TMI Blog1993 (9) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... B. P. JEEVAN REDDY. and N. VENKATACHALA. JJ. JUDGMENT C.A. Nos. 4240-4248 of 1992, C.A. Nos. 3405 of 1991, C.A. Nos. 2685 of 1992, C.A. Nos. 5381 of 1992, C.A. Nos. 3859 of 1992, C.A. Nos. 4881, C.A. Nos. 4882 of 1993, S.L.P. (Civil) Nos. 16839 of 1992, S.L.P. (Civil) Nos. 3219 of 1993, S.L.P. (Civil) Nos. 16838 of 1992, C.A. Nos. 4238, C.A. Nos. 4239, C.A. Nos. 4240 of 1983, C.A. Nos. 5865, C.A. Nos. 5866 of 1983 B.B Ahuja, Senior Advocate (R.K. Mehta and Ms. Mana Chakraborty, Advocate, for the respondent in C.A. Nos. 5865 and 5866 of 1983. Joseph Vellapally, Senior Advocate (Mukul Mudgal, Advocate, With him), for the respondent in C.A. Nos. 4239 to4248 of 1992. J. Ramamurthy, Senior Advocate (Rambir chandra, R. Ayyam Perumal and Ms. Sushna Suri, Advocates, With him), for the appellants in all the matters. A.M. Khanwikar, Advocate, for the respondent in C.A. Nos. 5865 and 5866 of 1933. The judgment of the court was delivered by B. P. JEEVAN REDDY J.- Two groups of appeals are placed before us for hearing. The first group involves the interpretation of identical words occurring in section 80HH and section 84, viz., "manufacture or produce a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can, there fore, be called an "industrial undertaking". (b) The word "articles" occurring in clause (i) of sub-section (2) of section 80HH is not confined to movables nor to small things produced in large quantities. (c) The activity of construction of a dam can be characterised as processing as well as manufacturing. At the instance of the Revenue the aforesaid question was referred for the opinion of the High Court. The High Court agreed with the Tribunal that the assessee-firm constituted for the purpose of constructing a dam for storing water can be called an "industrial undertaking". The High Court opined that the definition of "industry" in the Industrial Disputes Act can well be relied upon to ascertain the meaning of the expression "industrial undertaking", inasmuch as the said expression has not been defined in the Act or the Rules. The High Court also agreed with the Tribunal that the word "article" need not be confined to mere movables and that "there would be no justification to hold that a dam is not an article in that sense of the term". The correctness of the said view is questioned in these appeals. Learned counsel for the Revenue, Shri J. Ramamurthy, attac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section ; (iii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose in any backward area ; (iv) it employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power. Explanation. -Where any machinery or plant or any part thereof previously used for any purpose in any backward area is transferred to a new business in that area or in any other backward area and the total value of the machinery or plant or part so transferred does not exceed twenty per cent. of the total value of the machinery or plant used in the business, then, for the purposes of clause (iii) of this sub-section, the condition specified therein shall be deemed to have been fulfilled." Sub-section (4) provides that the deduction specified in sub-section (1) shall be allowed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by this court in Deputy CST v. Pio Food Packers [1980] 46 STC 63, among other decisions. In the said decision, the test evolved for determining whether manufacture can be said to have taken place is, whether the commodity which is subjected to the process of manufacture can no longer be regarded as the original commodity but is recognised in the trade as a new and distinct commodity. Pathak.J as he then was, stated the test in the following words (at page 65): "Commonly, manufacture is the end result of one or more pro cesses through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place." The word "production" or "produce" when used in juxtaposition with the word "manufacture" t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich tend to support the stand of the Revenue. It may be that the respondent is himself manufacturing some of the articles like gates, windows and doors which go into the construction of a dam but that makes little difference to the principle. The petitioner is not claiming the deduction provided by section 80HH on the value of the said manufactured articles but on the total value of the dam as such. In such a situation, it is immaterial whether the manufactured articles which go into the construction of a dam are manufactured by him or purchased by him from another person. We need not express any opinion on the question what would be the position if the respondent had claimed the benefit of section 80HH on the value of the articles manufactured or produced by him which articles have gone into/consumed in the construction of the dam. In the judgment under appeal, the Orissa High Court has relied upon the meaning assigned to the word "article" in the Shorter Oxford English Dictionary, to the effect- "a commodity ;a piece of goods or property". Since article means a piece of property, the learned judges said, it can as well mean immovable property. Accordingly, they held, a dam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the plain and simple language used in the enactment, It would not be reasonable or permissible for the court to rewrite the section or substitute words of its own for the actual words employed by the Legislature in the name of giving effect to the supposed underlying object. After all, the underlying object of any provision has to be gathered on a reasonable interpretation of the language employed by the Legislature. For all the above reasons, we are of the opinion that it is not possible to accede to the contention that the activity of construction of a dam can be characterised as manufacture or producing of article or articles, as the case may be, within the meaning of section 80HH(2)(i) of the Act. Another set of appeals in the first group (Civil Appeals Nos. 5865 and 5866 of 1983) are preferred against the judgment of the Bombay High Court in CIT v. Pressure Piling Co. (India) P. Ltd. [1980] 126 ITR 333. The respondent-assessee in these appeals is engaged in the business of laying foundations for buildings and other structures by a specialised patented method known as pressure piling. For the assessment years 1963-64 and 1964-65, it claimed the benefit under section 84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excavated through the tube itself in the manner employed by well bores. In this way, the underlying soil is thoroughly explored, samples of the succeeding strata being obtained as each hole is sunk. This permits the correct depth of boring to be determined in every case. If necessary, steel reinforcements of any required design can then be lowered down the casing and fixed in a correct position so that the rods will be properly embedded when concrete