TMI Blog1989 (12) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... 3). However, the ITO re-opened the assessments under section 147(b) on the ground that investment allowance under section 32A was erroneously allowed to the assessees, that are partnership firms carrying on the business as building contractors. The assessees filed returns in pursuance of notice under section 148 and objected to the reopening of the assessments as well as the proposed withdrawal of investment allowance. However, the ITO framed the assessments enhancing the income of M/s. R.S. Avtar Singh Co. (Delhi) by Rs. 38,120 and that of M/s. R.S. Avtar Singh Co. by Rs. 47,131. These amounts represent investment allowance, that was allowed in the original assessments. 3. The assessees appealed to the CIT (Appeals), who vide identic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to sub-section (2) of section 32A. The assessee does not dispute that finding and, therefore, as a small-scale industrial undertaking the assessee has to be engaged in the business of manufacture or production of any article or thing. The learned CIT(A), on the other hand, has pressed into service sub-clause (iii), which apart from the words "manufacture" or "production" uses the word "construction" as well. The assessee's investment in plant machinery being below Rs. 10,00,000 it can claim investment allowance only if it fulfils the conditions laid down in sub-clause (ii). However even if sub-clause (iii) is relied upon, the effect in the assessee's case would not be any different. The learned counsel for the assessee relied upon a Ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truct buildings which was not in the nature of processing or manufacturing of any goods. The Hon'ble High Court observed as below :-- "it so happens that the assessee uses bricks manufactured by others in making buildings. It also makes R.C.C. slabs etc. in the process of making those buildings. Can it reasonably be said that the assessee is a manufacturer or processor of goods ? In the sense that the assessee makes a building, it can loosely be said that the assessee is a manufacturer. But it is not manufacturer of goods. It is a manufacturer of buildings and buildings are not goods. Similarly, when it is asked whether the assessee is a processor of goods, it cannot be said that the assessee is a processor of goods, but it is using goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 32A(2)(b) the words "business of construction" have been used to mean business of construction of buildings. This interpretation or construction of the provision of law is not sound. The words used are, "business of construction, manufacture or production of any article or thing". Therefore, construction is not used for specifying any specific business. The word "construction" is used along with "manufacture" or "production" to specify the various ways in which an article or thing may be brought into existence. An article or thing may be brought into existence by either of the three modes, singly or jointly, and the use of a single word may be inappropriate to define the mode of the bringing into existence of a particular article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. According to the ITO the assessments were re-opened under section 147(b) as the ITAT Pune Bench in I.T.A. Nos. 408 409 (PN)/78-79 in the case of M/s. Dip Kiran Builders v. ITO vide order dated4-2-1980had held that an assessee engaged in the business of construction of buildings was not entitled to investment allowance. According to him, this was an information that came into possession after the assessments had already been completed and the reopening of the assessments was permissible. The learned CIT(A) has upheld the reopening on the basis of the aforesaid judgment of the Pune Bench. 9. The learned counsel for the assessees has placed in the paper book at page 11 a copy of what he described as the reasons recorded by the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court had held that an assessee, who was carrying on the business of "pressure piling" foundations for buildings by specialised patented method brought into existence an independent article i.e., pile and was, thus, engaged in manufacture or production of articles. This is exactly what section 32A also requires for the grant of investment allowance. If pressure pile foundations are articles then a building as a whole has also to be treated as an article or a thing and the process by which the building is brought into existence would be called manufacture or production of articles. This authority was cited before the ITO and he has held that it is distinguishable. The distinction lies only in the fact that while in that case the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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