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M/s CCAP Ltd. Versus ACIT Circle-10, Kolkata

2015 (6) TMI 555 - ITAT KOLKATA

Disallowance u/s. 35D - assessee engaged in the business of construction of road and bridges, laying down railway track - Held that:- We do not find any error in the order of the ld.CIT(A) in confirming the disallowances made u/s. 35D for all the assessment years under consideration as the assessee is not an industrial undertaking within the meaning of section- 35D. The business of civil construction would not amount to carrying on any manufacturing activity. See Commissioner of Income Tax, Oris .....

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e common order of Ld. CIT(A) dated 21-01-2011 passed for assessment years 2002-03, '03- 04 and '04-05 respectively. 2. The common issue involved in these appeals relates to confirmation of disallowance u/s. 35D of the I.T Act 1961. 3. The facts on all vital issue are common. Therefore, for the facility of reference, we take the facts from assessment year 2002-03. The assessee has filed its return of income on 28-10-2002 declaring total income of ₹ 92,10,770/-. On scrutiny of the ac .....

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aged in the business of construction of road and bridges, laying down railway track, it cannot be termed as "an industrial undertaking", where manufacturing activities are to be carried on by the assessee. In this way, the AO has disallowed the claim of the assessee. 4. Appeal to the ld.CIT(A) did not bring any relief to the assessee. 5. The ld. Counsel for the assessee while impugning the orders of the revenue authorities drew our attention to pages 183-185 of the paper book, where co .....

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C] has construed the construction activity equivalent to industrial undertaking. He drew our attention to pages 42-43 of the paper book. He further relied upon the order of the Special Bench of the Tribunal [ITAT, Delhi Bench ]in the case of ITO Vs. Hydle Construction (P) Ltd reported in 41 CTR (Trib) 17 (Del). According to the ld. Counsel for the assessee, the judgment of Hon'ble Supreme Court in the case of CIT Vs. N.C. Budharaja & Co. & Anr reported in (1993) 204 ITR 412 (SC) reli .....

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said section, which reads as under:- "Where an assessee, being an Indian company or a person (other than a company) who is resident in India, Incurs, after 31st day of March, 1970, any expenditure specified in sub section (2). (i) before the commencement of the business, or (ii) after the commencement of his business, in connection with the extension of his industrial undertaking or in connection with his setting up a new industrial unit, the assessee shall, in accordance with a subject to .....

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that expenditure should have been laid down/incurred for the extension of industrial undertaking or for setting up of new industrial unit. The ld. revenue authorities have concluded unanimously that the assessee is not engaged in manufacturing or production anything. Therefore, it is not an industrial undertaking. For buttressing the contention that construction of road would not amount to manufacture or production of an article or a thing. They made reference to the judgment of the Hon'ble .....

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a reference to page no.42 which is a browser in respect of some conference/workshop held by Construction Industry Development Council [ CIDC]. On reading of this, no where suggests that assessee engaged in construction activity would be construed as industrial undertaking. These references are all together for different purpose. Ld. 1st appellate authority has made a lucid analysis in the impugned order. It is pertinent to make reference to the finding of the ld.CIT(A), which reads as under:- & .....

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served as follows:- "Both the Tribunal and the High Court have held that the work undertaken by the assessee, or to put it differently, the assessee, which has undertaken the work of construction of a dam, can be characterized as an industrial undertaking. Counsel for the Revenue has not addressed any argument on this aspect. We shall, therefore, express no opinion on the question whether the assessee/respondent or the work undertaken by it constitutes an industrial undertaking." From .....

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s' which are involved in 'manufacturing activity', the activity of construction can, by no stretch of imagination, be treated as manufacturing activity as it does not amount to manufacture or production of an article or a thing. The relevant extract of the Hon'ble Court's order is reproduced hereunder: "16. From the discussion up to now, it follows that: (a) industrial undertaking is to be given the meaning which is understood in common parlance, and (b) which should be .....

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monstrative adjective industrial which qualifies the word undertaking was taken note of while answering the question, no significance was attached to the said expression industrial and the case is decided by relying upon the meaning of the expression undertaking alone. Interestingly, in the two judgments of Bombay High Court, taken note of above, the Court came to the conclusion that the activities in those cases amounted to manufacture or production of an article or a thing. 18. Therefore, we a .....

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N.C. Budharaja & Company & Ors, 204 ITR 412. Following this judgment, the Supreme Court in S.A Builders Ltd v. Commissioner of income Tax (Appeals), Chandigarh & Anr., 289 ITR 26, held that the business of civil construction would not amount to carrying on any manufacturing activity. Even this Court in Ansal Housing & Estates (P) Ltd. V. Commissioner of Income Tax, 1999(77) DLT 765, opined that the business of construction of building will not fall within the ambit of industrial .....

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