Per Shri Y. R. Meena, Judicial Member - This is an appeal by the assessee against the order of the Commissioner (Appeals), Gujarat, Rajkot dated 21-3-1983. The assessment year involved is 1981-82. The first issue for our consideration in this appeal is whether the Commissioner (Appeals) has erred in law and on facts in holding that the assessee-firm was not entitled to investment allowance on tractors and trailers. The facts in short are that the assessee is a contractor.
During the assessment year under appeal the assessee has done construction work of Sulchi Dam and Dahaj Amod Mular State Highway. The total receipts on the work executed by the assessee is Rs. 1,20,08,964 on which gross profit disclosed by the assessee is Rs. 12,40,726 as against gross profit of Rs. 11,41,394 on total receipts of Rs. 81,63,991 shown in immediate preceding year. Before the ITO the assessee claimed that the assessee is entitled for investment allowance of Rs. 77,263 on tractor and trailer. According to him, the tractors and trailers are machinery and are eligible for investment allowance.
The tractors are used for construction of dam. The ITO did not agree with the claim of the assessee. According to him, the business in respect of construction of dam and road cannot be considered as industrial undertaking. Therefore, the assessee is not eligible for investment allowance on tractor and trailer. Further, the assessee has relied on the case of Orissa minerals Development Co. Ltd. v. CIT  117 ITR 434 (Cal.) and the CBDT Instruction No. 39/65-IT (Ad.) dated 14-10-1965. The assessee further relied on the decision of the Orissa High Court in the case of CIT v. N. C. Budharaja & Co.  121 ITR 212. The ITO did not agree with the claim of the assessee.
Finally, he added Rs. 77,263 to the income of the assessee. In appeal, the view taken by the ITO was confirmed by the Commissioner (Appeals) on this point. Being aggrieved, the assessee came in appeal before us.
2. The submission of the learned counsel for the assessee Shri Divatia was that the assessee is an industrial undertaking and is entitled for investment allowance under section 32A (2) (b) (iii) of the Income-tax Act, 1961 (the Act). He relied on the decision of the Orissa High Court in the cases of Orissa Minerals Development Co. Ltd. (supra) and N. C.Budharaja & Co. (supra), the amendment in section 32A (2) (b) (iii) with effect from 1-4-1978 and Progressive Engg. Co. v. ITO  3 ITD 172 (Hyd.) He also relied on circular of the CBDT [F No. 10/39/65-IT (Ad.) dated 14-10-1965] which was referred to by the ITO. On the other hand, Shri Saxena, the learned departmental representative submitted that the assessee is not an industrial undertaking. Therefore, the assessee is not entitled for investment allowance. He further submitted that tractors are vehicles. Therefore, they do not form part of the machinery.
3. We have heard the rival submissions and considered the material on record. Before going to the issue whether tractors and trailers are part of the machinery or not we have to see whether the assessee is an industrial undertaking. In section 32A (2) (b) (iii) definition of industrial undertaking is given. We reproduce the same for ready reference : "(iii) in any other industrial undertaking for the purposes 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." From the reading of sub-clause it appears that if the assessee is engaged in construction, manufacture or production of any article or thing which is not specified in the list in the Eleventh Schedule to the Act, then the assessee should be taken as an industrial undertaking. Here it is an admitted fact that articles or things., i.e., construction of dam is not specified in the Eleventh Schedule.
4. In the case of N. C. Budharaja & Co. (supra) their Lordships of the Orissa High Court have considered the meaning of the term industrial undertaking. The facts there were that the assessees two registered firms undertook the construction of an irrigation project. the firms had come into existence for execution of the particular works and were to stand dissolved when the works were finished. Both the firms were dissolved when the works were finished. Before the ITO, the claim was whether the assessee is an industrial undertaking and entitled for concession under section 80HH of the Act and finally the issue came up before their Lordships of the Orissa High Court. Their Lordships observed that when the definition of industrial undertaking is not given in the provision it can be borrowed from sister legislation and finally held that the assessees were industrial undertakings and entitled to the benefit as provided under section 80HH.5. In the case of National Projects Construction Corpn. Ltd. v. CIT  74 ITR 465 their Lordships of the Delhi High Court have considered the meaning of industrial undertaking. The definition was given in the Explanation to the relevant provision as under : "Industrial undertaking means an undertaking in the manufacturing, production or processing of goods or articles or in mining or in the generation or distribution of electricity or in other form of power." The assessee, a wholly owned Government company, was engaged in the construction of dams, barge, etc., of a considerable magnitude. Now the question before their Lordships was whether the assessee is an industrial undertaking in view of the above definition. Their Lordships answered the question in the affirmative and in favour of the assessee.
