1986 (2) TMI 101

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....e Income-tax Act, 1961 ('the Act') for the assessment years 1979-80 and 1980-81. The assessee claimed investment allowance under section 32A of the Act which was allowed by the ITO in the assessments made for the assessment years 1979-80 and 1980-81. The Commissioner was of the view that the assessment orders are erroneous and prejudicial to the interests of the revenue and, accordingly, he revise....

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....ed these appeals. 2. The learned counsel for the assessee submitted that the assessee produces a new article or thing in its workshop by reboring the engine and carrying out various other operations. This amounts to production of an article or thing. Thus, the assessee is entitled to investment allowance. He placed reliance on the decisions in CIT v. Perfect Liners [1983] 142 ITR 654 (Mad.) and....

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.... 4. In CIT v. Hindusthan Metal Refining Works (P.) Ltd. [1981] 128 ITR 472, the Calcutta High Court held that production or manufacture of goods involves bringing into existence new goods or articles known as such goods or articles in the market. In that case it was held that the process of galvanising does not bring into existence a different article or an article commonly known to the people d....

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....e of life. The above orders squarely apply. Thus, in our view, the assessee carried only processing activity and is not entitled to investment allowance. The decisions relied on by the assessee's counsel are distinguishable. The decision of the Madras High Court in Perfect Liners' case is a case where the assessee was engaged in business of purchasing rough castings and supplying the same to the m....