Investment allowance for cold storage machinery: production need not yield a marketable commodity under section 32A.

Machinery or plant used in a cold storage business was treated as falling within section 32A(2)(b)(ii) of the Income-tax Act for investment allowance because the provision turns on use in the production or manufacture of an article or thing. The text rejected any additional requirement that the resulting article must be marketable, and treated the production of cold air as sufficient even though it formed only an intermediate stage in the preservation process. On that reasoning, cold storage machinery and plant qualified for investment allowance, and the reference was answered in favour of the assessee.

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Issues: Whether machinery or plant installed in a cold storage business is covered by section 32A(2)(b)(ii) of the Income-tax Act, 1961 for the purpose of investment allowance.

Analysis: The statutory language of section 32A(2)(b)(ii) was read as turning on whether the plant or machinery is used in the production or manufacture of an article or thing. The requirement of marketability was held to be absent from the text of the provision and was therefore not a justified limitation. The process in a cold storage was treated as involving production of cold air, and the fact that such production was an intermediate stage in carrying on the business of preservation did not take the machinery outside the provision.

Conclusion: Machinery or plant installed for a cold storage business is covered by section 32A(2)(b)(ii), and investment allowance is admissible.

Final Conclusion: The reference was answered in favour of the assessee and against the Revenue, recognising eligibility for investment allowance on cold storage machinery and plant.

Ratio Decidendi: For section 32A, production or manufacture of an article or thing need not result in a marketable commercial commodity, and machinery used in an intermediate process that produces such an article or thing qualifies for investment allowance.

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