be construed in the light of the purpose with which it has been introduced. This principle of purposive interpretation has been adopted in so many decisions of the Supreme Court like CIT vs. Gwalior Rayon Silk Mfg. Co. Ltd. (1992) 196 ITR 149 (SC); Bajaj Tempo Ltd. vs. CIT (1992) 196 ITR 188 (SC). In particular, we may point out that in (1992) 196 ITR 188 (SC) (supra), it has been held that a provision in the statute granting incentives for promoting growth and development should be construed liberally; and since a provision for promoting economic growth has to be interpreted liberally, the restriction on it too has to be construed so as to advance the objective of the provision and not to frustrate it.
16. As already indicated, the present investment allowance has replaced the former development rebate allowance provided under S. 33 of the Act. The S. 33 gave the said development rebate allowance in respect of machinery or plant owned by the assessee and is wholly used for the purpose of the business carried on by him. In that context, several decisions have held that the said allowance under S. 33 of the Act could be given even to an assessee, who only hires out the above said plant and machinery in the course of business of leasing. We may point out one of them, viz., Ajodhya Prasad Tara Chand Khekra vs. CIT (1967) 66 ITR 576 (All). In that case the Court held that for kolhus (sugarcane crushing machine) such development rebate could be allowed. In that context the relevant observation is as follows :
"The kolhus on which development rebate is claimed once were admittedly let out and were, therefore, wholly used for the assessees business which consisted of hiring out of such kolhus. The assessee was neither a crusher of sugarcane nor was that his business, and, therefore, kolhus could not have been used by him for that purpose. His business was wholly that of hiring out of kolhus. The 50 new kolhus were in fact hired out, and, therefore, they were used wholly for the purpose of the assessees business. The fact that the person who hired the kolhus also made use of them would not make the kolhus any the less "used wholly for the purpose of the assessees business."
17. It is also settled law that giving plant or machinery on licence or hire is one of the recognised modes of doing business as much as the use of the asset by the assessee himself for the purpose of manufacture or production [vide CEPT vs. Shri Lakshmi Silk Mills Ltd. (1951) 20 ITR 451 (SC).
18. Referring to the third main condition enumerated above, which also has to be satisfied for claiming the above said allowance under S. 32A, which provides that the said allowance is given in respect of the machinery or plant installed in any other industrial undertaking (i.e., other than the small scale industrial undertaking) for the purposes of business of construction, manufacture, or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule, the above said Karnataka decision also observes as follows :
"The term "installed" is found in several sub-sections of S. 32A; but that does not aid the construction because, in the main sub-section, i.e., S. 32A(1), both the terms "used" and "installed" are referred to in relation to the subject-matter.
However, we find some clue as to the legislatures intention comparing S. 32A(2B) with S. 33(1)(b)(B)(ii) and (iii). In the two sub-clauses (of S. 33), there is a specific reference to the assessees business premises where the machinery is to be installed."
In other words, while the relevant provisions in S. 33 provide that machinery or plant should be installed by the assessee in the premises used by it, or it is an asset or the said machinery or plant is an asset relating to the business carried on by the assessee, as the case may be, S. 32A(2B) does not have any such stipulation. That is why the said Karnataka decision concludes by saying thus :
"The benefit is given with reference to the actual user of the machinery, though the benefit may go to a person who does not exploit the machinery himself for manufacturing or producing any article. Such a situation is not entirely unknown in the field of taxation. If the object behind S. 32A is understood as to encourage industrial activities in investment in capital goods to facilitate industrial development, the provision would certainly bear the meaning we have attributed to it."
19. Learned counsel for the Revenue also relies on S. 32A sub-s. (5)(a) and contends that since the plant or machinery in the present cases has been leased out by the assessee, it is hit by the above said provision in view of the fact that the terms otherwise transferred found therein would include such lease. So; according to him, the said allowance "shall be deemed to have been wrongly made". But, we are unable to accept this contention also. First of all, even on the footing that the term otherwise transferred would include such "lease" as given in the present cases, the said provision will not disentitle the assessees herein from securing investment allowance, since the said provision only speaks of machinery or plant transferred by the assessee "at any time before the expiry of eight years from the end of the previous year in which it was acquired or installed". In all the present cases, admittedly the leases were only during the previous year in which the plant or machinery was acquired and not in the abovereferred to eight year-period beginning from the end of the previous year.
20. Further, learned counsel for the assessee points out that the Tribunal itself has found that the above said lease transaction by the assessees will not actually come under the terms otherwise transferred found in S. 32A sub-s. (5) taking into account the definition of the term transfer under S. 2 cl. (47) of the Act. The Special Bench of the Tribunal which decided the ITA No. 1951 of 1983 out of whose order arose the above said Tax Case Nos. 491 and 492 of 1986, has held in its impugned order dt. 8th May, 1985 thus :
"A perusal of the hire agreement shows that the ownership of the assets, which are leased out, vests only in the assessee. We are unable to hold, therefore, that there is extinguishment of any right when the assets are hired out, and only the benefit of user is obtained by the person who takes out the assets on hire. The assets cannot, therefore, be considered on being hired out, though the expression "lease" is used in the agreement, as having been otherwise transferred. The provisions of S. 32A(5) are also not attracted merely because the assets are leased out and no mistake would have been committed in granting investment allowance."
