TaxTMI 
TaxTMI 
1982 (8) TMI 224
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....f its machinery used in construction of a dam at Bargi in Madhya Pradesh. The machinery under consideration was used in its work. The assessee';s claim is for the allowance of ₹ 5,02,334. The ITO did not allow the same, as according to him, the assessee was not engaged in the manufacture of any article or a thing within the meaning of section 32A of the Income-tax Act, 1961 (';the Act';). This view was upheld by the Commissioner (Appeals) in his detailed order. He found that the decision of the Orissa High Court in the case of CIT v. N.C. Budharaja & Co. (1980) 121 ITR 212 squarely supported the assessee';s case. All the same, he felt ';with due respect'; that the view of the High Court holding that a firm of c....
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....machi-nery like Air Compressors and to activise Exploders for blasting the rocks. It is not necessary to go into various types of activities undertaken by the assessee as part of its obligations for completing the contract. The asses-see-firm';s partnership deed itself shows that it was a firm engaged in engineering contract works for the Government, local bodies, etc. It is not disputed that the assessee engages itself in the activities mentioned below. Section 32A requires, inter alia, that the machinery or the plant should be installed after 31-3-1976,"in any other 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....
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.... things';. While we may agree with the revenue';s point of view that construc-tion by itself would not qualify for investment allowance and that construction should be of an article or a thing. we are not in a position to agree with it that the construction of a dam is not construction of a thing. The word ';construction'; would equally apply to describe the activity of building a dam, as a ship or an aircraft. Again, the Orissa High Court in Budharaja';s case (supra) has pointed out ';industrial undertaking'; has no statutory defi-nition. It has further pointed out that the assessee did manufacture certain materials which were used in construction. But the decision of the High Court mainly turned on the ground t....
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.... the construction of an irrigation project would thus, according to the Court, be an industrial undertaking for the purposes of the Industrial Disputes Act, 1947". A contractor who was engaged in building construc-tion and repair was found to be not an industrial undertaking only in the limited context of the definition of ';industrial company'; in section 2(7)(d) of the Finance Act, which was concerned only with ';construction of ships'; and ';manufacture or processing of goods';. Hence, the decision of the Bombay High Court in N.U.C. (P) Ltd.';s case (supra) does not help the revenue as we are now concerned with the provisions which are more analogous to the definition under section 80HH with which the Ori....
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....rd ';thing';. Even in such circumstances, merely the activity of putting pressure piling foundations was treated as a manufacturing process. The assessee before us is, therefore, in a much better position to deserve the investment allowance. The Calcutta High Court in National Planning & Construction Ltd. v. CIT (1980) 122 ITR 197 was dealing with the business of a building contractor who was manufac-turing concrete slabs for its use in the construction of the buildings. This was treated as construing ';industrial activity'; to make it an industrial com-pany if that part of the income attributable to the manufacture of slabs exceeded 51 per cent of its total income. In this case, the Tribunal held that the assessee was not a....