TMI Blog1982 (8) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... is for the allowance of Rs. 5,02,334. The ITO did not allow the same, as according to him, the assessee was not engaged in the manufacture of any article or a thing within the meaning of section 32A of the Income-tax Act, 1961 ('the Act'). This view was upheld by the Commissioner (Appeals) in his detailed order. He found that the decision of the Orissa High Court in the case of CIT v. N.C. Budharaja Co. [1980] 121 ITR 212 squarely supported the assessee's case. All the same, he felt 'with due respect' that the view of the High Court holding that a firm of contractors could be treated as being engaged in industrial undertaking was not the correct view. The assessee has come up in second appeal. It relied upon the decision of the Orissa Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completing the contract. The assessee-firm's partnership deed itself shows that it was a firm engaged in engineering contract works for the Government, local bodies, etc. It is not disputed that the assessee engages itself in the activities mentioned below. Section 32A requires, inter alia, that the machinery or the plant should be installed after 31-3-1976, "in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule". It is common ground that the dam does not come under the list of articles mentioned in the Eleventh Schedule. The dispute is whether the assessee is an industrial undertaking, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould equally apply to describe the activity of building a dam, as a ship or an aircraft. Again, the Orissa High Court in Budharaja's case has pointed out 'industrial undertaking' has no statutory definition. It has further pointed out that the assessee did manufacture certain materials which were used in construction. But the decision of the High Court mainly turned on the ground that the word 'article' would not exclude a 'dam'. The word 'article' need not be confined to a movable property. After repeating the taxpayer counsel's proposition that 'there would be no justification to hold that a dam is not an article in the sense of the term', it proceeded to observe that there is considerable force in this argument. It is in this context tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Bombay High Court in N.U.C. (P.) Ltd.'s case does not help the revenue as we are now concerned with the provisions which are more analogous to the definition under section 80HH with which the Orissa High Court was concerned. The Delhi High Court in the case of National Projects Construction Corporation Ltd. v. CWT [1969] 74 ITR 465 considered that a similar company engaged in the construction of dams and barrages, etc., would be an industrial company as it had large workshops at work sites for processing steel, crushing stones, etc., for the purposes of construction of the river valley projects and that such articles produced, though not sold to the public would constitute feeding activity, giving rise to the inference that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of slabs exceeded 51 per cent of its total Income. In this case, the Tribunal held that the assessee was not an industrial company on the ground that the manufacture of concrete slabs was for the purpose of its own use and that it was not manufacturing the slabs for sale to outside customers. In the Tribunal's view, it could not, therefore, be treated as an industrial company. Here also, the High Court was concerned with the definition of 'industrial company' under section 2(8)(c) of the Finance Acts, 1974 and 1975, which did not have the word 'construction' or the word 'thing'. Even so, it was held that part of the income could be treated as being derived from an industrial activity. Though this decision is of a limited assistance to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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