TMI Blog1995 (9) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of milk. At the time of assessments the assessee claimed investment allowance on machineries used for pasteurising the milk, which was allowed by the Assessing Officer during the relevant assessment years. On a perusal of the assessment orders for the assessment years under consideration the Commissioner of Income-tax found that those orders were erroneous and prejudicial to the interests of Revenue as the allowance of investment allowance under section 32A as claimed by the assessee was not justified. Accordingly the Commissioner issued a show-cause notice under section 263 dated 12-1-1989 to the assessee calling upon the assessee to explain as to why an order enhancing or modifying the assessments or cancelling the assessments directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was required to keep the milk so purchased for some days. So that the milk is not destroyed the assessee had to pasteurize the same, but then the end-product as a result of such process is only milk. He contended that the connotation of the words "manufacture or production"as used in section 32A of the Act denotes that the end product obtained as a result of the process should be different from the input, but this is not the case in the present assessee's case. Reliance in this regard was placed on the Madhya Pradesh High Court decision in the case of Mittal Ice Cold Storage v. CIT [1986] 159 ITR 18 and also the decision of the Supreme Court in the case of Delhi Cold Storage (P.) Ltd v. CIT [1991] 191 ITR 656. He therefore p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eria is destroyed enabling storing the milk for a few days. Various types of machineries are used in this manufacturing process, viz., boiler, compressor, chilling plant, prepack filling machines and innumerable items of various machineries including generator. Thus the product manufactured by our Society is pasteurised milk, which is different from raw milk. Thus it is our earnest submission that our Society's activity includes manufacturing process and hence our Society is entitled to Investment Allowance under the provisions of section 32A of the Income-tax Act, 1961." 6. At the time of proceedings under section 263, none was present on behalf of the assessee before the Commissioner. Therefore, considering the reply submitted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cold Storage (P.) Ltd., their Lordships of the Hon'ble Supreme Court had occasion to deal with a case of a cold storage. In that case the assessee's case was that through the activities of the cold storage the company was 'processing' goods within the meaning of an 'Industrial company', as has been defined in section 2(7)(c) of the Finance Act, 1973 and hence entitled to investment allowance. The Supreme Court considering the decision in the case of Chowgule Co. (P.) Ltd v. Union of India [1981] 47 STC 124 held as follows : "What is necessary in order to characterise an operation as 'processing' is that the commodity must, as a result of the operation, experience some change. Here, in the present case, diverse quantities of ore possess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlance, "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. It was further held that in a cold storage, vegetables, fruits and several other articles which require 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. Their Lordships further held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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