K.C. Agrawal, J.
1. The assessee is a private limited company engaged in running cold storages at Farrukhabad, Kamalganj and Allahabad. For the assessment years 1969-70 and 1970-71, the assessee filed income-tax returns and claimed relief under Section 80-I of the I.T. Act, 1961 (hereinafter described as 'the Act'). The case of the assessee was that as it was engaged in the activity of production of processed seed and, as such, being a 'priority industry' within the meaning of Section 80B(7) was entitled to a deduction as provided in Section 80-I of the Act. The ITO negatived the claim. In appeal the judgment of the ITO was affirmed by the AAC of Income-tax. The AAC held that the assessee stored the potatoes belonging to Others by maintaining the temperature at 35 degrees. It further found that by trying to preserve the seeds in the same condition in which it was placed, it cannot be said that the assessee was engaged in the production, of processed seeds. The assessee took up the matter to the Income-fax Appellate Tribunal. The Appellate Tribunal agreed with the view of the AAC and held that the assessee was not entitled to any relief under Section 80-I. Thereupon, on an application under Section 256(1) of the Act being filed by the assessee, the Tribunal, being satisfied that the following question of law arises, referred the same to the High Court for its opinion :
'Whether, on the facts and in the circumstances of the case, the assessee was a priority industry within the meaning of Section 80-I and, therefore, entitled to relief under this section for assessment years 1969-70 and 1970-71?'
2. In order to appreciate the rival contentions it is desirable to reproduce Section 80-I of the Act, which provides :
'80-I. Deduction in respect of profits and gains from priority industries in the case of certain companies.--(1) In the case of a company to which this section applies where the gross total income includes any profits and gains attributable to any priority industry, there shall be allowed, in accordance with and subject to the provisions of this section, a deduction from such profits and gains of an amount equal to eight per cent, thereof, in computing the total income of the company.....'
Section 80B(7) of the I. T. Act gives the definition of 'priority industry '. It means 'the business of generation or distribution of electricity, or any other form of power or of construction, manufacture or production of any one or more of the articles or things specified in the list in the Sixth Schedule or the business of any hotel where such business is carried on by an Indian company and the hotel is for the time being approved in this behalf by the Central Government.'
3. The case of the assessee was that as it was engaged in the productionof processed seeds mentioned at item No. 28 of the Sixth Schedule, as such,it was entitled to the benefit of the aforesaid provision. The first questionthat arises for consideration is whether the assessee is a priority industry.In order to be a priority industry it is essential that it must be engaged inthe business of construction, manufacture or production of any one ormore of the articles or things specified in the list in the Sixth Schedule.
4. Admittedly, the assessee was neither constructing nor manufacturing anyone or more of the articles or things specified in the list in the Sixth Schedule. Its claim was based on the basis of production. The word 'production' is not defined in the Act. It is, therefore, necessary to consider whatit means in the section. The word 'production' does not have any rigidmeaning. It is, therefore, necessary that we should give the said word ameaning in which it best harmonises with the object of the statute and iteffectuates the purpose of the enactment.
5. In Words and Phrases (Permanent Edition), Vol. 34, the word 'produce' has been defined as 'means the production, or that which is produced, brought forth or yielded'. According to the Webster's International English Dictionary, the word 'produce' means 'to bring forward, to get together'. It would be seen that the word 'production' meant, amongst other things, that which was produced, a thing that results from any action,process or effort. It is, however, to be noted that, as stated in the Law Lexicon by P. Ramanathan, the word 'produce' is not necessarily confined to what is grown from the ground. It refers also to a finished article or semi-finished article made from the raw material. Thus, molasses can fairly be called the produce of the sugar mills. It would be thus seen that the word 'production' is not to be understood in a narrow sense so as to mean only something produced by another or a natural process.
6. After having considered the meaning of the word 'production' we are now required to find whether the assessee was engaged in an activity which may lead us to hold that it was engaged in the business of production of processed seeds. The income-tax authorities found that the assessee used to store the potatoes belonging to others and by maintaining the temperature at 35 degrees, it tries to preserve them in the same condition in which it was placed.
