Cold storage preservation is not production for investment allowance under the Income-tax Act, denying the claimed benefit.

Preservation of potatoes in a cold storage plant does not amount to production of an article for purposes of section 32A(2)(b)(ii) of the Income-tax Act, 1961, because mere storage preserves an existing commodity without bringing a new product into existence. The Court relied on the settled Supreme Court meaning of "production" and held that later excise decisions cited by the assessee were not applicable on the facts. As a result, the assessee was not entitled to investment allowance on the basis of cold storage operations.

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Issues: Whether preservation of potatoes in a cold storage plant amounts to production of an article within the meaning of section 32A(2)(b)(ii) of the Income-tax Act, 1961, so as to entitle the assessee to investment allowance.

Analysis: The Court noted that the expression "production" had already been construed by the Supreme Court in earlier decisions and that mere preservation of an existing article by cold storage does not bring into existence any new product. The later excise decisions relied upon were held not applicable to the facts of the case. The question was treated as settled on the existing legal position and decided on the facts of the matter.

Conclusion: Preservation of potatoes in cold storage does not amount to production of an article for the purpose of section 32A(2)(b)(ii) of the Income-tax Act, 1961, and the assessee is not entitled to investment allowance on that basis.

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