LexBUILDERS ASSOCIATIONS OF INDIA versus UNION OF INDIA AND ORS.
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A B BUILDERS ASSOCIATIONS OF INDIA v. UNION OF INDIA AND ORS. AUGUST 1, 1994 [B.P. JEEVAN REDDY AND S.C. SEN, JJ.) I11come Tax Act, 1961-Sections 32A(2)(b)(iii) and 32A(2A)--As in- serted by Finance (No. 2) Act, 1977. C The word "constniction" occurring in the sub-clause (iii) of clause (b)f Sub-Section (2) of Section 32A of Income Tax Act. Not to be dissociated from the words "manufacture or production of a11y article or thi11g not bei11g an article or thing specified in the list in the Eleventh Schedule'C-/Jy the retention of the word "constntction" in the new sub-clause (iii), it was intended that the ships shall continue to be within the purview of present sub-clause D (iii) as they were within the purview of erstwhile sub-clause (ii). Interpretation of Statutes-Taxing Laws. Opinion of Law Ministry and reply of Minister of State for Finance in Parliament-Not of much relevance for the purpose of interpreting sub-clause E (iii) of clause (b) of Sub-Section (2) of Sec. 32A of the Income tax Act, 1961. A writ petition was filed under Art. 32 challenging the correctness or the decision or this Court in Commissioner of Income Tax v. N.C. Bud- haraja & Co., (204) I.T.R. 412. F The challenge was based on the ground that as the following three Important circumstances were not brought to the notice of this Court, the decision, in so far as it relates to Section 32A(2)(b)(lii), requires recon- sideration by a larger Bench :- G (a) The word "construction" in clause (Iii) or clause (b) or Sub-Sec- tion (2) of Section 32A should be read independent of and not In associa- tion with the words following, viz., "manufacture or production of any article or thing". (For this proposition reliance was placed on the opinion of Law H Ministry and Reply of Finance Minister In Parliament) 376 BUILDERSASSNS. OFINDIA v. U.0.1. 377 (b) The circular issued by t.he Central Board of Direct Taxes in the A year 1986 [published in 161 l.T.R. (statutes) 24 to 26] with reference to Section 32·AB which was introduced with effect from April 1, 1987 but which contains identical words negatives the construction put by this Court in Budharaja 's case. (c) This court had in Commissioner of Income Tax v. Bhageeratha Engineering Limited, (1993) l.T.R. 12, taken a view contrary to the one taken iu Budharaja and Co. with respect to Section 32A(2)(b) (iii). Dismissing the writ petition, HELD : 1.1. Sub-clause (iii) of Clause (b) of Sub-section (2) of B c Section 32A of the Income tax Act, 1961 continues to apply to ships. The word "construction" occurring in the said sub· clause cannot be dissociated from the following !"ords "manufacture or production of any article or thing not being an article or thing specified in the list in the Eleventh Schedule". The context and the structure of the sub-clause does not permit D such Jissociation of the word "construction" from the following words. If that were the intention of the Parliament, it would have employed ap· propriate words to dissociate the word "construction" from the following words. There are none. As explained in the Budltaraja's case, the word "construction" was retained in the new sub-clause (iii) because the ships E continue to be within th< purview of present sub-clause (iii) as they were within the purview of former sub-clause (ii). It is not necessary to repeat the reasoning in Budharaja & Co. over again. (379-D; 385-F ·G·H; 386-A] 1.2. Sub-section (2A) of Section 32A was inserted by Finance (No. 2) F Act, 1977 by way of an amendment; Sub-section makes it clear that if any machinery or plant is used mainly for the purpose of business of construc· tion, manufacture or production of any article or thing which does not fall within the prohibited list in the Eleventh Schedule, it will qualify for prohibited list in the Eleventh Schedule, it will qualify for diduction under Section 32A. The deduction will not be denied only because such machinery G or plant is also used for the purpose of business of construction, manufac· ture or production of any article or thing included in the prohibited list. Sub-section (2A) of Section 32A is clarifacatory in nature. It clarifies that machinery or plant mainly used for inter alia, construction of articles or things which are not included in the prohibited list, will qualify for H 378 SUPREME COURT REPORTS [1994] SUPP. 2 S.C.R .. A diduction under Section 32A, notwithstanding the fact that su
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