7. The benefit of Section 80-I could accrue to a person who was engaged in the production of the processed seeds. Processing of seed is different from the keeping of potato-ware in the cold storage. In the present case, what was established from the record was that the assessee was storing the potatoes in its cold storages and was trying to preserve them in the same condition. There is no evidence on record to show nor was it the case of the assessee that the entire potatoes so stored was consumed for seed purposes. It is thus not possible for us to find the quantity of potatoes held by the assessee in its cold storages for seed purposes. The assessee could get the benefit of Section 80-I, if it could have proved that it was engaged in the production of processed seed. But, as the evidence brought on record established only that the assessee was keeping tubers, that alone would not entitle him to get its benefit.
8. Reliance was placed by the learned counsel for the assessee on a Division Bench case of this court in Addl. CIT v. Farrukhabad Cold Storage (P.) Ltd. : 107ITR816(All) for the submission that a company engaged in the business of cold storage would be entitled to get the benefit of Section 2(vii)(d). The view taken in this case was that the word 'processing' as used in the aforesaid Section 2(vii)(d) would include an activity of keeping potatoes in a cold storage. We are bound by the decision given in that case. Accordingly, it may be correct that keeping of potatoes in the cold storage may amount to engagement of an industry in processing but that by itself would be of no avail to the assessee in the instant case. The claim of the assessee was with regard to the benefit of a provision which could be conferred on him, if it was established that he was engaged in the production of processed seeds. The only evidence brought on record was that he used to store potatoes belonging to others. There is no finding about the percentage of potatoes kept in the cold storages which were used or meantto be used as seeds in the assessment years 1969-70 and 1970-71, with which we are concerned in the present case. It is clear from the judgments of the income-tax authorities that they also negatived the claim of the assessee on this basis and found that the keeping of potatoes would not amount to the assessee's engagement in the production of processed seeds. The potatoes kept could be used for multifarious purposes but the benefit is confined to the matter of production of processed seed. It cannot be extended or applied to the entire quantity of potatoes which used to be kept by the assessee in cold storages. That being so, even if it is accepted that preservation or keeping of potatoes in cold storages amounted to processing, that would not entitle the assessee to claim the benefit of Section 80-I inasmuch as it does not prove that the assessee was engaged in the production of processed seeds.
9. Shri Raja Ram Agarwal, counsel appearing for the assessee, emphasised that as keeping of potatoes in cold storages is essentially to preserve them in a sound condition without affecting their germination ability, the assessee could also be held to be engaged in the production of processed seeds. The submission made is not acceptable to us. It may be correct that during dormancy, which is the time taken after harvest to the initiation of sprouting, it may be useful to keep tubers in cold storage for achieving best results, but that has nothing to do with the production of processed seeds. The potato used for human consumption also needs cold storage. Such tubers called 'ware' are not used as seed. There is no material to show that the assessee keeps potato tubers only for seed purposes.
10. In order to bring the case of the assessee within the definition of the words 'priority industry', learned counsel relied upon a decision of the Supreme Court in Chrestien Mica Industries Ltd. v. State of Bihar  12 STC 150. In that case, the Supreme Court had after considering the meaning of the expression 'production' within the meaning of the Bihar Sales Tax Act, 1947, held that the process of mining of mica is a process of production within the meaning of Section 2(g) of the Bihar Sales Tax Act, as amended by Bihar Act No. VI of 1949. At page 152, the Supreme Court observed as under:
'The appellant-company is carrying on mica mining operations by which crude mica is taken out of the mine and processed into split mica, which is a commercial commodity. What happens is that there is a winning of crude mica from the earth which is split into thinner plates and cut into commercial sizes.'
11. This case does not assist us inasmuch as the activity with which the Supreme Court was concerned in the said case was processing and winning of crude mica from the earth. On the facts of the present case, the ratio of the Supreme Court decision does not help the assessee.
12. For the reasons stated above, we answer the question referred to us in the negative, in favour of the department and against the assessee. The CIT is entitled to costs which we assess at Rs. 200.