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TMI Blog1990 (3) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... to bank, for issuing guarantee to its contractees. 2. Shri S.K. Mehta, the counsel of the assessee, submitted that, the assessee is a firm carrying on the activity of construction of buildings and that, in respect of its building construction activity, had lodged its claim u/s. 80-I before the ITO, but was denied the deduction on the reasoning that, construction activity could not be treated as an industrial activity. In appeal before the CIT(A), the assessee had laid emphasis on the words used in section 80-I, viz., manufacture or production of any article or thing and that building is very much an "article" or "thing", as it undergoes several processes, before getting to the final shape as a building. The learned CIT(A), however, did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicates the predominant activity and not one of the many activities, viz., construction activity. He then drew our attention to the decision of the Bombay High Court in CIT v. Pressure Piling Co. (I) (P.) Ltd. [1980] 126 ITR 333, in which case the nature of activity, viz., pressure piling operations for laying foundations for the construction of buildings carried on by that company was examined and it was observed that, the technique involved considerable specialisation, processes of concrete mixture being subjected to pressure along with iron bars at site, all indicated manufacturing operations, and a new and an independent product "pile" was brought into existence and hence the company was an industrial company. He then referred to the Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80-I and if it were so intended the Legislature would have specifically provided for their inclusion. 4. We have given our very careful consideration to the rival submissions and also to the decisions referred to above. The crux of the issue is whether the term "article or thing" as referred to in sec. 80-I could be said to include a building ? 4.1 Section 80-I states that, an assessee whose gross total income includes any profits and gains derived from an industrial undertaking, to which this section applies, then, in accordance with and subject to the provisions of this section, would be allowed in computing his total income, deduction from such profits and gains of the industrial undertaking of an amount equal to twenty per cent the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to being, to make, to bring about and the word "production" as the act of producing, that which is produced, product, bringing out, creation of values. Substituting the meaning of the various terms for the terms in the phrase used in the sub-section, it would read "make either by hand or by use of machinery or partly by hand and partly by the use of machinery, construct, bring into being, convert or turn, bring into any state or condition, produce, bring out, create of value, a particular object or an item or an inanimate object, which object, item, article, produce is not listed in the Eleventh Schedule". The article or thing must be other than those listed in the Eleventh Schedule. The term "other than" has been stated to mean different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible for the rebate under this section, the requirement is that, the manufactured or produced item, must be capable of being treated as an article or thing and the same should not be listed in the Eleventh Schedule. Since building is not included in the list specified in the Eleventh Schedule, we are of the view that, the construction of a building could be said to be manufacture or production of an article or thing and the claim of the assessee accordingly is justified. 4.2 The argument of the assessee that, the Finance Act, 1983, has included in the definition of "industrial company", execution of projects, which has been defined to include construction of buildings is also relevant even though, this definition occurs for purposes of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though the pressure piling resulted in laying of the foundation of buildings, but in view of the technology involved, etc., came to hold that, the activity was a manufacturing of an article. Therefore, these two judgments also support the claim of the assessee. The three Tribunal decisions relied upon by the assessee, were considering the granting of investment allowance, under sec. 32A of the Act, containing the words, "the business of construction", and have been used in conjunction with the words "article or thing". Though the words "the business of construction" is not contained in sec. 80-I, but having regard to the fact that the Tribunal Decisions have held that building is an article or thing, the absence of the words "the business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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