11. In the absence of any definition provided under the Income Tax Act, it would be admissible to find out the scope of this expression by resorting to its meaning in common parlance as understood by common persons or its natural and grammatical manner. Law Lexicon, the Encyclopedia Law Dictionary (1997 Edition), provides the following meaning :-
“Industrial Undertaking –
To be an industrial undertaking, the work of manufacture or production should be carried on in one or more factories by person or authority including Government.”
Likewise,Wharton .s Law Lexicon (Dictionary) (15 th Edition) defines this expression as –
“any undertaking pertaining to a scheduled industry carried on in one or more factories by any company but does not include-
(i) An ancillary industrial undertaking as defined in clause (aa) of section 3 of the Industries (Development and Regulation) Act, 1951; and (ii) a small scale industrial undertaking as defined in clause (j) of the aforesaid section 3. [Sick Industrial Companies (Special Provision) Act, 1985 (1 of 1986), section 3(1)(f)] Means any undertaking pertaining to a scheduled industry and includes an undertaking engaged in any other industry, or in any trade, business or service which may be regulated by Parliament by law. [Central Industrial Security Force Act, 1968 (50 of 1968) section 2(1)(b)]. Means any undertaking pertaining to a scheduled industry carried on in one or more factories by any person or authority including Government. [Industrial (Development and Regulation) Act, 1951 (65 of 1951), section 3(d)].”
12. Going by the dictionary meaning as well, one would find that industrial undertakings take their flavour from the manufacturing or production activities carried by factories. The expression „industrial undertaking .appears in Section 54 -D of the Act as well and the Kerala High Court also had an occasion to expound this term in the case of P. Alikunju M.A. Nazeer Cashew Industries v. CIT, 166 ITR 804. That Court was also of the opinion that natural meaning to the words „industrial undertaking .should be given in the absence of any statutory definition.
13. To this extent, there is no quarrel. However, Mr. Ajay Vohra, learned counsel for the appellant submitted that wide meaning should be given to the expression „industrial undertaking . as was done by the Kerala High Court, which is clear from the following discussion contained in the said judgment :-
“5. What then is an “industrial undertaking” ? The Income-tax Act does not define what is “an undertaking” or what is an “industrial undertaking” . It has, therefore, become necessary to construe these words. Words used in a statute dealing with matters relating to the general public are presumed to have been used in their popular rather than their narrow, legal or technical sense. Loquitur ut vulgus, that is, according to the common understanding and acceptation of the terms, is the doctrine that should be applied in construing the words used in statutes dealing with matters relating to the public in general. In short, if an “Act is directed to dealings with matters affecting everybody generally, the words used have the meaning attached to them in the common and ordinary use of language.” (Vide Unwin v. Hanson  2 QB 115 , per Lord Esher M. R. at page 119). That the Income-tax Act is of general application, is beyond dispute. It, therefore, follows that the meaning that should be given to these words “industrial undertaking” must be the natural meaning. It is all the more so because the Income-tax Act is one consolidating and amending the law relating to income-tax and super tax. (See Rao Bahadur Ravulu Subba Rao v. Commissioner of Income tAx (1956) 30 ITR 163 (SC) at 169).
“Undertaking” in common parlance means an “enterprise” , “venture”, “engagement” . It can as well mean “the act of one who undertakes or engages in a project or business” (Webster), An undertaking mentioned in Section 54D must be one maintained by a person for the purpose of carrying on his business. “Undertaking” for the purpose of this section, however, must bean “industrial undertaking” . The demonstrative adjective “industrial” qualifying the word “undertaking” unmistakably and with precision shows that the undertaking must be one which partakes of the character of a business. That that is the meaning that is intended by Parliament is clear from the context in which these words have been used in the section. A reference in this connection to the following clause, namely :
“………being land or building or any right in land or building, forming part of an industrial undertaking belonging to the assessee which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee for the purposes of the business of the said undertaking. …… ” (emphasis supplied) is profitable. The word “business” has been denned in the Income-tax Act. The definition reads :
” ‘Business’ includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. “
7. Construing this word “business”, the Supreme Court in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax 26ITR765( SC) has observed that “the word “business” connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose.” Endorsing this construction, the Supreme Court in a later decision in Mazagaon Dock Ltd. v. Commissioner of Income Tax (1958) 34 ITR 368 has observed (at page 376) : “The word ‘business’ is, as has often been said, one of wide import and in fiscal statutes it must be construed in a broad rather than a restricted sense.”
8. The words “industrial undertaking” therefore, should be understood to have been used in Section 54D in a wide sense, taking in its fold any project or business a person may undertake. The “running of a lodge”, by the assessee, therefore, can be said to be an “industrial undertaking” within the meaning of Section 54D of the Income-tax Act.”
18. Therefore, we are of the opinion that common sense approach will have to be adopted and those undertakings would qualify as industrial undertakings .which are involved in „manufacturing activity .
19. The activity of construction can, by no stretch of imagination, be treated as manufacturing activity as it does not amount to manufacture or production of an article or a thing. Law in this behalf stands settled by the judgment of the Supreme Court in the case of Commissioner of Income Tax, Orissa & Ors. v. M/s. N.C. Budharaja & Company & Ors., 204 ITR 412. Following this judgment, the Supreme Court in S.A. Builders Ltd. v. Commissioner of Income Tax (Appeals), Chandigarh & Anr., 289 ITR 26, held that the business of civil construction would not amount to carrying on any manufacturing activity. Even this Court in Ansal Housing & Estates (P) Ltd. v. Commissioner of Income Tax, 1999 (77) DLT 765, opined that the business of construction of building will not fall within the ambit of industrial company. This appears to be a case of sister concern of the present assessee itself, but, unfortunately, our attention was not even drawn to this judgment by the counsel on either side. In these circumstances, we answer Question No. 1 formulated above against the assessee and in favour of the Revenue.