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The Chief Commissioner (Admn.), Lucknow. v. M/s Bhola Singh Jai Prakash & Co., Lucknow. - INCOME TAX REFERENCE No. 65 of 1988  RD-AH 1197 (29 April 2005)
INCOME TAX REFERENCE NO.65 OF 1988
The Chief Commissioner (Admn.), Lucknow. ....Applicant
M/s Bhola Singh Jai Prakash & Co., Lucknow. ....Respondent
Hon'ble R.K. Agrawal, J.
Hon'ble Rajes Kumar, J.
The Income Tax Appellate Tribunal, New Delhi has referred to following two questions of law under section 256 (1) of the Income Tax Act, 1961, (hereinafter referred to as "the Act") for opinion of this Court.
"1. Whether on the facts and in the circumstances of the case, the Tribunal was , in law, justified in upholding the order of the C.I.T. (A) directing the Income-tax Officer to allow investment allowance u/s 32A in respect of contract business.
2. Whether on the facts and in the circumstances of the case, the machinery employed by a contractor entitles the assessee to investment allowance within the meaning of section 32A (2)(b) of the I.T.Act, 1961 ?"
The reference relates to the assessment years 1983-84. Briefly stated, the facts giving rise to the present reference are as follows:
Respondent-Assessee (hereinafter referred to as the "Assessee") is a civil contractor and is engaged in the business of undertaking construction of building etc. It had claimed investment allowance under section 32A of the Act on the machinery used in the construction work. The assessing authority has disallowed the claim on the ground that it is not industrial undertaking, which order was however, reversed by the Commissioner of Income-tax (Appeals). Commissioner of Income-tax (Appeals) has held that the assessee is entitled for investment allowance. Order of Commissioner of Income-tax (Appeals) was upheld by the Tribunal.
We have heard Sri A.N.Mahajan, learned Standing Counsel for the Revenue.
In view of the decision of this Court in the case of CIT Vs. N.C.Budharja And Co. and another, reported in 204 ITR 412 held that undertaking involved in construction of building dam etc. does not manufacture or production of article and therefore, it does not comes within the meaning of section 32A of the Act. Thus, Tribunal was not correct in upholding the order of Commissioner of Income-tax directing investment allowance under section 32A of the Act.
Respectfully following the decision of this Court we answer the questions referred to use in negative, i.e. In favour of the Revenue and against the assessee. There shall be no order as costs.
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