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Claim of investment allowance under section 32A of the Income-tax Act, 1961 for a cold storage facility. Analysis: The appeals before the Appellate Tribunal ITAT Allahabad-A involved the claim of investment allowance by an assessee, a registered firm operating a cold storage facility, for the assessment years 1979-80 and 1980-81. The primary issue revolved around whether the cold storage operation qualified as a manufacturing or production activity eligible for investment allowance under section 32A of the Income-tax Act, 1961. The assessee contended that the cold storage involved machinery and plant essential for maintaining reduced temperatures, thereby constituting a manufacturing process. Reference was made to the judgment in CIT v. Yamuna Cold Storage, where it was held that cold storage could be considered a factory involved in manufacturing. The assessee argued that being a small-scale industry, it met the criteria for investment allowance. Conversely, the departmental representative argued that while the cold storage process involved preservation through refrigeration, it did not amount to manufacturing or production of goods as required by section 32A. The Tribunal carefully considered the submissions and distinguished the facts from the precedent cited. It highlighted the distinction between processing and manufacturing as per legal interpretations. Referring to the decision in Union of India v. Delhi Cloth & General Mills Co. Ltd., it emphasized that manufacturing involves creating a new substance, not just altering an existing one. While a cold storage facility may engage in processing goods, it does not meet the threshold of manufacturing or producing articles or things. The Tribunal noted that the machinery or plant seeking investment allowance should be utilized for the business of manufacturing or production in a small-scale industrial undertaking, as per the requirements of section 32A. Drawing on the judgment in Addl. CIT v. Farrukhabad Cold Storage (P.) Ltd., the Tribunal concluded that the assessee's cold storage operation did not qualify for investment allowance on plant and machinery additions, upholding the decision of the revenue authorities. In a concise order, the Tribunal partially allowed the appeals, indicating a favorable outcome on certain aspects while maintaining the disallowance of the investment allowance claim concerning the cold storage facility.
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