TMI Blog1990 (11) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee in I. T. R. C. Nos. 138 and 139 of 1985 is M/s. Shankar Construction Co., Bangalore, a registered firm carrying on business in manufacture and sale of tiles and construction work on a somewhat large scale specialising in construction of dams and channels. Similarly, the assessee in I. T. R. C. Nos. 217 and 218 of 1985 is M/s. Shankaranarayana Construction Co., Bangalore. The assessee in the case of I. T. R. C. No. 27 of 1986 is Naveen Mechanised Construction Co. (P.) Ltd., Hubli. In the first four cases, the assessee for the relevant assessment years, viz., 1978-79 and 1979-80, claimed allowance at the rate of 25% of the value invested by them in plant and machinery employed in the execution of their construction work a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Naveen Mechanised Construction Co. (P.) Ltd., the claim was disallowed by the assessing authority. But, on appeal filed, it was given allowance under the very same provision. On appeal by the Revenue, the appellate order Was confirmed by the Tribunal following the same decision. In that circumstance, the question which has been set out hereafter has been referred for our answer in all these cases: The question is as follows : "Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in upholding the disallowance of investment allowance ?" The question as formulated, we feel, is not correct. Therefore, we reformulate the question under the circumstances and the facts of the case as follows : "Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the assessees are to be considered to have engaged themselves in industrial activities by undertaking construction work falling within the definition or description of "industrial undertaking" occurring in sub-clause (iii) of clause (b) of sub-section (2) of section 32A of the Act. We feel that the Tribunal was in some haste in the first four cases in following the Special Bench's decision and denying the benefit to the assessee without application of its own mind to the question. In the circumstances of the case of the assessees in the first four cases, on consideration by us, as held by the High Court of Orissa in the case of CIT v. N. C. Budharaja and Co. [1980] 121 ITR 212, the law is fairly settled that in the absence of a statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nture in the public, joint, private or other sector. The true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employee relation. If the Organisation is a trade or business, it does not cease to be one because of philanthropy animating the undertaking. Although section 2(j) uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself. 'Undertaking' must suffer a contextual and associational shrinkage as explained in D. N. Banerji v. P. R. Mukherjee [1952-53] 4 FJR 443; AIR 1953 SC 58, so also, service, calling and the like. This yields the inference that all organised activity possessing the triple elements above mentioned, alt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the undertaking going or to assist the carrying on of the activities leading to the earning of profits." Similarly, the High Court of Madras in CIT v. M. R. Gopal [1965] 58 ITR 598, came to the conclusion that the process employed in converting boulders into small stones with the aid of machinery is a manufacturing process and the undertaking is an "industrial undertaking". The High Court of Judicature, Bombay, in the case of CIT v. Oricon Private Ltd. [1985] 151 ITR 296, following the ruling of the High Court of Madras in CWT v. K. Lakshmi [1983] 142 ITR 656, ruled that merely because the assessee had given sub-contracts for a part of the work, it would not lose its character of being an industrial company ([1984] 16 Taxman 100). We m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustrial Arbitration Act, 1940-1968 (N. S. W.) Steward v. Board of Fire Commissioners (N. S. W.) [1970] LB Co's Indus. Arb. Serv., Current Review, p. 32), but not an 'industry' within the meaning of s. 132(1)(b) of the Conciliation and Arbitration Act, 1904-1969 (6th) (Pitfield v. Franki [1970] 44 ALJR). (5) The process of destroying garbage by incineration was not an 'industry' within cl. 3 of the Country Cumberland Planning Scheme Ordinance ( Woollahra Municipal Council v. Sydney City Council [1966] 12 L. G. R. A.) Stat. Def. Industrial Reorganisation Corporation Act, 1966 (C. 50) s. 2(7) ; Industrial Relations Act, 1971 (C. 72), s. 167." Therefore, when a taxing statute has to be construed even when two views are possible, the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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