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TMI Blog1989 (9) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 32A(2) does not refer to construction work and on all the above grounds he dismissed the claim of investment allowance to the assessee and added Rs. 20,441 to the returned income. Incidentally it may be mentioned that the Income-tax Officer did not allow depreciation on the written down value of centering sheets, maintaining that they cannot be considered as plant or machinery, furniture or fittings. They have to be treated only as capital assets. No depreciation is provided for in the depreciation schedule in the Income-tax Rules for centering sheets and hence he disallowed the depreciation of Rs. 10,233. 2. Aggrieved against the refusal to grant investment allowance as well as depreciation the assessee went in appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner, following the order of the C-Bench of this Tribunal in ITO v. V. Ganesan [IT Appeal No. 392 (Mad.) of 1985 dated 11-12-1985] allowed the appeal and granted investment allowance. In the order of the Tribunal referred to in the impugned order of the Appellate Assistant Commissioner the Tribunal took the view that construction amounts to an industrial undertaking. The Appellate As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early distinguishable since in that decision the assessment years involved were 1971-72 and 1972-73. The point involved in the reference before the Delhi High Court in that case was whether the assessee was an 'industrial company' within the meaning of section 2(6)(c) of the Finance (No.2) Act, 1971 and the Finance Act, 1972. However, in the case before us firstly we need not consider whether the assessee is an industrial company or not within the meaning of the Finance Act of the relevant year. Even assuming that such a consideration is necessary, the definition of the words 'industrial undertaking' underwent a change under the Finance Act, 1983 which came into force from 1-4-1983 and it is clearly applicable to the facts of this case, The words 'industrial company' was defined in the Explanation given under Paragraph E of Part II of the First Schedule under the Finance Act, 1983. The Explanation as well as the note thereunder are as follows : "Explanation : For the purposes of this Paragraph, 'Industrial company' means a company which is mainly engaged in the business of generation or distribution of electricity or any other form of power or carriage, by road or inland waterways, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person engaged in the construction of building, road, dam or other structure would become an industrial undertaking within the meaning of Finance Act, 1983. This position would be fortified by the Special Bench decision on which reliance is sought to be placed by the Revenue itself, the ratio of which is extracted above. The learned counsel contended that either the case of the assessee falls under section 32A(2) or 32A(2A) the assessee should be granted investment allowance. Under section 32A(2) the assessee should fulfil the requirements of sub-section (b)(iii) which is as follows : "(b) any new machinery of plant installed after the 31st day of March, 1976, (iii) in any other industrial undertaking for the purpose of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule." Sub-section (2A) of section 32A is as follows : "The deduction under sub-section (1) shall not be denied in respect of any machinery or plant installed and used mainly for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of a building it should be considered as an 'industrial company' within the meaning of Finance Act, 1983. Even assuming that the word 'industrial undertaking' which we come across in section 32A(2), is to be understood in the same manner in which an industrial company under the Finance Act, 1983 should be understood, the assessee fulfils the requirements of such 'industrial company' and the finding of the Income-tax Officer that the assessee is not an 'industrial undertaking' cannot be upheld. According to me during the course of business the assessee manufactures things like concrete mixture and assembles doors, windows and concrete slabs, etc. and constructs houses. Therefore the end-product of all the activities of the assessee is either the construction of house or a dam or a bridge or like construction. I hold that the assessee would be manufacturing goods or articles like the cement concrete slabs which do not come under the Eleventh Schedule. Therefore in my view the assessee is entitled to investment allowance both under the provisions of section 32A(2) and section 32A(2A) of the Income-tax Act, the provisions of which are already extracted above. Further in my ..... X X X X Extracts X X X X X X X X Extracts X X X X
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