K. Shivashankar Bhat, J.—The following question has been referred to us for consideration under the provisions of the Income Tax Act, 1961 :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the order of the Commissioner of Income Tax (Appeals) that the internal telephone system should be considered as 'plant' of the assessee's factory and investment allowance has to be granted ?"

2. The assessee is engaged in the manufacture of electronic equipment. It has an internal telephone system with about 20 lines. This installation is claimed to be a plant and investment allowance was claimed by the assessee. However, the original authority did not grant the allowance but, on appeal, the same was granted by the Commissioner (Appeals). This order of the first appellate authority was affirmed by the Appellate Tribunal. Hence, this reference at the instance of the Revenue.

3. The question arose under section 32A of the Income Tax Act. As per this section :

Section 32A. - (1) In respect of a ship or an aircraft or machinery or plant specified in sub-section (2), which is owned by the assessee and is wholly used for the pu