(Petitions against the judgment and order, dated May 3, 1991, of the Kerala High Court in Income-tax References Nos. 134 and 135 of 1988).

Income-tax---

----Reference---Question of law---Investment allowance---Construction company- --Appellate Tribunal's finding on the facts that assessee was engaged mainly in the manufacture or processing of goods and was an industrial undertaking---Finding not challenged---Not open to Department in a reference to contend assessee not an industrial undertaking--Indian Income Tax Act, 1961, Ss.32A(2)(b)(iii) & 256.

The respondent, a construction company, had claimed investment allowance under section 32A of the Income Tax Act, 1961, which the Appellate Tribunal allowed on the finding that its machinery was used in the business of construction, manufacture or production of articles or things and the respondent was an industrial undertaking. The Department did not challenge this finding and on a reference of the question whether the respondent was entitled to investment allowance, the High Court held in favour of the respondent. On a petition for special leave to appeal preferred in the Supreme Court:

Held, dismissing the petition and affirming the decision of the High Court, that the contention of the Department that the construction activity carried on by the respondent could not be said to be an industrial undertaking became irrelevant as the Department had not challenged the finding of the Tribunal.

CIT v. Bhageeratha Engg. Ltd. (1992) 193 ITR 674 affirmed.

S.C. Manchanda, Senior Advocate (K.P. Bhatnagar and P. Parameswaran, Advocates with him) for Petitioner.

Harish N. Salve, Senior Advocate (Sudhir Gopi and A.G. Prasad, Advocates with him) for Respondent.

JUDGMENT

Heard learned counsel on both sides. The question of law formulated for the opinion of the High Court on a reference under section 256 of the Income Tax Act, 1961., pertains to the entitlement of the assessee to the investment allowance under section 32A of the Act. The High Court held (see (1992)193 ITR 674, 680):

"The Tribunal further found that since the machinery was used in an industrial undertaking in the business of construction, manufacture or production of articles or things, the assessee is entitled to investment allowance under section 32A of the Act. The finding that the assessee is engaged mainly in the manufacture or processing of goods and is an industrial undertaking is not in challenge before us. Admittedly, the assessee is a construction company and for the purpose of the manufacturing activities performed by it, it used the machinery in its business of construction ....It is not open to the Revenue to contend in these references that the assessee-company is not an industrial undertaking, since the finding of fact in that regard entered by the Tribunal, has not been expressly challenged by an appropriate question raised in the reference."

The contention of the assessee (sic) in relation to the construction activity carried on by him cannot be said to be ad industrial undertaking, becomes irrelevant.

With this finding, the special leave petition is dismissed.

M.B.A./2255/T Petition dismissed.