JUDGMENT
K. Shivashankar Bhat, J.
1. The two questions referred under the provisions of the Income-tax Act, 1961, read thus :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in restoring the matter to the Commissioner (Appeals) to consider allowance of investment allowance on machinery used in contract business ?
2. Whether the assessee is entitled to investment allowance in respect of the machinery used in the construction or only on that part of the machinery which is used for fabricating articles used in construction ?”
2. The assessee is a contractor who is engaged in the work connected with the Krishna Project. The assessee claimed various deductions including investment allowance under section 32A of the Act. One of the items claimed by the assessee pertained to a sum of Rs. 2,270 in respect of general machinery which were used in the work taken by the assessee. This was granted. The first question referred above pertained to this allowance. Mr. G. Chanderkumar, learned counsel for the Revenue, initially contended that as the first question pertains to a different aspect of the case, ultimately, he had to agree that the above first question was related only to the said sum of Rs. 2,270. Before the Appellate Tribunal, the parties raised several questions for reference but ultimately, only two question were referred as above. The questions which were rejected do not require consideration in these references, and therefore, will have to be eliminated from the contentious raised before us. The first question has to be read in the background of the above-said facts. Therefore, the facts to be considered regarding the first question pertain to the sum claimed as an investment allowance on general machinery. The amount involved is so small that we do not think it is worthwhile to spend our time considering this question. The Appellate Tribunal has considered the question and the assessee was granted the relief. Hence, we decline to answer the first question having regard to the amount involved.
3. The second question pertains to the dumpers and tippers belonging to the assessee. The assessee used them to lift earth which was necessary to perform the assessee’s part of the work. The contention of the Revenue is that the dumpers and tippers are not used in the manufacture of any article and, therefore, the provisions of section 32A are not at all attracted. Under section 32A, investment allowance is granted, inter alia, in respect of machinery or plant specified in sub-section (2) which is owned by the assessee and is wholly used for the purpose of business carried on by the assessee. The second proviso to section 32A(1) states that no deduction shall be allowed in respect of certain machinery or plant installed in the office premises or in respect of road transport vehicles, etc. Sub-section (2) of section 32A was strongly relied upon by learned counsel for the Revenue to contend that the machinery which is eligible for the investment allowance is machinery which produces an article. In other words, the machinery should be directly employed to produce an end product. It was contended that the machinery used just of lift earth and transport the same would not be the machinery contemplated by sub-section (2) which creates the eligibility for investment allowance. Learned counsel referred to sub-clause (iii) of clause (b) of sub-section (2) of section 32A as it then stood. This clause actually states that the machinery installed in any industrial undertaking for the purposes of the 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, is eligible for the allowance. The subject matter, certainly, is not enumerated in the Eleventh Schedule and there is no dispute about it. Therefore, the question is whether the dumpers and tippers used for the purpose of business of construction results in the production of an article or thing as contended by learned counsel for the Revenue. The word “thing” had a wide connotation as pointed out by the Madras High Court in I. Devarajan v. Tamilnadu Farmers Service Co-operative Federation [1981] 131 ITR 506. At page 525, the Bench has observed thus :
“The word ‘things’ is shown in Earl Jowitt’s Dictionary Vol. 2, as meaning ‘the subject of dominion or property as distinguished from persons’. `They are of three kinds; things real or immovable, comprehending lands, tenements, and hereditaments; things personal or movable, comprehending goods and chattels; and things mixed partaking of the characteristics of the two former, as a title deed, a term for years. The civil law divided things into corporeal and incorporeal.’ See Earl Jowitt’s Dictionary of English Law, Vol. 2, page 1746. Thus incorporeal items like debts would be things. Therefore, the word ‘things’ appears to comprehend incorporeal assets also.”
4. In fact, the Bench observed that the word “thing” would include balance at credit to a person in a bank. In CIT v. N. C. Budharaja and Co. [1980] 121 ITR 212, the Orissa High Court held that construction of a dam will be the construction of an article. It was pointed out that the term “article” need not be confined to movable property only. A wider meaning was given to the word “article” for the purpose of section 80HH of the Act. The purpose of section 32A is to provide for the grant of investment allowance in respect of machinery which is used for earning the income which is taxed under the Act. The impugned provision of section 32A(1) itself indicates that any machinery wholly used for the purpose of the business is eligible for investment allowance and this has been amplified under sub-section (2), clause (b), which is applicable to the assessee in question. The fact is that the assessee is an industrial undertaking, as has already been found by this court in the very assessee’s case in I. T. R. C. No. 138 of 1985 and connected matters disposed of on November 8, 1990 (Shankar Construction Co. v. CIT ). In fact, the decision of the Orissa High Court, referred to above, also supports the same view. The contention of learned counsel for the Revenue, if accepted, will unnaturally restrict the scope of the beneficial provision. That machinery used in the business of construction is normally eligible for investment allowance is clear from section 32A as well as by sub-clause (iii) of clause (b) referred to above. “The business of construction” again is a wide phrase and normally a business of construction involves construction of buildings, dams, roads, channels, etc. Machinery which is necessary for this business involving several activities cannot be held as not contemplated by Parliament as covered for the purpose of investment allowance. The contention of the Revenue will practically result in deleting the phrase “business of construction” from sub-clause (iii) of clause (b) of sub-section (2) of section 32A of the Act. A few decisions about the concept of “industrial undertaking” were cited, which it is not necessary for us to consider here since a Bench of this court has already given a finding in favour of the assessee in that regard. The contention of learned counsel for the Revenue, that only the machinery which directly produces an end product is eligible for investment allowance, also cannot be accepted, having regard to the phraseology of section 32A(2)(a) as well as section 32A(2)(b)(iii). Both these provisions refer to the machinery used for the purpose of business. The purpose of business includes every activity which is necessary to carry on the business. It is not the final touches involved in a construction work that result in carrying on of the business. The various activities from the beginning to the end will be part of the business. Therefore, the decisions CWT v. K. Lakshmi , CIT v. Shah Construction Co. Ltd. [1983] 142 ITR 696 (Bom) and CIT v. Oricon P. Ltd. [1985] 151 ITR 296 (Bom) need not be gone into.
5. Mr. Chanderkumar, learned counsel for the Revenue, then referred to the second proviso to section 32A, wherein, as per clause (b), road transport vehicles are excluded for the purpose of investment allowance. Dumpers and tippers are registered under the provisions of the Motor Vehicles Act as road transport vehicles and, therefore, it was contended that these vehicles are road transport vehicles for the purpose of the Income-tax Act also.
6. The words and phrases used in a statute will have to be understood in the context in which they are used. Clause (b) in the second proviso to section 32A has to be read in the setting in which other clauses (a), (c) and (d) are used. Specially, clauses (a) and (b) in the second proviso make it clear that exclusion from the provision is only in respect of the machinery or plant or appliances connected with the administrative part of the business, i.e., those used in the office premises or residential accommodation of the assessee. Naturally, road transport vehicles referred to herein will have to be such vehicles which are made to carry the employees to the office and back home. The words “road transport vehicles” include vehicles like omnibuses, cars, etc., and, not dumpers and tippers which are directly used in the activity of the business at the place where the business is actually carried on. The dumpers and tippers are essentially machinery to carry on construction work.
7. In view of the above, we are of the view that the assessee is entitled to investment allowance in respect of dumpers and tippers. The question referred to us will have to be answered in the affirmative and against the Revenue. References are answered accordingly.