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TMI Blog1986 (7) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance and had also treated the assessee-company as an 'industrial company' within the meaning of the relevant Finance Act and had applied the rate of tax at 60 per cent, which was prescribed for and appliacble to 'industrial company' as against the rate of tax at 65 per cent prescribed for those companeis, which were not industrial companies. In his order under section 263, the Commissiner held that the finding of that ITO that the assessee-company was an industrial company and further that the assessee-company was entitled to investment allowance were erroneous and were also prejudicial to the interests of the revenue. He, accordingly, directed the ITO to withdraw the investment allowance which had been allowed in the assessment orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial to the interests of the revenue, and, as such, powers under section 263 could not have been exercised. The learned departmental representative, on the other hand, has relied on the reasons given in the order of the Commissisoner in support of his submission that the investment allowance had been wrongly allowed in the original assessment order and that the assessee-company had been wrongly treated as an industrial company in the said order and, as such, the Commissioner was justified in revising the said order. As regards, the additional grounds for the assessment year 1978-79 raised by the assessee, the learned departmental representative submitted that since the items relating to investment allowance and treating of the assessee-com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion is Progressive Engg. Co. v. ITO [1983] 3 ITD 172 (Hyd.). In that case also it was held that investment allowance was allowable. The latest decision is in Shah Construction Co. Ltd. v. ITO [IT Appeal NO. 3665 (Bom.) of 1983, dated 19-7-1985]. In that decision all the cases including several decisions of the Bombay High Court which had been relied on by the learned departmental representative for the submissions before us were duly considered and it was held that construction company was entitled to investment allowance. The reason given was that they are in the definition of industrial company the words are 'construction of ship' while in sub-clause (iii) of section 32A(2)(b) the expression is 'construction of an article or thing, not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the company carrying on the business of construction of buildings came within the definition of 'industrial company' was duly considered by the Bombay High Court in CIT v. N.U.C. (P.) Ltd. [1980] 126 ITR 377 and it was held that such company did not fall within the definition of an 'industrial company' as given in the relevant Fianance Act. It is true that some other High Courts had taken slightly different view. However, we are bound by the decision of the Bombay High Court. The assessee had submitted before the Commissioner that the decision of the Bombay High Court was wrong and that there was contrary decision of the Calcutta High Court in National Planning Construction Ltd. v. CIT [1980] 122 ITR 197. He had also cited the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly, the assessee-company did not come within the definition of industrial company. The Commissioner was, therefore, justified in holding that the assessee company was not entitled to be treated as an industrial company for the purpose of concessional rate of tax. In view of the above findings recorded by us, the appeal for the assessment year 1980-81 is liable to be partly allowed. However, as far as the appeal for the assessment year 1979-80 is concerned that appeal is liable to be allowed in spite of the above findings. This is because of the following facts. In that assessment year the net income computed in accordance with the Act before deduction under Chapter VIA of the Act came to Rs. 1,71,68,541. This figure was arrived at after de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner would have no jurisdiction under section 263 when the Commissioner (Appeals) had decided the appeal against the assessment order prior to the exercise of that power, although in the appeal before the Commissioner (Appeals), there was no decision on the items sought to be revised. This decision was based on the principle that the jurisdiction of the AAC/ Commissioner (Appeals) was co-extensive with that of the ITO and that the whole assessment order merged with the order of the AAC/ Commissioner (Appeals) as the case may be. The learned departmental representative relied on the decision of the Bombay High Court in CIT v. Sakseria Cotton Mills Ltd. [1980] 124 ITR 570, but that decision has been duly considered in the decision of the Spe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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