Delhi High Court
Ansal Housing & Estates (P) Ltd. vs Commissioner Of Income Tax on 1 January, 1999
Equivalent citations: 77(1999)DLT765, 1999(48)DRJ651
JUDGMENT Devinder Gupta, J.
1. Following question of law referred for opinion to this Court is:-
"Whether on the facts and in the circumstances of the case, the ITAT was correct both on facts and in law in holding that the activities carried on by the Appellant company did not entitle it to the status of industrial company?"
Facts found are that the assessee is a private limited company engaged in the business of construction. It's claim that it was liable to be assessed at concessional rate for the assessment year 1981-82 on the ground that it was an industrial company as per the definition contained in Finance Act of 1991 was negatived by the Income Tax Officer. Commissioner of Income Tax (Appeals) allowed the assessee's claim holding that the assessee was an industrial company. Appeal of Revenue against the order of Commissioner of Income Tax (Appeals) was allowed by the Tribunal following the decision of this Court in Commissioner of Income Tax, Delhi-I v. Minocha Brothers P. Ltd. 1986(160) I. T.R. 134. Reference is at the behest of the assessee.
The decision of this Court relied upon by the Tribunal was affirmed by the Supreme Court in Minocha Bros.P.Ltd. v. Commissioner of Income Tax (1993) 204 I.T.R. 628 but on different ground holding that the appellant company mainly engaged in the construction of buildings was not an industrial company and was not entitled to be taxed at the concessional rate because it had failed to adduce material to establish that the income attributable to the manufacturing activity undertaken by it represented not less than 51% of its total income.
On the facts stated, the question referred otherwise is fully covered by the decision of the Supreme Court in Commissioner of Income Tax v. N.C. Budhiraja & Co. (1993) 204 I.T.R. 412. The assessee company engaged in the business of construction of building will not fall within the ambit of industrial company and the question has to be answered in favour of the Revenue and against the assessee. The decision of the Supreme Court in N.C.Budhiraja & Co.'s case (supra) was affirmed in Builders Associations of India v. Union of India and Ors. (1994) 209 I.T.R. 877. The activity of construction of a dam cannot be characterised as manufacture or producing of article or articles, as the case may be within the meaning of Section 80HH(2)(i) of the Income Tax Act, 1961.
In view of the fact that the question referred now stands settled by the Supreme Court in N.C. Budhiraja & Co. (supra), the reference is answered accordingly in favour of the Revenue and against the assessee.