Building construction is not manufacture or production, so deduction for industrial undertaking relief was denied.

Construction of multi-storeyed buildings and sale of flats does not amount to manufacture or production of articles or things for the purposes of section 80J(4)(iv) and the related deduction under section 80-I. The Calcutta HC held that building construction is a construction activity, not an industrial process of manufacture or production, and therefore does not fall within the scope of an "industrial undertaking" contemplated by the relief provision. On that reasoning, the assessee was not entitled to the deduction, and the question was answered in the negative in favour of the Revenue.

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Issues: Whether construction of multi-storeyed buildings and sale of flats amounts to manufacture or production of articles or things within the meaning of section 80J(4)(iv) of the Income-tax Act, 1961, so as to entitle the assessee to deduction under section 80-I of the Income-tax Act, 1961.

Analysis: Construction of a building or flat is a process of construction and not a process of manufacture or production. The expression "industrial undertaking" in the deduction provision does not extend to activities that merely result in the erection of buildings or flats. Applying the principle that what is constructed is not manufactured or produced, the activity in question falls outside the scope of the relief provision.

Conclusion: The assessee was not entitled to deduction under section 80-I. The question was answered in the negative and in favour of the Revenue.

Ratio Decidendi: Construction of buildings or flats does not amount to manufacture or production of articles or things for the purpose of deduction provisions aimed at industrial undertakings.

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