JUDGMENT
1. The Income-tax Appellate Tribunal, Allahabad, has referred the following five questions of law. The first three at the instance of the Commissioner of Income-tax and remaining two at the instance of the assessee under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for opinion to this court :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in upholding the order of the Commissioner of Income-tax (Appeals) directing the Income-tax Officer to allow investment allowance under Section 32A ?
2. Whether on the facts and in the circumstances of the case, the machinery employed by the assessee entitles the assessee to investment allowance within the meaning of Section 32A(2)(b) of the Income-tax Act, 1961 ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in deleting disallowance of Rs. 99,180 and holding that the provision of Rule 3(c) of the Companies (Acceptance of Deposits) Amendment Rules, 1981 is not applicable in the assessment year 1981-82 ?
4. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally correct in holding that the assessee-company was not entitled to carry forward of the amounts of unabsorbed deficiency under Section 80J from earlier years which had already been held to be allowable in the respective earlier years ?
5. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally correct in holding that the assessee-company was not entitled to relief under Section 80J of the Income-tax Act, 1961 ?"
2. At the outset it may be mentioned here that nobody has appeared on behalf of the assessee to press this reference made at its instance and, therefore, the two questions which have been referred at the instance of the assessee are being returned unanswered.
3. Briefly stated the facts giving rise to the present reference are as follows :
The reference relates to the assessment year 1981-82. The applicant, Jai Prakash Associates Pvt. Ltd., is a company engaged in the construction of tunnels, bridges and roads, etc. It claimed investment allowance under Section 32A and also relief under Section 80J of the Act. It has also claimed carry forward of unabsorbed deficiency under Section 80J from earlier years. The Income-tax Officer had disallowed the claim on the ground that it does not come within the definition of industrial undertaking. Further, the Income-tax Officer had disallowed the payment of interest to depositors in excess of 15 per cent. per year under the Companies Deposit Rules. However, in appeal the Commissioner of Income-tax (Appeals) has allowed the claim of investment allowance under Section 32A and Section 80J of the Act. However, he also upheld the order regarding the disallowance of interest in respect of the prescribed limit of 15 per cent. under the Companies Deposit Rules.
4. Feeling aggrieved the applicant preferred second appeal before the Commissioner. Cross appeal was also filed by the Revenue. The Tribunal has upheld the order of the Commissioner of Income-tax (Appeals) in so far as allowing of relief under Sections 32A and 80J of the Act is concerned. However, it had held that part of the interest which has been disallowed by the Income-tax Officer in view of the ceiling put under the Companies Deposit Rules is also to be allowed as the said rules will not be applicable in respect of the accounting period in question.
5. We have heard Shri A. N. Mahajan, learned standing counsel for the Revenue on the question referred at the instance of the Revenue and we find so far as the first two questions are concerned in view of the decision of the apex court in the case of CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412 the activity of construction of dam does not amount to manufacture or production of an article and, therefore, the firm is not entitled for investment allowance. In this view of the matter, the Tribunal has committed error in holding that the firm is entitled for investment allowance under Section 32A of the Act.
6. In view of the foregoing discussion the first two questions are, therefore, to be answered in the negative, i.e., in favour of the Revenue and against the assessee. So far as the third question is concerned we find that the provision of Rule 3(c) of the Companies (Acceptance of Deposits) Amendment Rules, 1981, was enforced on April 1, 1981. The amendment is in the Companies Deposit Rules and not under the Income-tax Act. It will come into operation only on April 1, 1981, and as the accounting period of the applicant ended on September 30, 1980, the same would not be applicable. In this view of the matter the Tribunal was justified in allowing the amount of interest claimed by the applicant. Question No. 3 is, therefore, answered in the affirmative, i.e., in favour of the assessee, and against the Revenue. However, there shall be no order as to costs.