IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE :: 07..12..2010 CORAM : THE HON'BLE MR. JUSTICE F.M. IBRAHIM KALIFULLA AND THE HON'BLE MR. JUSTICE N.KIRUBAKARAN TAX CASE (APPEAL) NOS: 601 TO 603 OF 2010 The Commissioner of Income Tax Chennai. ... Appellant in all the appeals -vs- M/s. Aicam Engineering Pvt. Ltd. No: 5, Prof. Subramaniam Street Kilpauk Chennai. ... Respondent in all the appeals Tax Case Appeals under Section 260 – A of the Income Tax Act 1961 against the order of the Income Tax Appellate Tribunal, "A" Bench, Chennai, dated 21.08.2009 passed in I.T.A. No: 44 to 46/Mds/2009 for the assessment years1986 – 1987,1994 – 1995 and 1995 – 1996 respectively against the order of the Commissioner of Income Tax (Appeals) III Chennai dated 09.09.2008 passed in ITA.Nos.861, 871 & 872/06-07/AIII against the assessment order of the Assistant Commissioner of Income Tax, Company Circle I(1) Chennai 34 in PA/GIR.No.AAACA5464B/AX5-003. For appellant : Mr. K. Subramaniam Standing counsel for I.T. Dept. For respondent : Mr. V.S. Jayakumar J U D G M E N T ( Judgment of the Court was delivered by F.M. Ibrahim Kalifulla, J. ) The Revenue has come forward with these appeals and the substantial questions of law framed are as under : "1. Whether on the facts and circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee company for the assessment years 1986-87, 1994-95 and 1995-96 is entitled to relief u/s.32A and 801A when the assessee company merely does the work of erection https://hcservices.ecourts.gov.in/hcservices/ of steel plant which does not involve manufacturing process? 2. Whether on the facts and circumstances of the case, the Appellate Tribunal was right in law in following the case of ITO vs. K.S.Venkatraman and Co. (243 ITR 377), when in the assessee's own case for the assessment year 1983-84 the Hon'ble jurisdictional High Court in T.C.No.753 of 1991 dated 26.08.2002 has held that the assessee's activity would not amount to 'manufacture'?" 2. The issues centers around the question whether the respondent assessee is entitled for the benefits unders Section 32 A and 80IA of the Income Tax Act, 1961, hereinafter referred to as the Act, on the footing that it is involved in the manufacture of articles and things. Section 32 A of the Act inter alia stipulates that in order to avail the benefit of Investment Allowance, the assessee should own a plant or an industrial undertaking for the purpose of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule. Similarly, under Section 80IA of the Act, as it stood at the relevant point of time, sub clause 12 (b) stipulates that for the purpose of that sub section an industrial undertaking shall have the meaning assigned to it in the Explanation to Section 33B. Explanation to Section 33 B defines an "Industrial Undertaking" to mean, " any undertaking which is mainly engaged in the business among other things in the manufactur or processing of things". Therefore, the relevant criteria to be applied for the assessee to claim the Investment Allowance under Section 32 A and the deduction provided under Section 80IA of the Act was to show that it is an Industrial Undertaking engaged in the manufacture of articles or thing or things. In fact, the present assessment order came to be passed pursuant to a remittal order of this Court passed in the decision reported in 274 (2005) I.T.R. 521 ( Commissioner of Income Tax -vs- Aicam Engineering Pvt. Ltd. ) as well as the directions of the Hon'ble Income Tax Appellate Tribunal to the assessing authority to extend an opportunity of hearing to the respondent assessee to substantiate the claim of Investment Allowance under Section 32A and deduction under Section 80IA of the Act. It is pursuant to the above referred to remand order that the assessing authority determined the issue and held that the respondent assessee is a contracting firm and cannot therefore be held to be an industrial undertaking enganged in the manufacturing activity. However, the C.I.T. Appeals as well as the Tribunal held that as part of its contractual operations, the respondent assessee is also involved in manufacture of articles and things and, therefore, it would qualify for relief under Section 32 A and Section 80 IA of the Income Tax Act. 3. We heard Mr.K. Subramaniam, learned Standing counsel appearing for the Revenue and Mr.V.S. Jayakumar, learned counsel https://hcservices.ecourts.gov.in/hcservices/ appearing for the assessee. 