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TMI Blog1982 (8) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... onductor system, (2) constructing tunnels, and (3) construction of exit channels. In respect of the machinery and plant installed after 31-3-1976, the assessee claimed investment allowance amounting to Rs. 6,66,666 and Rs. 1,06,348 under section 32A of the Act for the assessment years 1979-80 and 1980-81 respectively. The ITO allowed the investment allowance claimed. The Commissioner issued notice under section 263 proposing to withdraw the investment allowance allowed by the ITO in these two years as he was of the view that the orders of the ITO are erroneous and prejudicial to the interests of revenue. The assessee filed a written explanation objecting to the proposed action under section 263. After considering the objections, the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd those found in the order of the Commissioner are different and so, on that ground itself the order of the Commissioner has to be cancelled. Further, the Commissioner has not discharged the burden as to whether the order of the ITO is erroneous. The Commissioner was also not justified in setting aside the assessment orders as a whole. 4. The learned departmental representative strongly supported the order of the Commissioner. He submitted that there should be an article or thing which is ultimately manufactured or produced in these years for getting the relief under section 32A. In the instant case that has not been satisfied as the assessee has not constructed the entire dam or any other work and there is no end-product. It is not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head 'Profits and gains of business or profession' of any one previous year. (2) The ship or aircraft or machinery or plant referred to in sub-section (1) shall be the following namely :-- (b) any new machinery or plant installed after the 31st day of March, 1976-- (i) for the purposes of business of generation or distribution of electricity or any other form of power ; or (ii) in a small-scale industrial undertaking for the purposes of business of manufacture or production of any article or thing ; or (iii) in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... water conductor system, tunnel and exit channel would amount to construction of thing within the meaning of the above clause and can be considered as an industrial undertaking. Thus, the assessee has satisfied the conditions under section 32A and is entitled to the investment allowance. 6. In Abcoy v. Second ITO to which one of us (the learned Accountant Member) was a party had considered the provisions of section 32A. In para 5 it was held as under : ". . . We are of the view that the word 'construction' cannot be limited in such a way as to qualify only ships or boilers or such other things. 'Thing' is a word which is very wide in its meaning. No doubt, the learned departmental representative has confronted us with a decision of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratio squarely applies to the instant case. 8. In CIT v. M. R. Gopal [1965] 58 ITR 598, the Madras High Court held that process employed by the assessee in converting the boulders into small stones with the aid of machinery is a manufacturing process and the undertaking of the assessee is an industrial undertaking. 9. In CIT v. Pressure Piling Co. (India) (P.) Ltd. [1980] 126 ITR 333, the Bombay High Court held that the end-product of the piling process which had independent existence is an article for the purpose of section 84(2)(iii) of the Act. 10. In National Projects Construction Corporation Ltd. v. CWT [1979] 74 ITR 465, the assessee was engaged in the construction of dams, barrages, etc. The assessee had large workshops at work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said that the assessee is not engaged in manufacturing or processing of goods. Thus, it was held that the assessee was engaged in the manufacture, production or processing of goods or articles within the Explanation to section 45(d) and, therefore, qualified for the exemption. 11. The ratio laid down in the above case squarely applies to the instant case. In the instant case, the construction of tunnel, exit channel and additional water conductor system would amount to construction of a thing for the purpose of clause (iii) of sub-section (2)(b) of section 32A. Merely, because the items manufactured by the assessee are used in its own business, the claim cannot be disallowed as there is no such restriction prescribed in section 32A. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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