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Section 32A of the Income-tax Act, 1961 - Investment allowance - Whether extraction and processing of iron ore amounts to 'production' within meaning of word in section 32A(2)(b)(iii) - Held, yes Words and phrases - 'production' as occurring in section 32A of the Income-tax Act, 1961 FACTS The assessee was engaged in extraction and processing of iron ore. It claimed investment allowance under section 32A in respect of machinery used in mining activity, which was allowed by the Tribunal. On appeal, the High Court held that extraction and processing of iron ore did not amount to 'manufacture' but involved 'production' within the meaning of section 32A(2)(b)(iii ) entitling the assessee to investment allowance under the said provision. On appeal to the Supreme Court : HELD There was no dispute that the plant in respect of which the assessee claimed deduction was owned by it and was installed after 31-03-1976 in the assessee's industrial undertaking for excavating, mining and processing mineral ore. Mineral ore is not excluded by the Eleventh Schedule. The only question was as to whether such business was one of manufacture or production of ore. The issue had arisen before different High Courts over a period of time. The High Courts have held that the activity amounted to 'production' and answered the issue-in-question in favour of the assessee. [Para 8] From the wide definition of the word 'production', it has to follow that mining activity for the purpose of production of mineral ores would come within the ambit of the word 'production' since ore is 'a thing', which is the result of human activity or effort. [Para 9] The assessee correctly submitted that the other provisions of the Act, particularly section 33(1)(b)(B) read with Item No. 3 of the Fifth Schedule, would show that mining of ore is treated as 'production'. Section 35E also speaks of production in the con text of mining activity. The language of these sections is similar to the language of section 32A(2). There was no reason to assume that the word 'production' was used in a different sense in section 32A. [Para 11] Therefore, it was to be held that extraction and processing of iron ore amounts to…

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