9911796707
TMI Blog1982 (5) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... installed a plate freezer. It is not in dispute that it is a new machinery installed by the assessee. The assessee claimed investment allowance of Rs. 39,500 being 25 per cent of the cost of Rs. 1,58,000. The ITO did not allow this on the ground that the new machinery installed is not for the purpose of construction, manufacture or production of any one or more of the articles or things specified in the Ninth Schedule to the Act. In so disallowing he has reproduced the words contained in section 32A(2)(b) as it stood before its amendment by the Finance (No. 2) Act, 1977 with effect from 1-4-1978. By this amendment the reference to manufacture or production of the articles specified in the Ninth Schedule was removed. Sub-clause (iii) as intr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sea food and subjected them to such processes as are necessary for export. It is submitted that it cannot be said that in doing these processes, the assessee can be considered to be either manufacturing or producing any article or thing. Reliance is placed in this connection on the consolidated order of the Tribunal dated 21-2-1978 in IT Appeal Nos. 331 and 332 (Coch.) of 1976-77 where the business was also in purchase and export of sea food after subjecting them to these processes. The claim there was made under section 80J of the Act. It is pointed out that the Tribunal held that the assessee in that case was not entitled to the relief under section 80J as it would not be considered to manufacture anything. It is pointed out that the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xported after processing for the purpose of such export are one and the same commodity. In view of this decision, it is contended that there is no manufacture or production. It is argued that manufacture or production definitely involves change in the commodity ; since such a change is absent here it cannot be said that the assessee is manufacturing or producing an article or thing ; and, therefore, the assessee is not entitled in the investment allowance. 5. On behalf of the assessee, it is submitted that the question here is squarely covered by the decision of the Kerala High Court in CIT v. Castlerock Fisheries [1980] 126 ITR 382. It is pointed out that though this decision was in respect of the claim of that assessee for a higher deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative has not been raised by the ITO either in the assessment order or before the AAC. 6. It is seen from the assessment order and the order of the AAC that the question of this allowance was considered by them only in a narrow compass, viz., whether the investment allowance is to be curtailed because of the reference to articles or things in the Ninth Schedule. The question whether the assessee was engaged in the manufacture or production was not considered by the ITO nor did the ITO place this aspect before the AAC. The assessee's representative is right when he points out that these contentions made by the departmental representative were not before either of the lower authorities. Nevertheless, this is only a question concerning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case cannot be considered to be engaged in the manufacture or production of an article or thing as required under section 32A. In the order of the Tribunal in the case of Marwell Sea Foods [IT Appeal Nos. 265 and 329 (Coch.) of 1978-79], the question was whether the assessee was eligible to the relief under section 80HH. Section 80HH requires either manufacture or production of articles in the backward area. It was held that the assessee in that case must be considered to have been engaged in the production of the article concerned and therefore entitled to the relief under section 80HH. This order of the Tribunal would be more relevant than the order of the Tribunal in the earlier case, viz., United Industries. In that order, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee, namely, shrimps and other sea foods cannot be exported as such. They have to be not merely frozen but before freezing they have to be de-headed and de-veined, removing part of the body of the sea food that is purchased by the assessee. We consider that taking into account these aspects, the assessee must be considered to have been engaged in the production of an article. We find support for this conclusion in the decision of the Kerala High Court in the case of Castlerock Fisheries though that was a decision under section 33(1)(b)(B)(i)(a). It is true that the point involved in that case was whether the assessee was entitled to a higher development rebate on the ground that the particular commodity was an article enumerat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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