1. At the instance of the Revenue, the Income-tax Appellate Tribunal, Patna Bench, Patna, referred to this court the following questions for its opinion under Section 256(1) of the Income-tax Act, 1961 :
' (1) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in allowing investment allowance under Section 32A of the Act since the goods stored in the cold storage are not produced or manufactured by the assessee and in view of the insertion of Rule 5AA from April 1, 1981 ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in setting aside the orders of the lower authorities and allowing investment allowance and directing the Income-tax Officer to ask the assessee to furnish the particulars of other things ?'
2. To answer these questions it will be convenient to refer to Section 32A which provides for investment allowance in respect of ship, aircraft, machinery, plant, etc. This section, in relevant part, is as under :
' 32A(2)(b)(iii). In any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule.'
3. Rule 5AA of the Income-tax Rules stands omitted with effect from April 2, 1987 ; earlier it had been inserted with effect from April 1, 1981, by the Income-tax (Amendment) Rules, 1981. This rule required the assessee to furnish certain particulars as provided in the rule for the purpose of deductions referred to in Sub-section (1) of Section 32A.
4. In this case, the assessee was running a cold storage where it installed a generator at the cost of Rs. 2,58,300 on which it claimed investment allowance under Section 32A of the Act amounting to Rs. 64,575. The Income-tax Officer did not allow the investment allowance as claimed by the assessee as in his view the cold storage plant did not produce any article or thing as envisaged in Section 32A of the Act.
5. The appeal filed by the assessee was allowed by the Commissioner of Income-tax (Appeals) and the appellate authority accepted the assessee's claim towards the investment allowance. On further appeal filed by the Revenue, the Appellate Tribunal agreed with the view expressed by the Commissioner of Income-tax (Appeals). Being aggrieved by that decision, the Commissioner of Income-tax made an application before the Tribunal and got these questions referred to this court for its opinion.
6. Mr. Rastogi, learned counsel appearing for the Revenue, submitted that under Section 32A, the relevant part of which is set out above, the cold storage could not be said to manufacture or produce any article. In the course of his submissions, Mr. Rastogi cited some decisions of the High Courts of Allahabad, Madhya Pradesh and Calcutta.
7. In CIT v. Nandlal Cold Storage : [1993]199ITR327(All) similar questions as in the present case were raised and the court answered the questions in favour of the Revenue. The court observed that the operation of a cold storage plant did not result in the manufacture or production
of any article or thing and, thus, the condition precedent for claiming investment allowance did not exist in the case of a cold storage.
8. Similar is the view expressed in Mittal Ice and Cold Storage v. CIT : [1986]159ITR18(MP) and in S. B. Cold Storage Industries Pvt. Ltd. v. CIT : [1987]166ITR646(Cal) .
9. Mr. Rastogi, however, also pointed out a decision of the Punjab and Haryana High Court in CIT v. S. Warriam Singh Cold Stores , in which a different view was taken and it was held that the machinery or plant installed for the business of cold storage would be covered under Section 32A(2)(b)(ii) of the Act. Clause (ii) is as under :
' 32A(2)(b)(ii). In a small-scale industrial undertaking for the purposes of business of manufacture or production of any article or thing.'
10. In Delhi Cold Storage P. Ltd. v. CIT : [1991]191ITR656(SC) , the question that came up for consideration was whether, on the facts and in the circumstances of the case, the assessee-company running the cold storage could be held to be an industrial company for purposes of Section 2(7)(c) of the Finance Act, 1973, and the First Schedule thereto. Section 2(7)(c) of the Finance Act, 1973, defined that industrial company meant a company which was 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. The Supreme Court considered the words 'processing of goods' and observed that in common parlance 'processing' was understood as an action which brought forth some change or alteration of the goods or material which was subjected to the act of processing and held that the assessee-company was not entitled to the concessional rate of tax and consequently answered the question in the negative, that is, in favour of the Revenue and against the assessee. In this context, the Supreme Court observed (at page 660) :
' In a cold storage, vegetables, fruits and several other articles which required preservation by refrigeration are stored. While, as a result of long storage, scientific examination might indicate loss of moisture content, that is not sufficient for holding that the stored articles have undergone a process within the meaning of Section 2(7)(c) of the Finance Act, 1973. '
11. Taking the view following the Supreme Court decision as to what are the functions of the cold storage, we find ourselves unable to agree with the view expressed by the Punjab and Haryana High Court and we
are inclined to follow the decisions of the Allahabad, Madhya Pradesh and Calcutta High Courts.
12. Accordingly, we answer both the questions in the negative, that is, in favour of the Revenue and against the assessee. Since no one is appearing for the assessee there shall be no order as to costs.