Investment allowance depends on whether processing amounts to manufacture or production; marine products denied, seed processing allowed.

Processing of shrimps and other marine products was held not to amount to manufacture, so machinery used in the marine products division did not qualify for investment allowance under section 32A. By contrast, processing of seeds was treated as production, and the machinery in the seed processing unit was held eligible for the allowance. The reference was therefore answered partly for the Revenue and partly for the assessee, with the allowance denied for the marine products division and allowed for the seed processing unit.

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Issues: (i) Whether machinery deployed in the marine products division was entitled to investment allowance under section 32A of the Income-tax Act, 1961; (ii) Whether machinery deployed in the seed processing unit was entitled to investment allowance under section 32A of the Income-tax Act, 1961.

Issue (i): Whether machinery deployed in the marine products division was entitled to investment allowance under section 32A of the Income-tax Act, 1961.

Analysis: Processing of shrimps and marine products was held not to amount to manufacture, and the earlier binding decision on the point was applied.

Conclusion: Investment allowance was not allowable on the machinery used in the marine products division, in favour of the Revenue.

Issue (ii): Whether machinery deployed in the seed processing unit was entitled to investment allowance under section 32A of the Income-tax Act, 1961.

Analysis: Processing of seeds was treated as production, and the earlier decision concerning the same assessee was followed.

Conclusion: Investment allowance was allowable on the seed processing unit, in favour of the assessee.

Final Conclusion: The reference was answered partly for the Revenue and partly for the assessee, denying investment allowance for the marine products division while allowing it for the seed processing unit.

Ratio Decidendi: Processing that does not amount to manufacture will not attract investment allowance, whereas processing amounting to production can qualify for the allowance.

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