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TMI Blog1985 (1) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed before the ITO in the course of the assessment proceedings that this activity amounted to production or manufacture of an article or thing and consequently the assessee was entitled to investment allowance on machinery and plant used in the business. The ITO while making the assessment by order by 25th March, 1981, allowed this claim of investment allowance. Subsequently, however, the CIT was of the view that the order of the ITO was erroneous and prejudicial to the interests of revenue. He was not satisfied with the assessee's submission that since the assessment order was the subject matter of appeal before the CIT(A) the CIT had no jurisdiction under s. 263 and, alternatively, the assessee's activities amounted to the manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as laid down by the Hon'ble High Court of Calcutta in the case of Russell Properties (P) Ltd. vs. Addl. CIT (1977) 109 ITR 229 (Cal), the assessment cannot be said to be erroneous simply because the ITO had followed the decisions of the Hon'ble High Courts, which he was bound to follow. It was also point out by him that since at the time of the proceedings under s. 263, the appeal against the assessment order was pending before the CIT(A), it was open to the ITO to request for enhancement and the CIT had no jurisdiction under s. 263. In this connection, he pointed out that the reasoning in the decision of the Special Bench of the Tribunal in the case of Dwarkadas Co. (P) Ltd. vs. ITO (1983) 15 TTJ (Bom) 61 : (1982) 1 SOT 495 (Bom) was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance on new machinery and plant used in this business and the investment allowance was rightly allowed by the ITO. Summing up, Shri Haribhakti vehemently contended before us that in the first place the CIT had no jurisdiction under s. 263 and alternatively the assessment order was not erroneous and, therefore, the order of the CIT under s. 263 should be cancelled. 5. On the other hand, the ld. Departmental Representative, Shri Vohra submitted to us that on the date of the order of the CIT under s. 253, i.e., 7th Feb., 1983, the appeal against the assessment order before the CIT(A) was still pending and, therefore, there was no question of the merger of the assessment order in the order of the CIT(A) at the time the CIT exercised his power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Calcutta High Court in the case of CIT vs. Radha Nagar Cold Storage (P) Ltd. where their Lordships laid down that the potatoes kept in the cold storage for preservation in the original state and prevention of the normal decay amounts to processing of goods, which is not the same thing as manufacture of goods. Both these decisions therefore, according to him. Vohra, were not on the issue of whether the assessee's business of purchase of milk from various sources, which was transported to Bombay and sold after chilling and pasteurization under the brand name of "Doodh Amrut" amounted to manufacture or production of an article or thing. On this basis, Shri Vohra submitted that there was no question of the ITO following the decisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing and, therefore, the assessee is not entitled to investment allowance on new items of plant and machinery in the cold storage and the second being Budhwar Cold Storage vs. ITO (1984) 10 ITD 357 ((Del) where also the Tribunal held that investment allowance was not admissible on machinery and plant installed in the cold storage since this did not involve manufacture on production of an article or thing. Referring to this decisions the Tribunal cited by the assessee's learned counsel. Shri Haribhakti, Shri Vohra submitted that these cases were on different facts and were distinguishable on the facts and circumstances of the present case. Summing up, Shri Vohra argued before us that the assessment order accepting the assessee's claim of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinary sense in which the language is understood, the end product in the present case, whatever be the brand name, was only milk. Thus while the activity of the assessee of bringing the milk purchased from various centres to Bombay by refrigerated tankers and chilling, pasteurization and bottling of the milk may satisfy the test of processing of gods, it does not satisfy the test of manufacture or production of an article or thing. The assessee was, therefore, not entitled to the claim of investment allowance on the new item of plant and machinery used in this business and the assessment order allowing this claim was erroneous and prejudicial to the interests of revenue. 8. We will now deal with the issue raised that since the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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