Investment allowance under Section 32A required proof that mining and polishing activities amounted to production, leading to remand for evidence.

Investment allowance under Section 32A depended on whether the assessee's mining, polishing and export activities amounted to production, and the claim had to be supported by evidence of the exact activities carried on. Because no such evidence had been led before the Assessing Officer, the issue could not be decided finally on merits. The matter was therefore remitted for fresh inquiry, with the assessee to be given an opportunity to produce relevant material and the claim to be reconsidered on that basis.

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Issues: Whether the assessee was entitled to investment allowance under Section 32A of the Income-tax Act, 1961 on the basis that its mining, polishing and export activities amounted to production, and whether evidence had to be led to establish such production.

Analysis: The assessee had not led evidence before the Assessing Officer regarding the exact nature of the activities undertaken. The controlling requirement under Section 32A is that the process must amount to production, and the claim depends on proof of the activities actually carried on. In the absence of such evidence, the matter could not be finally decided on merits and required reconsideration after giving the assessee an opportunity to adduce relevant material.

Conclusion: The impugned judgment and the order of the Tribunal were set aside and the matter was remitted to the Assessing Officer for fresh inquiry and decision after allowing the assessee to produce evidence.

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