GENERAL CONTRACTS CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Ahmedabad Bench `B', at the instance of the Assessee, has made this Reference on the following question for the opinion of this Court in relation to the Assessment Years 1986-87 and 1987-88 relating to the ITA No. 4129 & 4130/Ahd/90: Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that the assessee is not entitled to investment allowance under Section 32A of the I. T. Act amounting to Rs. 7,87,652/- in A.Y. 1986-87 and Rs. 14,37,943/- in A.Y. 1987-88?

(2.) The short facts necessary for disposal of the present Reference are that the Assessee is a partnership firm carrying on the contract work for Gujarat Mineral Development Corporation (G.M.D.C.) at Pandhro and Rajpadhi - Jagadia. The Assessee is engaged in the work of mining and excavation of lignite, including removal of overburden, at Rajpadhi and Pandhro. The Assessee claimed investment allowance of Rs. 7,87,652=00 in the Assessment Year 1986-87 and Rs. 14,37,943=00 in the Assessment Year 1987-88 on the total costs of the plant and machinery installed or put to use in the respective years.

(3.) Mr. Divetia, learned Counsel for the Assessee, submitted that from the very opening words of Section-32A and the judgement of the Supreme Court in the matter of Commissioner of Income-Tax v. Sesa Goa Limited (2004) 271 I.T.R. 331, and the Division Bench of this Court in I.T.R. No. 213 of 1991, between the Commissioner of Income-Tax and Sandeep Construction Pvt. Ltd., decided on 18th March, 2003, it would clearly appear that even if a person is engaged or employed in removing the overburden or excavating ores, then, it would be deemed that he is engaged in an industrial activity. It is submitted that the judgement of the Supreme Court in the matter of N.C. Budharaja and Co. (supra) was misunderstood and misapplied by the Tribunal to the facts of the case. The learned Counsel for the Revenue on the other hand supported the order submitting, inter alia, that from the very language of Section-32A, it would clearly appear that the Assessee would not be entitled to any investment allowance.