1984-VIL-63-ITAT-PNE

Equivalent Citation: TTJ 020, 273,

Income Tax Appellate Tribunal PUNE

Date: 17.04.1984

RATILAL BHAGWANDAS & ASSOCIATES.

Vs

INCOME TAX OFFICER.

BENCH

Member(s)  : T. A. BUKTE., KANWAL KRISHAN.

JUDGMENT

This appeal is filed by the assessee against the order of the CIT dt. 24th Feb., 1983 passed under s. 263 of the IT Act 1961. The CIT came to the conclusion that the assessee firm is not a manufacturer or a processor. It is submitted on behalf of the assessee that the assessee has fulfilled the conditions laid down under s. 32A(b) (ii) or (iii) of the Act and the order passed by the CIT is bad in law for withdrawing the investment allowance of Rs. 7,628.

2. The assessee firm is engaged in carrying out contracts of different parties. It carries on business of civil construction. The ITO allowed investment allowance under s. 32A(b) of the Act. Sec. 32(b) (iii) reads as follows:

"If any assessee is engaged in carrying on construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule."

The Pune bench of the Tribunal has held in the case of XYZ Builders vs. ITO in I.T.A. Nos. 388 & 389/PN/1980 for the asst. yrs. 1977-78 and 1978-79 particularly in respect of investment allowance for the asst. yr. 1978-79 that the assessee is entitled to investment allowance under s. 32A(2) of the Act and held the category of business of construction, manufacture or production of any articles or thing. The Tribunal has considered in the cases of CIT vs. Pressure Piling Co. (India) P. Ltd. (1980) 126 ITR 333 (Bom), CIT vs. Tata Hydro Electric Power Supply Co. Ltd. (1980) 122 ITR 288 (Bom) and CIT vs. N.C. Budharaja & Co. 1980 121 ITR 212 (Ori) on the point of construction of a building holding to be a plant and an article. The assessee's claim is squarely covered by that decision of the Tribunal.

Amendment to s. 32A(2) came into force from 1978-79. The Orissa High Court in (1980) 121 ITR 212 (Ori) held that articles constructed must be immovable property. The full Bench of the Tribunal, Delhi, has held in the case of ITO vs. H. Constructions P. Ltd. (1983) 6 ITD 575 (Del) (FB) that the assessee company having its main business of carrying out of civil construction work like Tunnel Power House, etc., can be treated as industrial company if on facts it is found out that the company is engaged in manufacturing or processing of goods. It has further held that the assessee company is entitled for investment allowance under s. 32A for the asst. yr. 1978-79 only as all other conditions laid down in that section are satisfied. The Bangalore Bench also held similar view in Naveen Mechanised Construction Co. (P) Ltd. vs. First ITO (1983) 3 ITD 456 (Bang).

3. The ld. departmental representative, Shri K. Srinivasan, has relied upon the judgment of the Bombay High Court in the case of CIT, Bombay City-I vs. N.U.C. Private Ltd. (1980) 126 ITR 377 (Bom). The Tribunal had held in that case that the manufacture of windows and door frames and concrete slabs and beams was directly related to the actual business of the company i.e., of production and construction of buildings and the assessee was an industrial company within the meaning of s. 2(7)(d) of the Finance Act, 1966. In reference the High Court has held that the Tribunal was, therefore, erroneous in its conclusion that the assessee-company fell within the definition of an ‘industrial company' as given in s. 2(7)(d) of the Finance Act, 1966. Amendment to s. 32A(2) applies from the asst. yr. 1978-79.

4. We have considered the point of industrial undertaking as well as manufacture or production of an article or thing in detail in I.T.A. No. 611/PN/1982. By following the said decision the view taken by the CIT does not appear correct and hence the order of the CIT requires to be reversed. In the result, the assessee succeeds and the appeal is allowed.

 

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