R.K.AGRAWAL, J. - (1.) THE Tribunal, New Delhi, has referred the following question of law under s. 256(1) of the IT Act, 1961, hereinafter referred to as "the Act" for opinion to this Court : "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that deduction under s. 80 - I was to be allowed to the assessee by holding that the assessee was manufacturing or producing articles or things -
(2.) THE present reference relates to the asst. yr. 1984 -85.
(3.) BRIEFLY stated the facts giving rise to the present reference are as follows : The ITO in making the assessment for the year 1982 -83 found that the assessee was carrying on contract business and was undertaking for manufacture and construction of tabular trusses, beams, girders and other structurals, rolling shutters along with other civil works. In respect of this business, the assessee had claimed deduction under s. 80 -I of the Act. The ITO was, however, of the view that the business of the assessee was of a contractor and it could not be held to be carrying on business of manufacture or production of articles as required under s. 80 -I of the Act. The ITO did not allow the claim under s. 80 -I. Before the AAC, it was submitted that the assessee had been granted registration as a small -scale industry and it was manufacturing various structures at the workshop and these structures were used in erecting these structures at the site. It was pointed out that the nature of the business was different from normal civil work/contract work and the assessee was mainly engaged in manufacturing steel structures. On these facts, the AAC held that the firm was engaged in small industrial undertaking for the purpose of manufacture and production of articles and things. In this connection, he referred to the manufacture of tabular roofing structures, steel fabrications and allied structures beams, girders and rolling shutters. The AAC also held that investment allowance was allowable to the assessee as the assessee was carrying on manufacturing activity and he was actually producing various structures and fabricated items. Feeling aggrieved the Revenue as well as the assessee preferred separate appeals before the Tribunal and the Tribunal has allowed the assessee's appeal by observing as follows : "7. We have considered the facts of the case and we are of the view that the case of the assessee cannot be equated with that of a normal civil contractor constructing buildings, dams, tunnels, etc., it is true that neither the ITO nor the AAC has brought out any detail of the nature or the activity and the articles produced have not been considered in the light of the erection contracts completed by the assessee. The nature of the contract has also not been brought out in the orders. The ITO has also used the words 'civil contracts' but merely use of a word cannot determine the nature of the activity. There is force in the submission of the assessee's counsel that the basic activity of the assessee is of manufacturing various fabrication parts and tabular roofing structures like beams, girders as well as rolling shutters. It may be that besides these, some other activities may have been carried on by the assessee but that is not brought out in the order of the lower authorities. If the assessee uses the manufactured articles and erects the mechanical structures by just fixing them in a particular position, the claim of the assessee under s. 80 -I could not be denied. Here we are not concerned with the construction of a bridge or dam or a building and, therefore, this case is distinguishable from the case of Hydle Construction (P) Ltd. relied upon by the learned Departmental Representative. We are, therefore, inclined to agree with the contention of the learned counsel that in case the firm's activity is of manufacturing structures, the benefit of s. 80 -I should be available to the assessee. However, the learned AAC has not gone into the matter in detail and has not found whether the profit is against which the deduction was claimed related to such manufacturing activity or to some other activities. The section provides for allowance of 20 per cent of such profits and gains as deduction and such profit and gain has to be from the industrial undertaking itself, which is engaged in the manufacturing activity and not from any other type of activity. The AAC is, therefore, directed to ascertain the position of profits vis -a -vis the manufacturing activities as this aspect of the matter is not brought out in the orders of the authorities. Subject to this direction, the claim of the assessee is accepted." We have heard Sri A.N. Mahajan, learned standing counsel for the Revenue.;