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TMI Blog2010 (7) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... egitimate claim, claim of the assessee for depreciation on foreign cars used at foreign sites for its business is clearly admissible. decision against the revenue and in favour of the assessee Whether Tribunal was right in law holding the construction business as industrial undertaking and allowing deductions u/s 80J & 80-HH when the different courts have held contrary to that – Held that:- activity of the assessee, as already mentioned above, is construction and fabrication of mechanized houses, which cannot be equated to manufacture and production of articles or things, questions referred have to be answered in favour of the revenue and against the assessee. The assessee was not entitled to deduction under Sections 80J and 80HH of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is carrying on the business of construction and fabrication of mechanized houses in foreign countries. It used vehicles in foreign countries for transporting its employees or for procuring material and claimed depreciation on the use of said vehicles. The Assessing Officer disallowed the said claim relying upon second proviso to Section 32(1)(ii) of the Act, which is to the following effect:- "Provided further that no deduction shall be allowed under this clause or clause (iii) in respect of any motor car manufactured outside India, where such motor car is acquired by the assessee after the 28th day of February, 1975, and is used otherwise than in a business of running it on hire for tourists;" 3. The order passed by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me has to be slightly strained. In our opinion, user of cars of foreign make abroad for business purposes, would not involve any expenditure which could be termed as ostentatious of extravagant. We, therefore, hold that the assessee was entitled to depreciation on cars of foreign make used abroad for business purposes. This ground, therefore, succeeds." 4. The Assessing Officer also disallowed claim for depreciation by not treating the undertaking of the assessee to be 'industrial undertaking'. The assessee also claimed deduction under Section 80-J of the Act in respect of profits and gains from newly established industrial undertakings. The Assessing Officer disallowed the said claim on the ground that a company engaged in construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be held to be referable to cars imported and used in India and should not apply to cars used for business outside India when income was generated from the business activities outside India, as has been held by the Tribunal in the finding recorded above. 9. Learned counsel for the revenue submitted that on a literal interpretation of the second proviso to Section 32(1)(ii) of the Act, depreciation could not be allowed on imported cars. 10. On consideration of rival submissions, we are unable to accept the view put forward by learned counsel for the revenue. The speech of the Finance Minister clearly shows the purpose of exclusion by way of proviso of claims for depreciation of imported cars incorporated by the second proviso t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed building. To says that all of them fall within the meaning of the word "Articles" is to overstrain the language beyond its normal and ordinary meaning. It is equally difficult to say that the process of constructing a dam is a process of manufacture or a process of production. It is true that a dam is a process of manufacture or a process of production. It is true that a dam is composed of several articles; it is composed of stones, concrete, cement, steel and other manufactured articles like gates, sluices etc. But to say that the end product, the dam, is an article is to be unfaithful to the normal connotation of the word. A dam is constructed; it is not manufactured or produced. The expressions "manufacture" and "produce" are normally ..... X X X X Extracts X X X X X X X X Extracts X X X X
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