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TMI Blog1990 (4) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the previous year ended 30th September, 1980, corresponding to the assessment year 1981-82, the Income-tax Officer granted deductions under section 80J as well as investment allowance under section 32A subject to creation of reserve. 3. For the assessment year 1982-83, the Income-tax Officer rejected the claim for investment allowance but treated the assessee as an industrial company under the Finance Act for the purpose of levying tax at a concessional rate. 4. The Commissioner of Income-tax on a review of the aforesaid assessments held that the assessee was not entitled to investment allowance under section 32A and deduction under section 80J as well as concessional rate of tax for the assessment year 1981-82 and should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly of repair to ships the assessee was not entitled to the deduction. However, we find that this objection has no basis because in terms of the provisions of section 80J the main section does not refer to the business of an industrial undertaking but only to the profits and gains derived from an industrial undertaking. Secondly, the condition in sub-section (4) again refers to manufacturing process carried on with the aid of power and employing ten or more workers. This condition is identical to the condition given in the definition of a factory in section 2(m) of the Factories Act and admittedly the assessee has satisfied this condition and has obtained the factory licence. Moreover, the objection that the articles produced were not meant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the capital employed in the industrial undertaking had been separately computed and the profits and gains of the industrial undertaking could be separately deduced and, in fact, the Income-tax Officer is empowered to compute such profits and gains on a reasonable basis even if the profits are derived from captive industrial undertaking whose products are used in the composite business of the assessee. In the circumstances, we are satisfied that the assessee was rightly granted deduction under section 80J and we, therefore, cancel the finding in the order made under section 263 withdrawing the deduction granting under section 80J. 7. Coming to the treatment of the assessee as an industrial undertaking within the meaning of the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee could be said to be mainly engaged in the activity of manufacture or processing of goods so as to be treated as an industrial company for the purpose of concessional rate of tax. 8. We now come to the claim of the assessee under sec. 32A. That section, however, is worded differently. There is no definition of an industrial company in this section. Section 32A merely states that the allowance is available for machinery installed after 31-3-1976 in an industrial undertaking for the purpose of business of manufacture or production of any article or thing. 9. The first contention of the revenue is that the main business of the assessee is that of repairing ships and such a business will not fall within scope of this section whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tractor and in the process of that work manufactures doors and windows etc. could not be considered eligible for the investment allowance under section 32A. A comparison of the wording of this section with those sections 80J and 80HH as well as the definition of ' industrial company ' in the Finance Act shows that this section 32A does not incorporate the defintion of a factory as in 80J or provide for the bifurcation of the industrial undertaking in the case of a captive unit where the business of the assessee is a composite business. It is also significant that this section does not refer to an assessee who is mainly engaged in the manufacture of articles as in the definition of an industrial company in the Finance Act. Therefore, a readi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Finance Act provides for a concessional rate of tax on the total income of the assessee if it is mainly engaged in industrial activity. But section 32A grants an allowance in computing the profits of the business as such. Hence unless the business itself is an industrial undertaking this section will not be attracted. 13. A purposeful construction of this section shows that the investment allowance is only in respect of the business as such and not for any activity carried on in the course of that business as held by the Delhi High Court in the case of Minocha Bros. (P.) Ltd. In the circumstances, we have to reject the claim of the assessee for investment allowance and uphold the findings of the Commissioner on this aspect. 14. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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