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1997 DIGILAW 1550 (MAD)

Commissioner of Income Tax v. V. Ganesan

1997-12-23

N.V.BALASUBRAMANIAN, P.THANGAVEL

body1997
Judgment :- N. V. BALASUBRAMANIAN, J. At the instance of the Department, the Appellate Tribunal has referred the following question of law for our opinion under section 256(1) of the Income-tax Act, 1961, for the assessment year 1980-81. "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the assessee is entitled to the investment allowance ?" The assessee an individual, takes contracts for construction of buildings for different parties. During the assessment proceeding, for the assessment year 1980-81, the assessee claimed investment allowance on 14 different items which are listed as under 1. Centering sheet 2. Red cutting machine, R. M. Brand hand lever shearing machine with handle 3. Ramming machine 4. Ramming machine 5. Ramming machine 6. Double folding prestke 7. Vibrator 8. Concrete mixer 9. Acrow from fitting 10. Acrow from fitting 11. Swivel coupler (scaffolding unit) 12. Acrow scaffolding unit 13. Acrow scaffolding unit 14. Levelling instrument The aggregate value of all the items came to Rs. 1, 23, 019 and the Income-tax Officer rejected the claim of the assessee for investment allowance under section 32A of the Income-tax Act (hereinafter referred to as the "Act"), on the ground that the assessee was not engaged in the manufacture or production of any article or thing specified under section 32A of the Act. The Commissioner of Income-tax (Appeals), following the decision of the Orissa High Court in CIT v. N. C. Budharaja and Co. and the decision of the Bombay High Court in the case of CIT v. Pressure Piling Co. (India) Pvt. Ltd. held that the assessee was entitled to the grant of investment allowance. The above view of the Income-tax Commissioner (Appeals) was coin firmed by the Income-tax Appellate Tribunal on an appeal preferred by the RevenueThe order of the Appellate Tribunal is the subject matter of the present tax case reference Mr. C. V. Rajan, learned counsel for the Revenue, submitted that the issue raised in the question is squarely covered by the decisions of the Supreme Court in the case of CIT v. N. C. Budharaja and Co. and in the case of Builders Association of India v. Union of India. Mr. C. V. Rajan, learned counsel for the Revenue, submitted that the issue raised in the question is squarely covered by the decisions of the Supreme Court in the case of CIT v. N. C. Budharaja and Co. and in the case of Builders Association of India v. Union of India. Mr. P. P. S. Janarthana Raja, learned counsel for the assessee, submitted that the assessee was manufacturing certain articles incidental to the construction of the buildings and to that extent, the assessee is entitled to the grant of investment allowance. We have carefully considered the submissions of learned counsel for both sides The Supreme Court in the case of CIT v. N. C. Budharaja and Co. clearly held that the assessee constructing buildings is not entitled to investment allowance under section 32A of the Act as the said provision did not comprehend within its ambit construction of a dam, a bridge, a building, a road, a canal and other similar constructions Admittedly, the assessee is a contractor engaged in the construction of the building. On the basis of the decision of the Supreme Court in N. C. Budharaja's case the assessee is not entitled to claim investment allowance. The above decision of the Supreme Court in N. C. Budharaja's case was considered again by the Supreme Court in Builders Association of India v. Union of India and the Supreme Court held therein that there was no need to reconsider its earlier decision and thus reaffirmed the earlier view We are of the opinion that the Tribunal was not correct in holding that the assessee is entitled to investment allowance under section 32A of the ActMr. P. P. S. Janarthana Raja, learned counsel for the assessee, submitted that the assessee bid manufactured certain articles and to that extent the assessee should be regarded as an industrial undertaking. But we are unable to accept the contention of the assessee as no such case was put forward before the Appellate Tribunal on behalf of the assessee and there is no such finding recorded by the Appellate Tribunal that the assessee was manufacturing certain articles. Further from the decision of the Supreme Court in N. C. Budharaja's case it is clear that where an assessee manufactured certain articles incidentally for the construction of the building, the assessee is not entitled to investment allowance under section 32A of the Act. Further from the decision of the Supreme Court in N. C. Budharaja's case it is clear that where an assessee manufactured certain articles incidentally for the construction of the building, the assessee is not entitled to investment allowance under section 32A of the Act. Further the Appellate Tribunal has also not recorded its finding that the assessee was manufacturing certain articles independent of the construction business activities carried on by the assessee. The Tribunal referred to its earlier order in Progressive Engineering Co. v. ITO 3 ITD 172. But it cannot be assumed that the facts in the case of Progressive Engineering Co. v. ITO (3 ITD 172), were similar to the present case as well, Since there is no finding of the Appellate Tribunal that the assessee was manufacturing certain articles independently, we are of the view that it is not permissible for the assessee to raise such contention that the assessee was manufacturing certain articles independent of the business activity carried on by the assessee. Accordingly, we hold that the Tribunal was not correct in holding that the assessee is entitled to investment allowance under section 32A of the Act We answer the question of law referred to us in the negative and in favour of the Revenue. No costs.