S.S. Sodhi, J.
1. The matter here pertains to the admissibility of investment allowance in respect of machinery or plant for cold storage under Section 32A(2)(b)(ii) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act').
2. During the assessment year 1978-79, the assessee, S. Warriam Singh Cold Stores, claimed a sum of Rs. 64,399 in respect of machinery and plant installed in their cold storage business. This was declined by the Income-tax Officer and also in appeal by the Appellate Assistant Commissioner, but was accepted by the Commissioner of Income-tax (Appeals) (sic ) whose decision was later upheld by the Tribunal. This is what led to the following question being referred for the opinion of this court:
'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that machinery or plant installed for the purpose of business of cold storage is covered under Section 32A(2)(b)(ii) for the purpose of the admissibility of deduction under Section 32A(1) by way of investment allowance ?'
3. In dealing with this matter, counsel for the Revenue sought to rely upon the judgment of the High Court of Calcutta in S. B. Cold StorageIndustries Pvt. Ltd. v. CIT : [1987]166ITR646(Cal) , where it was held that as the object of putting goods in cold storage was mainly to preserve their original condition and not to produce anything new and that by such preservation, no new marketable article is brought into existence, machinery or plant installed in the cold storage was not for manufacture or production of any article or thing and no investment allowance in respect thereof accrued under Section 32A of the Act.
4. A similar view was taken by the High Court of Madhya Pradesh in Mittal Ice and Cold Storage v. CIT : [1986]159ITR18(MP) , where it was observed that in the context in which the words 'manufacture' and 'production' occur in Section 32A(2)(b)(ii) of the Act, they imply that what is manufactured or produced in the industrial undertaking is marketable and capable of being passed on from hand to hand as a new and distinct commercial commodity.
5. With respect, we cannot concur with these views as a plain reading of the provisions of Section 32A(2)(b)(ii) of the Act would show that the words 'production' and 'manufacture' there are not in any manner qualified by the 'article' or 'thing' being marketable or being a commercial commodity. The concept of marketability is, in our view, a wholly unwarranted intrusion into this provision.
6. The matter regarding cold storage came before this court in CIT v. Yamuna Cold Storage , in the context of its claim for depreciation on the plea that it fell within the definition of factory building. It was held that the process undertaken in a cold storage fell within the definition of 'manufacturing process' in Clause (k)(i) of Section 2 of the Factories Act, 1948, inasmuch as it involved the production of cold air and, therefore, a cold storage building fell within the definition of 'factory building' and was thus entitled to depreciation.
7. Next to note is the judgment of the High Court of Andhra Pradesh in CIT v. Super Drillers : [1988]174ITR640(AP) , where it was held that the drilling of a tubewell results in the production of underground water for use on the surface of the ground and, therefore, the firm purchasing a rig and compressor for digging borewells was entitled to investment allowance under Section 32A of the Act. Relying upon this judgment, counsel for the assessee laid great stress upon the fact that water underground and water on the surface of the ground remained the same substance, yet, it was held entitled to investment allowance in respect of the machinery purchased. On a parity of reasoning, it was contended that in a cold storage, the production of cold air must also be treated as 'production' or 'manufacture' of an 'article' or 'thing' in terms of Section 32A of the Act.
8. After giving our careful thought to the matter, we fully concur with the view expressed by the Tribunal, namely :
'... Such a plant does fulfil the condition of producing an article or thing first and the thing produced is later on used for carrying on the business of preservation of articles and goods. Again, the language of the relevant section will be fully satisfied if, in the production of an end product, several intermediate articles are produced. It will be obviously not possible to say that the Legislature intended to grant investment allowance only in respect of the machinery and plant used in the last process and no investment allowance will be available in respect of intermediate processes of manufacture, which may be producing any article or thing.'
9. The reference is, accordingly, answered in the affirmative, in favour of the assessee and against the Revenue. There will, however, be no order as to costs.