COMMISSIONER OF INCOME TAX Vs. ELEMECH INDUSTRIAL CONSTRUCTIONS

JUDGEMENT

(1.) In this reference under section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue, the following question is referred to this court for opinion which relates to the assessment years 1982-83 and 1983-84.

(2.) The respondent-assessee, a registered firm, carries on business in fabrication work. It claimed investment allowance under section 32A of the Income-tax Act for the assessment year 1982-83 in a sum of Rs. 2,09,934 and for the assessment year 1983-84 in a sum of Rs. 2,84,363. The Income-tax Officer declined to grant the allowance on the ground that it is not an industrial undertaking. It was noted that the nature of the assessee's contract work, was structural fabrication wherein raw material like steel rods and steel sheets, supplied by the contractors, are fabricated into steel structures as per the specifications and designs given in the process of such fabrication and that the process involves assembling but not manufacturing. On appeal by the assessee, the Commissioner (Appeals) upheld the view of the Income-tax Officer. On further appeal to the Income-tax appellate Tribunal, it took the view that the assessee is not (sic) carrying on any manufacturing work and, therefore, it is not (sic) an industrial company.

(3.) It is not in dispute that if the assessee-company is an industrial company it is entitled to the allowance under section 32A of the Act. The dispute is whether the activities carried on by the assessee would amount to manufacture or only assembling of various parts.