TMI Blog1991 (5) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... The Income-tax Officer denied the relief. The grounds for denial of the relief were two-fold : (1) the machinery had not been installed in an "industrial undertaking" for the purpose of business of construction, manufacture or production of any article or thing since the business of the assessee was undertaking building contracts only which could not be considered as an "industrial undertaking", and (2) the assessee was only carrying on contracts for others. In the appeal, the Commissioner of Income-tax (Appeals), held thus : " On a plain reading of section 32A as it stood during the relevant period, it is clear that an assessee engaged in the business of construction should get the benefit of investment allowance in respect of plant or machinery used for the purpose of construction. The enlargement of the scope of the section by conferring the benefit on construction business has been correctly spelt out in the Notes on Clauses accompanying the Finance Bill. The relevant observations can be seen at page 153 (Statutes) of 107 ITR, wherein it has been stated that sub-clause (a) 'seeks to enlarge the scope of the existing provision and provide that investment allowance will be gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. Counsel for the Revenue referred us to the history of the legislation which led to the enactment of section 32A in the Income-tax Act. Reliance was placed on the Finance Minister's Budget Speech for 1976-77. The portion of the speech relied on is as follows : "The present scheme of investment allowance will facilitate investment in priority industries and reduce the dependence of the corporate sector on public financial institutions." Proceeding further, counsel for the Revenue placed reliance on the Finance Minister's Second Budget Speech for 1977-78 and Notes on Clauses to the Finance (No. 2) Bill, 1977, and contended that the then existing provision was to enlarge the scope of the law to priority industries and all industries will not be entitled to the benefit of the provision. It was argued that, on the terms of section 32A(2)(b)(iii) of the Act, the assessee should prove that the new machinery or plant is installed in an "industrial undertaking" and that it should be so done for the purpose of business of construction, manufacture or production of an article or thing. In this case, the assessee is engaged in the business of building contracts. It is engaged in the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d take within its fold any project or business a person may undertake. Placing reliance on the Notes on Clauses of the Finance (No. 2) Bill, 1977 relating to section 32A of the Income-tax Act, counsel contended that the object was to enlarge the scope of the existing provision and as rightly pointed out by the Commissioner of Income-tax (Appeals), investment allowance is to be granted in respect of machinery and plant installed for the purpose of business of construction, manufacture and production of any article and thing, not specified in the list in the Eleventh Schedule. Counsel for the assessee stressed that the Tribunal, after adverting to the nature of various activities carried on by the assessee, has entered a finding of fact to the effect that the assessee is an industrial undertaking. It was also found that since the machinery was used in an industrial undertaking for the business of construction, manufacture or production of articles or things, the assessee is entitled to investment allowance under section 32A of the Act. According to counsel the finding of fact entered by the Tribunal on the basis of materials before it, that the assessee is an "industrial undertaking" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials which are processed to make them into concrete structures to support the tunnels and crushing big pieces of stones to obtain boulders of various forms and sizes for being used in the construction of tunnels and projects, we are fully convinced that the entire activity of the assessee is manufacturing and processing of various materials to be used in its construction activities." It is seen that on basis of the materials before it, the Tribunal has entered a finding that the entire activity of the assessee is manufacturing and processing of various materials to be used in its construction activities and, therefore, the assessee is engaged mainly in the manufacture or processing of goods and as such an "industrial company". On the basis that the assessee is an industrial company, the Tribunal further found that since the machinery was used in an industrial undertaking in the business of construction, manufacture or production of articles or things, the assessee is entitled to investment allowance under section 32A of the Act. The finding that the assessee is engaged mainly in the manufacture or processing of goods and is an industrial undertaking is not in challenge befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construed in its popular sense. Construing the words "industrial undertaking" occurring in section 54D of the Income-tax Act, a Bench of this court in P. Alikunju, M. A. Nazeer Cashew Industries v. CIT [1987] 166 ITR 804, 807 stated thus : "What then is an 'industrial undertaking'. The Income-tax Act does not define what is 'an undertaking' or what is an 'industrial undertaking'. It has, therefore, become necessary to construe these words. Words used in a statute dealing with matters relating to the general public are presumed to have been used in their popular rather than their narrow, legal or technical sense. Loquitur ut vulgus, that is, according to the common understanding and acceptation of the terms, is the doctrine that should be applied in construing the words used in statutes dealing with matters relating to the public in general. In short, if an 'Act is directed to dealings with matters affecting everybody generally, the words used have the meaning attached to them in the common and ordinary use of language'. (Vide Unwin v. Hanson [1891] 2 Q. B. 115 (CA), per Lord Esher M. R., at page 119). That the Income-tax Act is of general application, is beyond dispute. It, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 32A(2)(b)(iii) of the Income-tax Act. The court referred to the decision of the Orissa High Court in CIT v. N. C. Budharaja and Co., [1980] 121 ITR 212, the earlier decision of the Mysore High Court in Sree Yallamma Cotton Woollen and Silk Mills Co. Ltd's case [1970] 40 Comp Cas 466 ; AIR 1969 Mys 280 and of the Madras High Court in CIT v. M. R. Gopal [1965] 58 ITR 598, the decision of the Delhi High Court in National Projects Construction Corporation Ltd. v. CWT [1969] 74 ITR 465 and the meaning of the word "industrial undertaking" as given in Stroud's judicial Dictionary, Vol. 3, Fourth Edn., at page 1357, and held that the activities carried on by the assessee in those cases were certainly those of an "industrial undertaking". The said judgment is dated November 8, 1990. The word "industrial undertaking" has come up for very elaborate consideration before the Supreme Court in Bangalore Water Supply and Sewerage Board v. A. Rajappa [1978] 51 FJR 197 ; AIR 1978 SC 548. The word has been construed in a very wide or liberal sense. We are of the view that the word "industrial undertaking" occurring in section 32A(2)(b)(iii) of the Income-tax Act should be construed in a libera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Projects Construction Corporation Ltd. v. CWT [1969] 74 ITR 465 (Delhi) and CIT v. Budharaja (N. C.) and Co. [1980] 121 ITR 212 (Orissa). In Budharaja's case [1980] 121 ITR 212 (Orissa) the term "industrial undertaking" occurring in section 80HH of the Income-tax Act came up for consideration. Delivering the judgment of the Bench, R. N. Misra J., at pages 217 and 218 stated thus : "'Industrial undertaking' has no statutory definition. The law is fairly settled that where there is an absence of the statutory definition, it would be open to look for the meaning by referring to the definitions in sister legislations and failing that, to adopt the common parlance meaning. There can be no dispute that the business of a contractor who has undertaken the construction of an irrigation project would be an industrial undertaking for the purpose of the Industrial Disputes Act. The concept of industrial undertaking need not necessarily be confined to manufacture and production of articles. Even in the absence of either of them, in the strict sense, there could be an industrial undertaking. The Tribunal in the instant case has clearly recorded a finding of fact that the assessee had und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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