is added. If the bore hole is dry, concrete is introduced to the casings and compressed air is admitted. The air pressure forces the concrete down the casing and presses it into the interstices of the bottom part of the bored hole from which the casing is withdrawn. In this way, the actual diameter of the pile is made to exceed that of the casing itself and it also forms a rough surface that bonds into the strata penetrated by the pile. As each section of the tube is raised above ground, it is unscrewed and further batch of concrete is added. This process is continued until the pile is completed." Section 84 . in so far as it is relevant for our purpose, reads thus : " 84. Income of newly established industrial undertakings or hote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing or production of articles. The process of laying a foundation is an integral part of the construction of a dam, bridge or building. Each such structure requires a foundation. The assessee does no more than lay the foundations by a technologically innovative method, which lends to the strength of the foundation. It cannot be said that if a person constructs the entire dam including the foundation, he is not manufacturing or producing an article but where he merely lays the foundation for such dam he is manufacturing or producing an article. The piles, which the assessee lays by his particular method become a fixture in the earth. It ultimately becomes an integral part of the dam, bridge or building, as the case may be. It is not as if the assessee supplies pre-fabricated piles, which are bored into the earth by the contractor or owner, as the case may be. The work is done on the spot and it is a works contract. It is no different from any other works contract which is done on the spot and becomes part and parcel of a larger construction. In such matters, one has to look to the precise activity and decide whether it can be said to amount to manufacturing or producing an articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the Revenue's appeal following the decision in I. T. A. No. 715/(Bang.) of 1982 (pertaining to Shankaranarayana Construction Co.). The assessee thereupon applied for and obtained reference under section 256 of the Income-tax Act. The question referred for the opinion of the High Court reads thus : "Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in upholding the disallowance of investment allowance ?" With a view to pin pointing the controversy, the High Court reframed the question in the following terms : "Whether, on the facts and in the circumstances of the case, the allowance provided for under sub-clause (iii) of clause (b) of sub section (2) of section 32A of the Act will enure to the benefit of the assessee ? " The respondent-assessee is a registered firm, carrying on business in the manufacture and sale of tiles and in construction work on a large scale. It has specialised in the construction of dams and canals. The question before us is whether the assessee is entitled to investment allowance on the actual cost of the machinery and plant installed for the purpose of its business pertaining to construction of dams and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to our notice the meanings given to the said word in various dictionaries, namely, from the Lexicon Webster Dictionary, the Concise Oxford Dictionary of Current English, Black's Law Dictionary and Stroud's judicial Dictionary. So far as the first two dictionaries are concerned, the said word does not take in immovable property like buildings, etc., within its ambit. However, in Black's Law Dictionary, the following meanings are assigned to the expression "things": "Things. The objects of dominion or property as contradistinguished from 'persons'. Gayer v. Whelan, 59 Cal. App.2d 255, 138 P.2d 763, 768. The object of a right i.e., whatever is treated by the law as the object over which one person exercises a right and with reference to which another person lies under a duty. Such permanent objects, not being persons, as are sensible, or perceptible through the senses. Things are distributed into three kinds : (1) Things real or immovable, comprehending lands, tenements, and hereditaments ; (2) things personal or movable comprehending goods and chattels ; and (3) things mixed, partaking of the characteristics of the two former, as a title-deed, a term for years. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milarly, the expression "thing" is used as interchangeable with the expression article ; a perusal of the list in the Eleventh Schedule reinforces this submission inasmuch as the articles and things mentioned in the Eleventh Schedule are all movables ; it would not be correct to associate the word "construction" with the word "thing" ; the appropriate way to read them is in the order in which they occur in the sub-clause-says learned counsel. Though at first sight, the use of the words "construction" and "thing" appear to lend some substance to the contention of learned counsel for the assessee, a deeper scrutiny-and in particular, the legislative history of the relevant provisions-militates against the acceptance of his submission. Sub-clauses (ii) and (iii) of clause (b) of sub-section (2) of section 32A were substituted by the Finance (No. 2) Act of 1977, with effect from April 1, 1978. Prior to the said amendment, the sub-clauses read as follows: " (ii) for the purposes of business of construction, manufacture or production of any one or more of the articles or things specified in the list in the Ninth Schedule ; or (iii) in a small-scale industrial undertaking for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d construction, manufacture or production of any articles and things...", respectively. It is equally evident that in these sub-clauses as well as in the Ninth Schedule and the Eleventh Schedule, the words "articles" and "things" are used interchangeably. In the scheme and context of the provision, it would not be right to isolate the word "thing", ascertain its meaning with reference to law lexicons and attach to it a meaning which it was never intended to bear. A statute cannot always be construed with the dictionary in one hand and the statute in the other. Regard must also be had to the scheme, context and-as in this case-to the legislative history of the provision. We are, therefore, of the opinion that sub-clause (iii) of clause (b) of sub-section (2) of section 32A does not comprehend within its ambit construction of a dam, a bridge, a building, a road, canal and other similar constructions. So far as the decision of the High Court under appeal is concerned, it appears to have concentrated more upon the meaning of the word "industrial undertaking" and answered the question in favour of the assessee, holding that the assessee is an industrial undertaking within the meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X
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