Commissioner Of Income-Tax vs Megaska International (India) ...
2001 Latest Caselaw 1091 Del

JUDGMENT

Arijit Pasayat, C.J.

1. At the instance of the Revenue, the following question has been referred for the opinion of this court under Section 256(1) of the Income-tax Act, 1961 (in short "the Act"), by the Income-tax Appellate Tribunal, Delhi Bench "A", New Delhi (in short "the Tribunal") :

"Whether, on the facts arid in the circumstances of the case, the assessed is entitled to-

(i) investment allowance under Section 32A(2)(b)(iii); and

(ii) relief under Section 80J of the Income-tax Act, 1961 ?"

2. The dispute relates to the assessment year 1978-79.

3. The factual position in a nutshell, as is indicated in the statement of the case, is as follows :

The assessed is a private limited company and was, at the relevant point of time, engaged in the business as a building contractor. Its accounting period ended on September 30, 1977. It undertook a sub-contract from Engineering Projects (India) Ltd., New Delhi, a Government of India undertaking, for the construction of 350 dwelling units at Ardiya (Helder) Housing Project, Kuwait. It claimed investment allowance on building and machinery purchased during the year under Section 32A(2)(b)(iii) on the ground that it was a small-scale industrial undertaking. It also claimed deduction under Section 80J on the basis that it was an industrial undertaking and that the profits and gains derived from the activity of building construction were profits derived from the industrial undertaking. The Income-tax Officer held that the assessed was not an industrial undertaking and, therefore, the claim for investment allowance and benefit under Section 80J were denied. The matter was carried in appeal before the Commissioner of Income-tax (Appeals) (in short "the CIT"). The assessed's claim was accepted by the Commissioner of Income-tax (Appeals) holding that it is an industrial undertaking. The Revenue preferred an appeal before the Tribunal, which held that in view of the decision of this court in National Projects Construction Corporation Ltd. CWT [1969] 74 ITR

465, the claims were allowable. On being moved for reference, the question as set out above, has been referred for the opinion of this court.

4. We have heard learned counsel for the Revenue. There is no appearance on behalf of the assessed.

5. So far as the first part of the question is concerned, in view of the decision of the apex court in CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412, the answer is in the negative, in favor of the Revenue and against the assessed. Consequentially, so far as the second part of the question is concerned, the assessed is not entitled to any relief under Section 80J of the Act. That part of the question is also answered in the negative, in favor of the Revenue and against the assessed.

6. The reference is accordingly disposed of.