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Issues Involved:
- Interpretation of the claim for investment allowance under section 32A of the Income-tax Act, 1961 - Determination of whether the erection of a boiler constitutes a manufacturing activity as per the Act Analysis: The judgment addressed multiple reference applications concerning the allowance of investment allowance under section 32A of the Income-tax Act, 1961. The central issue revolved around whether the assessee, engaged in the erection of boilers, qualified for investment allowance based on the activity being classified as manufacturing. The Tribunal initially allowed the investment allowance, which was later challenged by the Commissioner of Income-tax under section 263 of the Act, leading to a series of appeals and references. The assessee contended that the erection of boilers amounted to manufacturing, justifying the claim for investment allowance. The Tribunal considered precedents and held in favor of the assessee, emphasizing the importance of the activity in question being classified as manufacturing under the Act. The Tribunal's decision was based on the understanding that the assembling of parts to create a new end-product could be considered manufacturing, citing relevant legal cases to support this interpretation. However, the Revenue argued against this classification, highlighting the distinction between mere erection and actual manufacturing activities. The Revenue emphasized the need for a clear definition of "manufacture or production" under the Act, urging a strict interpretation of the terms. The Revenue pointed out that the parts of the boiler were supplied by a holding company, and the mere assembly of these parts did not create a new distinct product in the market. Ultimately, the High Court examined the definitions and common understanding of relevant terms like "erection" and "manufacturing" to determine the nature of the activity undertaken by the assessee. The Court concluded that the erection of a boiler did not meet the criteria to be classified as manufacturing under section 32A of the Act. The Court differentiated between the assembly of parts and the creation of a new marketable product, emphasizing the lack of transformation into a distinct article or thing with a separate identity in the commercial market. In conclusion, the Court ruled in favor of the Revenue, denying the claim for investment allowance under section 32A for the assessee. The judgment underscored the importance of adhering to the common understanding of terms when interpreting legal provisions in the absence of specific definitions under the Act.
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