1986 (1) TMI 79 - HC - Income Tax

Summary

Issues Involved:
The judgment involves the interpretation of the term "manufacturing process" under section 32A(2)(b) of the Income-tax Act, 1961 in relation to the operation of a cold storage plant.

Summary:
The High Court of Madhya Pradesh considered a reference made by the Income-tax Appellate Tribunal regarding the entitlement of an assessee operating a cold storage plant to claim investment allowance under section 32A(2)(b) of the Income-tax Act, 1961. The Tribunal had rejected the claim, stating that the plant and machinery of the cold storage plant were not used for manufacturing or producing any article or thing. The assessee contended that the cold storage process constituted a manufacturing process, citing precedents. However, the Court emphasized that the Act did not define "manufacture" or "production" and that the ordinary dictionary meanings of these terms should apply. The Court held that the operation of a cold storage plant did not result in the creation of a new marketable commodity, thus investment allowance was not applicable. The Court also ruled that the definition of "manufacturing process" in the Factories Act, 1948 could not be imported into the Income-tax Act. Therefore, the Court affirmed the Tribunal's decision, denying the investment allowance claim for the cold storage plant machinery.

In conclusion, the Court answered the referred question in the affirmative, ruling against the assessee's claim for investment allowance. Each party was directed to bear their own costs in this reference.