Commissioner of Income Tax vs U.P. Rajkiya Nirman Nigam Ltd.

By the Court

The Income Tax Appellate Tribunal, Allahabad has referred the following question of law u/s 256(1) of the Income Tax Act, 1961, hereinafter referred to as the Act, for opinion to this Court.

"Whether, the Income Tax Appellate Tribunal was, in law, justified in holding that the assessee was eligible for investment allowance u/s 32A(2)(iii) of the Income Tax Act, 1961?"

The present Reference relates to the assessment years 1978-79 and 1979-80.

Briefly stated the facts giving rise to the present Reference are as follows :

The respondent-assessee is a State Government undertaking. It is engaged in business of construction of bridges etc. It claimed investment allowance which was rejected by the Assessing Authority on the ground that it was not an industrial undertaking where the plant and machinery were installed for the purpose of business of construction, manufacture or production of any article or thing. The order was set aside by the Commissioner of Income Tax (Appeals) who had held that the investment allowance is admissible. In further appeal the Tribunal has upheld the order of the Commissioner of Income Tax (Appeals).

In view of the decision of the Apex court in the case of Commissioner of Income Tax, Orissa and Others Vs. N.C. Budharaja and Company and Others, , the persons who are engaged in construction activities do not produce any article or thing so as to entitle them for claiming investment allowance u/s 32A of the Act. Thus, the Tribunal was not justified in allowing the investment allowance to the respondent-assessee.

Respectfully following the aforesaid decision, we answer the question ref erred to us in the negative, i.e., in favour of the revenue and against the assessee. However, there shall be no order as to costs.