RATILAL BHAGWANDAS & ASSOCIATES v. INCOME TAX OFFICER
[Citation -1984-LL-0417-2]

Citation 1984-LL-0417-2
Appellant Name RATILAL BHAGWANDAS & ASSOCIATES
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 17/04/1984
Assessment Year 1980-81
Judgment View Judgment
Keyword Tags construction of a building • manufacture or production • business of construction • industrial undertaking • investment allowance • civil construction • industrial company • plant
Bot Summary: The CIT came to the conclusion that the assessee firm is not a manufacturer or a processor. It is submitted on behalf of the assessee that the assessee has fulfilled the conditions laid down under s. 32A(b) or of the Act and the order passed by the CIT is bad in law for withdrawing the investment allowance of Rs. 7,628. The assessee firm is engaged in carrying out contracts of different parties. 32(b) reads as follows: If any assessee is engaged in carrying on construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule. The assessee's claim is squarely covered by that decision of the Tribunal. The Tribunal had held in that case that the manufacture of windows and door frames and concrete slabs and beams was directly related to the actual business of the company i.e., of production and construction of buildings and the assessee was an industrial company within the meaning of s. 2(7)(d) of the Finance Act, 1966. In the result, the assessee succeeds and the appeal is allowed.


T.A. BUKTE, J.M. This appeal is filed by assessee against order of CIT dt. 24th Feb., 1983 passed under s. 263 of IT Act 1961. CIT came to conclusion that assessee firm is not manufacturer or processor. It is submitted on behalf of assessee that assessee has fulfilled conditions laid down under s. 32A(b) (ii) or (iii) of Act and order passed by CIT is bad in law for withdrawing investment allowance of Rs. 7,628. assessee firm is engaged in carrying out contracts of different parties. It carries on business of civil construction. ITO allowed investment allowance under s. 32A(b) of Act. Sec. 32(b) (iii) reads as follows: "If any assessee is engaged in carrying on construction, manufacture or production of any article or thing, not being article or thing specified in list in Eleventh Schedule." Pune bench of Tribunal has held in case of XYZ Builders vs. ITO in I.T.A. Nos. 388 & 389/PN/1980 for asst. yrs. 1977-78 and 1978-79 particularly in respect of investment allowance for asst. yr. 1978-79 that assessee is entitled to investment allowance under s. 32A(2) of Act and held category of business of construction, manufacture or production of any articles or thing. Tribunal has considered in cases of CIT vs. Pressure Piling Co. (India) P. Ltd. (1980) 126 ITR 333 (Bom), CIT vs. Tata Hydro Electric Power Supply Co. Ltd. (1980) 122 ITR 288 (Bom) and CIT vs. N.C. Budharaja & Co. 1980 121 ITR 212 (Ori) on point of construction of building holding to be plant and article. assessee's claim is squarely covered by that decision of Tribunal. Amendment to s. 32A(2) came into force from 1978-79. Orissa High Court in (1980) 121 ITR 212 (Ori) held that articles constructed must be immovable property. full Bench of Tribunal, Delhi, has held in case of ITO vs. H. Constructions P. Ltd. (1983) 6 ITD 575 (Del) (FB) that assessee company having its main business of carrying out of civil construction work like Tunnel Power House, etc., can be treated as industrial company if on facts it is found out that company is engaged in manufacturing or processing of goods. It has further held that assessee company is entitled for investment allowance under s. 32A for asst. yr. 1978-79 only as all other conditions laid down in that section are satisfied. Bangalore Bench also held similar view in Naveen Mechanised Construction Co. (P) Ltd. vs. First ITO (1983) 3 ITD 456 (Bang). ld. departmental representative, Shri K. Srinivasan, has relied upon judgment of Bombay High Court in case of CIT, Bombay City-I vs. N.U.C. Private Ltd. (1980) 126 ITR 377 (Bom). Tribunal had held in that case that manufacture of windows and door frames and concrete slabs and beams was directly related to actual business of company i.e., of production and construction of buildings and assessee was industrial company within meaning of s. 2(7)(d) of Finance Act, 1966. In reference High Court has held that Tribunal was, therefore, erroneous in its conclusion that assessee-company fell within definition of industrial company' as given in s. 2(7)(d) of Finance Act, 1966. Amendment to s. 32A(2) applies from asst. yr. 1978-79. We have considered point of industrial undertaking as well as manufacture or production of article or thing in detail in I.T.A. No. 611/PN/1982. By following said decision view taken by CIT does not appear correct and hence order of CIT requires to be reversed. In result, assessee succeeds and appeal is allowed. *** RATILAL BHAGWANDAS & ASSOCIATES v. INCOME TAX OFFICER
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