1994 (11) TMI 1

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.... reference was made in relation to three years 1981-82, 1982-83 and 1983-84 in respect of which the Revenue sought reference of three different questions in its application for reference, namely:- "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law and fact in finding that the assessee is entitled to investment allowance under section 32A? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law and fact in finding that the activity of the assessee would be well within the term 'business' of construction in. section 32A(2)(b)(iii) ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law and fact in finding that the as....

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.... the machinery or plant specified in sub-section (2). As per sub-clause (b)(iii) of sub-section (2), the machinery or plant in respect of which the investment allowance is granted is such machinery or plant used by an industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule. In order to earn the allowance, the machinery or plant should be used for the purpose of the business of construction, manufacture or production of any article or thing. As to what exactly is conveyed by "use in the construction of an article or thing" was the subject of consideration by the Supreme Court in a recent decision in CIT....

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....ns. It must be noted that in the course of discussion, the Supreme Court has mentioned that articles or things mentioned in the provision refer only to movable objects and that they cannot have any application to immovable items of the nature mentioned by us earlier, despite the use of the word "construction" therein. It has, therefore, to be held that section 32A(2)(b)(iii) has no application to the construction of immovable items and that investment allowance is not available in respect of plant and machinery used for the construction of such items. Therefore, the case squarely falls within the ratio of the decision of the Supreme Court and the question referred to us has to be answered in favour of the Revenue and against the assessee. ....