A similar issue was considered by the Tribunal in the case of Progressive Engg. Co. (supra). The facts before the Tribunal were that the assessee was doing business as contractors and claimed investment allowance on its machinery used in the construction of a dam. The Tribunal held that the assessee-firm doing business as contractors is entitled for investment allowance on its machinery used in construction of a dam under section 32A. The learned counsel for the assessee drew our attention towards the notes on clauses relevant to the amendment in section 32A which came into force with effect from financial year 1977-78. We reproduce the same for ready reference : Sub-clause (a) seeks to enlarge the scope of the existing provisions and provides that investment allowance will be granted in respect of machinery and plant installed for the purposes of business of construction, manufacture or production of all articles and things, except articles and things specified in the list in the Eleventh Schedule. A special dispensation has been provided in respect of machinery and plant installed in small-scale industrial undertakings before 1st July, 1977. Such machinery and plant will be eligible for investment allowance irrespective of whether it is used for the purposes of business of construction, manufacture or production of an article or thing specified in the list in the Eleventh Schedule." From the above notes on clauses it is clear that any article or thing which is not specified in the Eleventh Schedule is entitle for the investment allowance under section 32A. Considering the above discussions, in our view, the business of the assessee is construction of a thing and is covered by the definition of industrial undertaking given in section 32A (2) (b) (iii).
6. Now, the only question remaining for our consideration is whether tractors and trailers are entitled for investment allowance. The learned counsel Shri Divatia drew our attention towards the order of the Tribunal referred to above as well as the decision of the Calcutta High Court in the case of Orissa Minerals Development Co. Ltd. (supra) wherein their Lordships have considered the issue whether tractors and dumpers are road transport vehicles or not. Their Lordships pointed out at large 436 that in case of depreciation admissible to different head than motor vehicles, motor buses, motor lorries, motor taxies, motor tractors and motor cars. Further, their Lordships have reproduced the relevant para of the circular of the CBDT wherein the tractors and bulldozers are differentiated from vehicles. These are motor cars, motor lorries, buses, trucks, trailers, etc. The relevant para from the decision of their Lordships is reproduced as under : "Mr. Sengupta cited the departmental circular relied on by the assessee, which read as follows : 2. Development rebate is not admissible for and from the assessment year 1960-61 in respect of such vehicles as can be properly described as road transport vehicles, e.g., motor cars, motor lorries, buses, trucks, trailers etc. The benefit of development rebate should not, however, be refused in respect of tractors, bulldozers, etc." (p. 437) The learned counsel for the assessee submitted that the Calcutta High Courts decision related to development rebate while the issue for our consideration is in respect of investment allowance. We find common words in both the sections, i.e., section 32A and section 33 of the Act. These are new machineries or plant other than office appliances or road transport vehicles. The similar is the language of section 32A, i.e., no deduction shall be allowed in respect of .... in office appliances or road transport vehicles. Therefore, so far as the road transport vehicles are concerned, the wording is just identical and their Lordships of the Calcutta High Court have taken the view that road transport vehicle does not include tractors and dumpers, bulldozers, etc. Therefore, following the decision of their Lordships of the Calcutta High Court and the circular of the CBDT referred to by the Calcutta High Court at page 437 of the reports, we are of the view that tractors and trailers are eligible for investment allowance in view of the facts of this case.
7 to 12. [These paras are not reproduced here as they involve minor issues].