So, according to the said counsel, we cannot normally go beyond the abovesaid factual finding that there was no extinguishment of any right of the assessees when the plant or machinery in question was hired out. There is force in this argument also. No doubt, a copy of the lease agreement entered into by one of the assessees viz., Sundaram Finance Limited was produced before us wherein we also find the following passage as one of the terms of the lease deed :
"The lessee acknowledges..... that it holds the equipment as a mere bailee of the lessor and that it shall not have any property right, title or interest in the equipment or any part thereof and shall at all times, protect and detent as bailee/licence of the equipment."
......."
21. No doubt, learned counsel for the Revenue drew our attention to Blue Bay Fisheries (P) Ltd. vs. CIT (1987) 166 ITR 1 (Ker), but that turned down on its own facts. There, trawler was leased out and the Court held that the agreement between the parties indicated that the transaction was a lease of the trawler in favour of the transferee and that for a period of ten months the trawler was to remain in the exclusive possession of the transferee and at the end of the period it was to be sold to it. We do not think that the said decision would apply to the facts of the present case.
22. Then, we now come to the aspect referred to in para 4B above, in relation to the question referred to us in Tax Case No. 1651 of 1986 viz., whether in respect of buldozer, the assessee therein could claim the above said allowance. According to learned counsel for the Revenue relying on the terminology used in S. 32A(2)(b)(iii) buldozer cannot be considered as a "machinery or plant installed ...... in any other industrial undertaking for the purpose of business of construction, manufacture or production of any article or thing....."
In this connection, the decision in CIT vs. N.C. Budharaja & Co. etc. (1993) 204 ITR 412 (SC) relied on. According to the above decision of the Supreme Court, the word article and thing are used inter-changeably in the said provision and these words in the above context in which they are used, cannot comprehend or take within its ambit a dam, a bridge, a building, a road, a canal and so on. The Supreme Court so held that the assessee in that case was not entitled to the allowance under S. 32A. Therefore, in view of this Supreme Court decision and also Builders Associations of India vs. Union of India & Ors. (1994) 209 ITR 877 (SC) which also reiterated the same principle, it has to be held that the assessee in this Tax Case No. 1651 of 1986, is not entitled to the abovesaid investment allowance under S. 32A in relation to its hiring of buldozer.
23. But, the learned counsel for assessee in this case argues that the abovesaid question does not at all arise out of the Tribunals order dt. 30th Aug., 1985, in ITA No. 2554 of 1984 out of TC No. 1651 of 1986 has arisen and, hence, this Court is not called upon to decide the question whether in respect of buldozer the abovesaid investment allowance could be claimed.
24. No doubt, we find in the abovesaid Tribunals order that the only discussion is virtually only the following :
"After due consideration and in view of the decision of the Tribunal in the case of Abcoy and the Special Bench decision in the case of First Leasing Co. cited supra (13 ITD : 23 TTJ 469) we uphold the order of the CIT(A)."
So it follows that the Tribunal has not actually considered the abovesaid question whether with reference to buldozer as such, the abovesaid investment allowance could be claimed. But, as pointed out by learned counsel for the Revenue, in VR. C.RM. Adaikkappa Chettiar vs. CIT (1970) 78 ITR 285 (Mad) at page 297, relying on CIT vs. Scindia Steam Navigation Co. Ltd. (1961) 42 ITR 589 (SC), inter alia, it has been held that when a question of law is raised before the Tribunal, but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it and is, therefore, one arising out of its order. In this case, the question of law whether the allowance under S. 32A could be granted to the assessee was squarely before the Tribunal but, the Tribunal did not actually consider one aspect of it in the light of one of the statutory conditions prescribed in S. 32A(2)(b)(iii) of the Act, in relation to the buldozer hired out by the assessee. So as per the above said decision of the Supreme Court that aspect must be deemed to have been dealt with by the Tribunal and, therefore, it is one arising out of its order.
25. The net result is, in TC Nos. 491 and 492 of 1986, the second question referred to us both in relation to investment allowance under S. 32A as well as initial depreciation under S. 32(1)(vi) is answered in the affirmative and against the Revenue. Insofar as the first question referred to us in both the said tax cases, in view of what is stated in para 7 above, it is held that there is no necessity to answer this first question and the said first question is returned unanswered accordingly.
26. Insofar as TC No. 786 of 1986, the question referred to us is answered in the negative and against the Revenue.
27. Insofar as TC No. 1651 of 1986 taking into account only the above referred to subsidiary question whether with reference to the bulldozer the assessee is entitled to the allowance under S. 32A, the question referred to us is answered in favour of the Revenue.
28. Insofar as TC Nos. 1242 and 1243 of 1991 the question referred to us is answered in the affirmative and against the Revenue. No costs.