Machinery used in the business of construction is normally eligible for investment allowance under section 32A of the Income Tax Act, 1961.

K. Shivashankar Bhat, J.—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 produc