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Section 32A of the Income-tax Act, 1961 - Investment allowance - Assessment year 1978-79 - Assessee purchased sea food, namely, shrimps and subjected them to various processes like beheading, peeling, de-veining and freezing - For aforesaid purpose assessee purchased a deep freezer - Whether assessee could be said to be engaged in production of an article and, thus, was entitled to deduction under section 32A in respect of freezer - Held, yes FACTS The assessee purchased sea food, namely shrimps, and subjected them to various processes like beheading, peeling, de-veining and freezing. Thereafter, the sea food was exported. For the aforesaid purpose, the assessee had installed a deep freezer. For the assessment year 1978-79, the assessee claimed investment allowance on the cost of the freezer. The ITO disallowed the assessee's claim on the ground that the new machinery was not installed for the purpose of construction, manufacture or production of any one or more of the articles or things specified in the Ninth Schedule. However, on appeal, the AAG allowed the assessee's claim. On appeal by the revenue, the Tribunal held that taking into account the process carried on by the assessee he should be considered to have been engaged in the production of an article and, therefore, was entitled to deduction. On reference : HELD The crucial words occurring in section 32A(2)(b)(iii) show that the investment allowance by way of deduction is permissible in the case of a machinery or plant in an industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule. It was common ground that the article in the instant case was not one which was specified in the list of the Eleventh Schedule. In view of the decision in the case of CIT v. Marwell Sea Foods [1957] 166 ITR 624 (Ker.) the processing of prawns amounted to production of an article. If so, in the instant case, the assessee was entitled to the deduction as claimed. CASE REVIEW CIT v. Marwell Sea Foods [1987] 166 ITR 624 (Ker.)followed & relied upon. CASES REFERRED TO CIT v. Castlerock…

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