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TMI Blog1991 (10) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... nce for any new machinery or plant installed after March 31, 1976, in any industrial undertaking for the purpose of business of manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule. The Income-tax Officer rejected the assessee's claim for investment allowance on the ground that there was no manufacture or production of any article or thing in the operation of the cold storage. The assessee appealed without any success, the Appellate Assistant Commissioner affirming the view of the Income-tax Officer. On further appeal to the Income-tax Appellate Tribunal, the contention of the assessee was upheld on the strength of the decision of the Punjab and Haryana High Court in CIT v. Yamuna Cold Storage [1981] 129 ITR 728 and held that the operation of a cold storage plant tantamounts to " manufacture of an article or thing " within the meaning of clause (iii) of section 32A(2)(b) and, therefore, the assessee was entitled to claim investment allowance as a permissible deduction. Accordingly, the assessee's appeal was allowed and a direction was issued for modification of the assessment. The question referred for o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or production of an article or thing. This brings us to the crux of the issue, namely, whether the plant and machinery installed by the assessee for its cold storage plant can be legitimately held to be one for the purpose of business of manufacture or production of any article or thing as contemplated by clause (b)(iii) of sub-section (2) of section 32A of the Act. Put more simply, the question is whether the operation of a cold storage plant by the assessee amounts to carrying on the business of manufacture or production of any article or thing. In order to resolve this controversy, we will have to examine the true meaning to be assigned to the words " manufacture " and " production ". These words have not been defined in the Act. It must, therefore, according to the settled view, receive its ordinary meaning, of course keeping in view the context in which they appear. The words "manufacture" and "production" in common parlance have been used synonymously to refer and relate to the turning out of a new article. In Words and Phrases, Vol. 26, Permanent Edn., the word " manufacture has been defined as: " Manufacture implies a change, but every change is not manufacture and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of any article or thing so as to attract section 32A(2)(b) of the Income-tax Act. In Mittal Ice and Cold Storage v. CIT [1986] 159 ITR 18, the Madhya Pradesh High Court, considering an identical situation, held that an assessee who operates a cold storage is not entitled to claim investment allowance under section 32A in respect of machinery of a cold storage plant. Chief justice Sohani, speaking for the court, observed at pages 23 and 24 thus : " It is, thus, clear that as the words " manufacture " and " production " used in clause (b)(ii) of sub-section (2) of section 32A of the Act are not defined in the Act, these words have to be understood in the context as meaning bringing into existence a new and distinct commercial commodity. Accordingly, it must be held that the provisions of section 32A of the Act could not be invoked by the assessee as the operation of a cold storage plant does not result in bringing into existence any new and distinct marketable commodity. The articles or goods preserved in a cold storage plant remain the same as they were prior to such preservation. There is no manufacture or production of " cool air " as was urged on behalf of the assessee beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achinery or plant installed for the manufacture or production of any article or thing and as such the assessee is not entitled to claim investment allowance under section 32A of the Income-tax Act, 1961. We answer the question referred in the affirmative and in favour of the Revenue. There will be no order as to costs." With respect, we entirely agree with the opinion expressed by the Calcutta High Court and the Madhya Pradesh High Court in the cases cited above. Reliance was, however, placed by learned counsel for the assessee on the decision of the Punjab and Haryana High Court in the case of CIT v. S. Warriam Singh Cold Stores [1989] 178 ITR 585 in support of his contention that the operation of a cold storage does involve manufacture or production of a thing or article, the article manufactured or produced being cool air which helps in the preservation of potatoes and other articles and in preventing them from decaying or perishing. With great respect to the learned judges of the Punjab and Haryana High Court, we find it difficult to share the opinion expressed by them. The decision is founded on an earlier judgment of that court in the case of CIT v. Yamuna Cold Storage [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion expressed by the Punjab and Haryana High Court in S. Warriam Singh's case [1989] 178 ITR 585. Before concluding, we may refer to a recent pronouncement of their Lordships of the Supreme Court in the case of Delhi Cold Storage P. Ltd. v. CIT [1991] 191 ITR 656 ; [1991] 3 JT 449 SC, which has a decisive bearing on the question referred to us. In this case, their Lordships of the Supreme Court were considering the scope of section 2(7)(c) of the Finance Act, 1973, which runs thus (at page 658 ) : " Industrial company means a company which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining. " Paragraphs 12 and 13 of the judgment are relevant for our purpose and the same read thus (at page 660) : " In common parlance, processing is understood as an action which brings forth some change or alteration of the goods or material which is subjected to the act of processing. The dictionary meaning of the term is not very different from this meaning in one sense, while various other meanings of wider amplitude are also available. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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