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TMI Blog1979 (1) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... hence was entitled to relief under section 84(1) of the Income-tax Act, 1961, for the assessment year 1963-64, and relief under section 84(1) and section 101 for the assessment year 1964-65 ? " The assessee is a private limited company doing the business of laying foundations of buildings by a specialised patented method known as " pressure piling ". The process has been described as follows in the statement of case. "Pressure piles are cast in site and piles are formed in bore holes previously excavated by suitable boring plant at each pile position. The borings are sunk to suitable bearing stratum and concrete is then introduced into the holes under applied air pressure. This, when set, forms permanent pile giving a very high surfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the business of the assessee, the assessee-company qualified for relief under s. 84 of the Act to the extent of 6 per cent. of the capital employed in its industrial undertaking for both the years. The ITO took the view that the assessee had not satisfied the condition laid down in s. 84(2)(iii) and was, therefore, not entitled to relief under s. 84. Appeals filed by the assessee company before the AAC against the orders of the ITO also came to be rejected. The AAC took the view that the pile was in fact a concrete structure built into the ground and once it is built into the ground, it cannot normally be taken out unless it is dug out of the ground. Therefore, according to the AAC, the assessee-company could not be said to be engaged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... built on it. It is neither removable nor saleable as a commodity. It is not an article produced either by physical labour or by mechanical means. " Thus, according to the judicial Member, pressure piling was only construction work undertaken by the assessee-company and the company was not, therefore, manufacturing or producing articles so as to qualify for relief under s. 84 of the Act. In view of this difference of opinion, the matter had been referred to a third Member of the Tribunal. The third Member took the view that the mere fact that the assessee carried out manufacturing activities at the site did not take away from its business the character of manufacturer or a producer of cement concrete piles and that since the assessee-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery or plant previously used for any purpose : (iii) it has begun or begins to manufacture or produce articles in any part of India at any time within a period of eighteen years from the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking ...... " Thus, s. 84(1) provides that the profits or gains of an industrial undertaking to which that section applies are not subject to income-tax to the extent of six per cent. per annum on the capital employed in the undertaking or hotel. What industrial undertaking can avail of this facility or concession is specified in sub-s. (2) which deals with the conditions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essure piling can be said to be an article. Mr. Joshi supported the view taken by the judicial Member of the Tribunal and, according to Mr. Joshi, unless a thing can be sold or supplied, it cannot be classified as an article and, in the instant case, the process of piling is in essence a part of the building activity. According to him, it is a part and parcel of the activity of construction or raising building because the work of piling is done at the site itself. Now, it is difficult to see how the mere fact that an article is manufactured or brought into being at a particular site would be material for determining whether the thing produced or manufactured is an article. It is not necessary that an article should be manufactured in a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is in the form of the piles, gets attached to the superstructure and becomes part of the entire building., This fact would, however, not be material because the point of time with reference to which the applicability of s. 84 will have to be considered, is when the article is brought into being as product of the piling process. Though ultimately the piles become a part of the building, that does not detract from the fact that before the super-structure was constructed, a pile is an independent product as such. It is difficult, therefore, to see how the product which ultimately results from the piling process cannot be said to be an independent article. It is also not necessary that all articles must necessarily have the quality or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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