JUDGMENT
N.K. Jain, J.
1. The Income-tax Appellate Tribunal, Indore Bench, Indore, has on an application by the applicant-Department made under Section 256(1) of the Income-tax Act, 1961 (for short “the Act”), stated the case and referred the following question said to be of law for the opinion of this court, arising out of its order dated November 9, 1992, passed in I. T. A. Nos. 143 and 144/Ind of 1988 relating to the assessment years 1985-86 and 1986-87 :
” Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in holding that the assessee is an ‘industrial undertaking’ engaged in manufacture or production of articles or things and thereby holding that it is entitled to deduction under Sections 80HH and 80I of the Income-tax Act, 1961 ?”
2. Briefly stated the facts leading to this reference are thus : The years of assessment involved are 1985-86 and 1986-87. The non-applicant assessee is a registered firm engaged in the business of construction of overhead water tanks. The assessee was denied deduction claimed under Section 80HH for the year 1985-86 and under Sections 80HH and 80I for the assessment year 1986-87. On appeal, the Commissioner of Income-tax (Appeals) upheld the disallowances.
3. The assessee came in second appeal before the Tribunal. The Tribunal by its order dated November 9, 1992, allowed the deduction under Section 80HH in the assessment year 1985-86 and under Sections 80HH and 80I for the year 1986-87 as claimed by the assessee. The Tribunal, inter alia, observed :
“The assessee was engaged in the business of construction of overhead water tanks, which requires construction of piles. The construction of piles itself is a process of manufacture.”
4. As the Department was not satisfied, it moved an application under Section 256(1) of the Act leading to this reference.
5. We have heard Shri D. D. Vyas, learned counsel for the applicant Department. None has appeared for the non-applicant/assessee, despite service of notice and SPC for final hearing for May 10, 1996.
6. The point projected in this case stands resolved by a decision of the the Supreme Court in CIT v. Shanhar Construction Co. [1993] 204 ITR 412, wherein the apex court dealing with a case in which the assessee was engaged in the construction of dams observed (page 426) :
” For all the above reasons, we are of the opinion that it is not possible to accede to the contention that the activity of construction of a dam can be characterised as manufacture or producing of an article or articles, as the case may be, within the meaning of Section 80HH(2)(i) of the Act.”
7. It may be that the assessee itself is manufacturing some of the articles which come into the construction of overhead water tanks but as observed by their Lordships of the apex court in the case of Shankar Construction Co. [1993] 204 ITR 412 “that makes little difference to the principle”. The assessee is not claiming the deduction provided under Section 80HH on the value of the said manufactured articles but on the total value of the overhead tanks as such. In such a situation, observed the apex court, (page 424) “it is immaterial whether the manufactured articles which go into the construction of a dam are manufactured by him or purchased by him from any other person”.
8. Following the aforesaid decision in Shankar Construction’s case [1993] 204 ITR 412, this court in M. C. C. No. 143 of 1993 (CIT v. P. D. Agrawal and Co. [1997] 226 ITR 924), decided on April 4, 1996, has held that an assessee engaged in the business of construction of buildings, roads, etc., is not an industrial undertaking engaged in the manufacture or production of articles or things.
9. In view of the factual and legal position above, we are satisfied that the Tribunal was not justified in law in holding that the assessee was an industrial undertaking engaged in the manufacture or production of articles or things.
10. In the result, we answer the question in the negative, i.e., in favour of the Department and against the assessee.
11. The miscellaneous civil case thus stands disposed of as aforesaid but without any order as to costs. Counsel’s fee is allowed at Rs. 750, if certified.
12. A copy of this order be transmitted to the Tribunal for further action in accordance with law.