Commissioner of Income Tax vs Bakhtawar Singh Balkishan Bhilai

A.K. Mathur, C.J

This is a reference u/s 256(1) of the Income Tax Act, 1961, at the instance of the Revenue and the following question of law has been referred by the Tribunal for answer by this court :

"Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was an industrial undertaking and was entitled to relief u/s 32A of the Income Tax Act ?"

The brief facts of the case are that the assessee is a registered firm engaged in the business of construction of industrial foundations, public buildings and housing complexes for steel plants and thermal power plants. The assessee claimed relief of investment allowance under Sections 32A and 80HH of the Act. The Assessing Officer has disallowed the claim of the assessee for earlier assessment years.

Against this decision of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) and the same was allowed. Thereafter the Department approached the Tribunal against the order of the Commissioner of Income Tax (Appeals). The Tribunal dismissed the appeal of the Department. Hence, the Department approached the Tribunal for referring the question before this court and accordingly the reference has been made before this court.

It is pointed out by learned counsel for the assessee that the assessee is not only involved in construction of buildings, housing complexes, etc., but sometimes the assessee is also engaged in the business of manufacture and supply of plant and equipment in the nature of ash handling and oil extraction system for thermal power plant and steel plant.

Shri Tankha, learned counsel for the petitioner, has submitted that so far as the construction work is concerned, this will not come in the scope of industrial undertaking because of the decision given by their Lordships of the Supreme Court in the case of Commissioner of Income Tax, Orissa and Others Vs. N.C. Budharaja and Company and Others, . Therefore, the order of the Tribunal to this extent is not correct. The contention of Shri Tankha is justified, as their Lordships of the Supreme Court in the aforesaid case have already taken the view that civil construction does not involve any manufacturing activity. Therefore, it is not an industrial undertaking and to that extent, the order of the Tribunal is not justified.

Hence, in the light of the aforesaid decision of the Supreme Court, we answer this reference in favour of the Revenue.

So far as the other part of the question is concerned, it is for the Tribunal to consider whether it is manufacturing activity or not.

The reference is accordingly disposed of.