Investment allowance under section 32A is limited to industrial undertakings engaged in manufacture or production, not construction activity.

Investment allowance under section 32A of the Income-tax Act, 1961 is confined to specified ship, aircraft, machinery or plant used in a business carried on by an industrial undertaking. The controlling principle stated is that construction activity, by itself, does not amount to manufacture or production of an article or thing and therefore does not qualify as an industrial undertaking for this purpose. On that basis, a company engaged in construction work is not entitled to investment allowance under section 32A, and the reference was answered in favour of the Revenue.

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Issues: Whether the assessee, engaged in construction work, was entitled to investment allowance under section 32A of the Income-tax Act, 1961.

Analysis: Investment allowance under section 32A is available in respect of specified ship, aircraft, machinery or plant used for the purposes of business carried on by the assessee, but the provision does not extend to an industrial company as such. The controlling principle applied was that the allowance is confined to an industrial undertaking, and construction activity that does not result in the manufacture of an article or thing does not constitute such an undertaking.

Conclusion: The assessee was not entitled to investment allowance under section 32A. The answer to the referred question was negative and in favour of the Revenue.

Ratio Decidendi: Investment allowance under section 32A of the Income-tax Act, 1961 is admissible only to an industrial undertaking engaged in manufacture or production, and not to a company carrying on construction activity.

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