Law:

Section:

Section 32A of the Income-tax Act, 1961 - Investment allowance - Allowability of - Assessment years 1980-81 and 1981-82 - Whether assessee engaged in business of undertaking building contracts is an industrial undertaking within meaning of section 32A(2)(b)(iii) so as to be entitled to investment allowance -Held, yes FACTS The assessee was engaged in the business of undertaking building contracts. During the previous years relevant to the assessment years 1980-81 and 1981-82 the assessee acquired plant and machinery and claimed investment allowance. The ITO denied this relief holding (i) that the machinery had not been installed in an 'industrial undertaking' for the purpose of business of construction, manufacture or production of any article or thing since the business of the assessee was undertaking business of contracts only which could not be considered as an industrial undertaking, and (ii) that the assessee was only carrying on contracts for others. On appeal, the Commissioner (Appeals) held that the assessee was entitled to investment allowance. The Tribunal found that the assessee was engaged in the production of reinforced concrete slabs, etc., which were used for construction of tunnels, dams, etc., and, therefore, the entire activity amounted to manufacture and processing of various materials to be used in construction activities. The Tribunal held that the assessee was engaged in the manufacture and processing of goods and, as such, was an industrial undertaking entitled to investment allowance. On reference: HELD The Tribunal had entered a finding that the entire activities of the assessee were manufacturing and processing of various materials to be used in the construction activities and, therefore, the assessee was engaged mainly in the manufacture and processing of goods and as such an 'industrial undertaking'. Since the finding of the Tribunal had not been challenged expressly in the reference, it was not open to the revenue to contend that the assessee-company was not an industrial undertaking. In the light of the finding of fact entered into by the Tribunal, the only course open was to answer the question referred to this Court in the…

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