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Judgment
The Income Tax Appellate Tribunal, Allahabad has referred the following question of law u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act) for opinion to this Court:- Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in upholding the order of C.I.T. (Appeals) directing the I.T.O. to allow investment allowance u/s. 32A in respect of contract business?
The reference relates the assessment year 1981-82. Briefly stated the facts giving rise to the present reference are as follows.
The respondent assessee is engaged in the construction activities during the assessment year in question. It claimed deduction in the investment allowance u/s 32A amount to Rs. 55,57,143 for which reserve of Rs. 41,67,857 had been credited by debiting to the profit and loss account. The Assessing Officer disallowed the claim of investment allowance. However, in appeal, the CIT (Appeals) had allowed the claim which order has been affirmed by the Tribunal.
We have heard Shri R.K. Upadhay, learned Standing Counsel for the revenue. Nobody has appeared on behalf of the respondent assessee. We find that the Apex Court in the case of Commissioner of Income Tax, Orissa and Others Vs. N.C. Budharaja and Company and Others, has held that in the construction activities, no goods or things are produced, and therefore, persons engaged in construction activities are not entitled for investment allowance u/s 32A of the Act. Respectfully following the aforesaid decision, we are of the considered opinion that the respondent assessee was not entitled for allowance of investment allowance. The Tribunal has therefore, misdirected itself. We, accordingly, answer the question refer to us in the negative, i.e., in favour of the revenue and against the assessee.
There shall be order as to costs.