Meaning of “Articles”

The meaning of articles under section 80J of the Income Tax Act is not defined in the act itself. But we can take guidance from decisions by various high courts. Here are excerpts of courts orders in which the Hon’ble High Court tried to explain the meaning of articles.

Meaning of articles defined by court

The phrase ‘articles’ used in section 80J of the Income Tax Act came up before various high courts as detailed under :

1. Hon’ble Bombay High Court explained the meaning of ‘articles’ while delivering judgment in CIT vs. Hindustan antibiotics ltd. [1974] 93 ITR 548 (Bom.) as under :

Meaning: The word ‘articles’ has to be interpreted with regard to the object with which this section was enacted. Undoubtedly, the object was to encourage establishment of new industrial undertakings and such object was sought to be achieved by granting an exemption from tax to the extent of 6 per cent per annum on the capital employed in the undertaking in the manner prescribed. If the object is to give exemption from tax, that presupposes that the real object is that the profits are capable of being earned by the company.

If such be the object, then until the assessee-company reaches a stage where it is in a position to decide that a final product, which could ultimately be sold in the market, could be manufactured or produced by it, it will be an idle formality to say that it had started manufacture or production of articles simply because trial products are prepared with a view to verify whether they can be ultimately used in the preparation or manufacture of the final products.

2. Hon’ble Kolkata High Court explained the meaning of ‘articles’ while delivering judgment in CIT vs. Madgul Udyog [1994] 208 ITR 541 (Cal.) as under :

Meaning: The mere fact that the dictionary meaning of ‘article’ includes ‘a piece of property’ has not impelling force to conclude that the word also denotes an immovable like a building. In common parlance, article only refers to a movable property. ‘Articles’ are ‘goods’, according to the constitution of india. That being so, it is idle to say that the word ‘article’ should be separated from the word ‘goods’ or the use of the word ‘goods’ in place of ‘articles’ or vice versa could make any difference.

If one goes by the definition of ‘goods’ in clause (12) of article 366 of the constitution of india, it is immaterial whether the object of manufacture or production has been referred to as ‘goods‘ or ‘articles’. Therefore, the word ‘articles’ of manufacture for trade, in its common excitation, refers to goods and commodities. The word means only movables and excludes immovables.

Section 80J of Income Tax Act

Deduction in respect of profits and gains from newly established industrial undertakings or ships or hotel business in certain cases.

80J. [Omitted by the Finance (No. 2) Act, 1996, w.r.e.f.1-4-1989.]

In this article, you can get guidance from high courts on the meaning of articles under section 80J of the Income Tax Act.

Updated up to Finance Act 2021