TMI Blog1985 (1) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... hilling and pasteurization before being bottled and sold under the brand name 'Doodh Amrut'. It was 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 dated 25-3-1981, allowed this claim of investment allowance. Subsequently, however, the Commissioner was of the view that the order of the ITO was erroneous and prejudicial to the interests of the revenue. He was not satisfied with the assessee's submission that since the assessment order was the subject-matter of appeal before the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which falls within the meaning of processing of goods. He, therefore, submitted that, as laid down by the Hon'ble Calcutta High Court in the case of Russell Properties (P.) Ltd. v. A. Chowdhury, Addl. CIT [1977] 109 ITR 229, 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 pointed out by him that since at the time of the proceedings under section 263 the appeal against the assessment order was pending before the Commissioner (Appeals), it was open to the ITO to request for enhancement and the Commissioner had no jurisdiction under section 263. In this connection, he pointed out that the reasoning in the decision of the Speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to manufacture or production of an article or thing. On this basis, Shri Haribhakti submitted that the assessee-firm was entitled to investment allowance 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 Commissioner had no jurisdiction under section 263 and, alternatively, the assessment order was not erroneous and, therefore, the order of the Commissioner under section 263 should be cancelled. 5. On the other hand, the learned departmental representative, Shri Vohra, submitted to us that on the date of the order of the Commissioner under section 263, i.e., 7-2-1983, the appeal against the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was let out to a sister concern and, therefore, there is no decision by the Hon'ble Kerala High Court on whether the business amounted to manufacture or production of an article or thing. We were then taken through the ruling of the Hon'ble Calcutta High Court in the case of 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 of these decisions, therefore, according to Shri 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunals were also cited before us, the first being Saluja Cold Storage v. ITO [1982] 1 ITD 751 (All.) where the Tribunal held that the plant and machinery used in cold storage cannot be said to be engaged in manufacture or production of an article or 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 v. ITO [1984] 10 ITD 357 (Delhi) 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 or production of an article or thing. Referring to the decisions of the Tribunal cited by the assessee's learned counsel, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in consequence the change may be. The production of an article also presupposes that the end product should be different from the raw material. Viewed in this context, as laid down by the Hon'ble Kerala High Court, in the case of Casino (P.) Ltd. applying the test of the ordinary 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 goods, it does not satisfy the test of manufacture or production of an article or thing. The assessee was, therefore, not en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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