4. At the very outset Mr. Subramaniam relied upon the order passed by a Division Bench of this Court dated 26.08.2002 made in T.C. No: 753 of 1991 which is also related to the very same assessee. The questions of law framed thereunder were also mostly related to the issue as to whether the respondent assessee was entitled for the deduction under Sec. 32 A – Investment Allowance and whether it can be said that the assessee is involved in manufacturing activity namely manufacutre of an article or thing. The learned standing counsel then contended that some of the statutory forms submitted by the respondent assessee itself relates to the contracting firms and not related to manufacturing establishments. The learned standing counsel therefore contended that having regard to the stand that the respondent assessee has engaged contract workers for erection of various equipments for different parties, its activities cannot be brought within the term "Industrial Undertaking" in order to extend the benefits under Section 32 A and Section 80 IA of the Income Tax Act, 1961. 5. On the above submissions Mr. V.S. Jayakumar learned counsel appearing for the respondent assessee contended that a detailed list of manufacturing activities carried on by the respondent assessee have been furnished before the assessing authority as well as the C.I.T. (Appeals) and that the C.I.T. (Appeals) perused the records and then rendered a factual finding that the respondent assessee, in the course of enforcing its contractual obligations, was involved in very many operations of supply of industrial equipments and, therefore, simply because the respondent assessee was involved in the business of errection of various equipments, the revenue cannot contend that there was no manufacturing operations carried on by the respondent assessee to deny the benefits of Section 32 A and Section 80 IA of the Act. 6. We see some force in the submission of the learned counsel appearing for the respondent / assessee. In fact a perusal of the details culled out by the Commissioner of Income Tax (Appeals) while passing the order dated 09.09.2008 pertaining to the assessment years 1986-'87, 1994-'95 and 1995-'96 would disclose the various products and equipments manufactured and supplied by the respondent assessee to its customers / end users whcih was running to Rs.2.50 crores to Rs.11.81 crores. In fact, in its detailed reply, the respondent / assessee has explained the nature of its operations for its different principals. In one such statement the respondent / assessee has submitted that it used to purchase raw materials, manufacture and supply and errect for various public undertakings several industrial equipments comprising boilers and piping systems, heaters, crane girders, different steel plant equipment, chemical columns, girders for MRTS, power generating equipment for North Madras Refinery, various equipments for refinery maintenance, air pre-hearing system https://hcservices.ecourts.gov.in/hcservices/ for cauvery refinery of MRL and different other mechanical equipment for cement plants. The above details furnished by the respondent assessee supported by material documents sufficiently demonstrated before both the lower authorities to confirm that the respondent assessee was squarely covered by the expression "Industrial Undertaking" by virtue of its manufacturing activity in the course of its business of contract of supply and errection of various equipments for different public sector undertaking. Such overwhelming evidence did weigh with the lower authorities to hold that the respondent assessee was entitled to the benefits under Section 32 A and Section 80IA of the Income Tax Act, 1961. Having regard to such detailed consideration of relevant materials by the lower appellate authorities and the Tribunal which had reached a finding of fact as regards teh manufacturing acitivity of the respondent assessee, there is no scope for interference on such finding of fact arrived at by the Tribunal. The Tribunal also followed the decision of the Division Bench of this Court rendered in Income Tax Officer vs. K.S.Venkatraman and Co. Reported in 243 I.T.R. 377 while confirming the order made by the C.I.T. (Appeals). Apart from the above said detailed discussion and consideration of material documents by the C.I.T. (Appeals), which was confirmed by the Tribunal, no other materials were available on record. Though the earlier order dated 26.08.2002 made in T.C. No: 753 of 1991 relates to the very same assessee, the said decision cannot be applied to the case on hand. We are, therefore, convinced tha t the order of the Tribunal, confirming the order of the C.I.T. (Appeals), is perfectly in order and the questions of law are answered against the appellant. The tax case appeals fail and the same are dismissed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar gp To 1. The Income Tax Appellate Tribunal, " A " Bench, Chennai. 2. The Commissioner of Income Tax, Chennai. 1 cc To Mr.K.Subramanian Senior Standing Counsel for IT, SR.87623. 1 cc To Mr.V.S.Jayakumar, Advocate, SR.87768. T.C. (A) Nos: 601 to 603 of 2010 KGK(CO) RVL 19.01.2011 https://hcservices.ecourts.gov.in/hcservices/