Law:

Section:

Assessee, who is engaged in extraction and processing of iron ore, is entitled to investment allowance in respect of machinery used in mining activity Section 32A of the Income-tax Act, 1961 - Investment allowance - Whether extraction of ore and various processes which it undergoes until it is sold amount to 'manufacture' - Held, no - Whether mining or extraction of ore would fall within meaning of expression 'production' - Held, yes - Whether, therefore, assessee, who is engaged in extraction and processing of iron ore, is entitled to investment allowance in respect of machinery used in mining activity - Held, yes Words and phrases - Expression 'manufacture' or 'production' as occurring in section 32A of the Income-tax Act, 1961 FACTS The assessee was engaged in extraction and processing of iron ore for export. According to the assessee, the ore was raised from the earth; the ore then underwent various processes; the ore as removed, was then sequestered and after applying various processes, it was made ready for export and was exported; the ore, thus, extracted was not the same article or thing as was exported. The assessee claimed investment allowance under section 32A in respect of machinery used in mining activity. The Assessing Officer as well as the first appellate authority disallowed the assessee's claim. On second appeal, the Tribunal relying on the of the Karnataka High Court in the case of CIT v. Gogte Minerals (No. 2) [1997] 225 ITR 60/[1996] 89 Taxman 541, wherein the Division Bench of the High Court had held that mining operations carried out for excavating iron ore, would amount to 'manufacture', held that the assessee was entitled to investment allowance under section 32A in respect of machinery used in mining activity. On appeal : HELD The issue that for consideration was arose whether extraction of iron ore would fall within the meaning of the expression 'manufacture' or 'production'. [Para 10] In view of the various s of the Supreme Court and the High Courts on the issue whether extraction of iron ore would fall within the meaning of expression 'manufacture', it is evident that extraction of ore and the various processes which it undergoes…

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