Cold storage of potatoes is not "production" for section 80-I deduction without proof of processed seed activity.

A cold storage company that merely stored potatoes for preservation was not treated as a priority industry eligible for deduction under section 80-I. Although "production" was construed broadly, the benefit was limited to a company actually engaged in producing articles or things specified in the Sixth Schedule. The record showed only storage of tubers belonging to others, with no reliable material that the potatoes were meant for seed purposes or that the assessee was producing processed seeds. On that factual basis, the claimed deduction was denied.

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Issues: Whether a cold storage company storing potatoes for preservation could be treated as a priority industry engaged in the production of processed seeds and thereby qualify for deduction under section 80-I.

Analysis: The expression "production" in section 80-I was construed broadly and not in a narrow or rigid sense, but the benefit was confined to a company actually engaged in the production of articles or things specified in the Sixth Schedule. Mere storage of potatoes in cold storage, even if it amounts to processing in a broader sense, was not enough unless the assessee proved that it was engaged in the production of processed seeds. The record showed only that the assessee stored tubers belonging to others and preserved them in cold storage, with no reliable material showing that the stored potatoes were meant for seed purposes or that the assessee was producing processed seeds.

Conclusion: The assessee was not a priority industry within the meaning of section 80-I and was not entitled to the claimed deduction.

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