1. The assessee, a private limited company, is in appeal for the assessment year 1976-77. All the grounds of appeal relate to its business activity of film exhibition. It ran "Deepali Cinema" for that purpose. The accounting year followed was calendar year 1975. The various grounds raised in this appeal are separately considered below : 2. The first contention relates to not granting of development rebate and depreciation on a sum of Rs. 17,849, which represented expenditure in the nature of pre-operative expenditure incurred before the air-conditioning plant and machinery of the cinema theatre were commissioned as per the assessee's own statement in ground of appeal No. 3. Shri J.P. Shah, the assessee's authorised representative, filed before us details of the expenditure of Rs. 17,849 classified under various heads, namely, octroi, freight, cartage, miscellaneous expenses, licence fees, advertisement, postage, telephone and telegram and insurance premium. According to him, the Commissioner (Appeals) had not gone into all the different heads of expenditure and, therefore, had failed to apply the principles of Supreme Court's decision in CIT v. Lucas-T.V.S. Ltd. (No. 2)  110 ITR 346 as interpreted by the Gujarat High Court in Shree Vallabh Glass Works Ltd. v. CIT 127 ITR 37 in respect of all such heads of expenditure. He submitted that expenses on octroi, freight and cartage could be clearly capitalised.
On behalf of the revenue, it was submitted that the Commissioner (Appeals) had given instances of the expenditure which could not be capitalised, such as, opening ceremony expenditure, etc.
3. We are inclined to accept the submissions of Shri J.P. Shah without going into the merits involved that the Commissioner (Appeals) did not examine the assessee's claim for capitalisation of expenses in respect of all the heads of expenditure. He merely referred to one particular group of expenditure under the head 'Miscellaneous expenses'. As the Commissioner (Appeals) had failed to examine the issue raised by the assessee properly, we consider it appropriate to set aside his findings on this issue and restore it to his file for fresh disposal after hearing both the sides.
4. Shri J.P. Shah did not press ground No. 5 about deduction of this expenditure under Section 35D as an alternative plea. That plea is, therefore, rejected.
5.1 The second contention in this appeal is about allowing development rebate on a sum of Rs. 19,900 being architectural fees. Shri Shah filed from the books details about the architectural fees and the nature of such fees. The amount was made up of two items of Rs. 5,700 and Rs. 14,200. The description against the items of Rs. 5,700 was architectural service rendered for "Dipali Theatre". While the description against the second item of Rs. 14,200 was "Interior design services rendered for air-conditioning plant". Shri Shah contended that the whole of the amount be added to the cost of air-conditioning plant and development rebate allowed thereon. His submission was that architectural fees paid to architects were allocated towards air-conditioning plant as architectural fees were incurred for designing of the building with a view to effective functioning of air-conditioning plant.
6. On behalf of the revenue, it was pointed out that the amount of Rs. 5,700 could not at all be considered as relating to air-conditioning plant as the description was "architectural service rendered for Dipali Theatre". In regard to the other item of Rs. 14,200, it was submitted that the ITO's reasoning was quite correct and the amount would not form part of the actual cost of air-conditioning plant as the architects had only advised about the designing of building in which the air-conditioning plant was to be put up. It was submitted that such an expenditure could be included towards the cost of building only and not to the cost of air-conditioning plant.
7. We find force in the submissions of the departmental representative.
Again the expenditure of Rs. 14,200 on architectural fees related to "interior design services rendered for air-conditioning plant". This clearly shows that the fees related to the designing of the building where an air-conditioning plant was to be installed. Such expenditure, in our opinion, cannot be added towards the cost of air-conditioning plant and the expenditure would relate to the cost of building.
Consequently, the assessee is not entitled to development rebate on the amount of Rs. 19,900 on the footing of adding this amount to the cost of air-conditioning plant.
8. The last contention is about the Commissioner (Appeals) not holding that cinema theatre is an "industry" for the purpose of computation of tax as applicable to an industrial undertaking. This plea of the assessee was raised in the context of concessional rate of 55 per cent being applicable in the case of an "Industrial company" as defined in Section 2(9) of the Finance Act, 1976, the relevant clause being Sub-clause (c). An "Industrial company" for the purpose of this appeal will mean a company which is mainly engaged in the manufacture or processing of goods. Shri J.P. Shah rested his case only on the limb "processing of goods" in the case of the assessee's business of exhibition of films.
9. Shri Shah contended that film exhibition amounted to "processing of goods". He cited the meanings of the word "process" at page 1677 of the Shorter Oxford English Dictionary on Historical Principle, Vol. II. He pointed out to a meaning therein, namely, "to reproduce by mechanical or photographic process". It was his contention that applying this meaning, exhibition of a film will amount to processing of goods. It was also stressed that in the case of exhibition of cinema film, an audio-visual process was involved which amounted to processing of the cinema film, and as no manufacturing of an article was needed, while considering the concept of processing of goods, no shattel was to be searched on the other end after processing (sic.). He cited a decision of the Jaipur Bench of the Tribunal reported in "Taxes and Planning", June 1, 1981 issue, at page 210, and certain High Courts decisions, namely, CWT v. Mubarakali Khan  123 ITR 101 (All.), AM. CIT v.Farrukhabad Cold Storage (P.) Ltd.  107 ITR 816 (All.) and CIT v.Radha Nagar Cold Storage (P.) Ltd.  126 ITR 66 (Cal.).
10. On behalf of the revenue it was submitted that the assessee could not be treated to be an "industrial company" as it was not processing goods by exhibiting the film on its screen a number of times daily. The exhibition of the film, it was submitted, amounted to the use of the film and not its processing and all that was being done was that by using the projector the film was projected on the screen. It was also stated that in the context of words "manufacture or processing of goods", processing involved some change in goods processed but in the case of exhibition of film it remained qualitatively the same and it could merely wear out by user and there was no other change or alteration in the character of the film. It was also submitted that there was no need to refer to a dictionary as the definition was provided in the Act itself and for this purpose reliance was placed on the observations of the Bombay High Court at page 381 in the decision reported in CIT v. N.U.C. (P.) Ltd.  126 ITR 377.
11. On a careful consideration of the rival submissions, we are unable to hold for the assessee that it is an "industrial company" within the meaning of Section 2(9) of the Finance Act, 1976. Shri Shah has quoted one of the meanings given in the dictionary as under : To treat by a special process ; e.g., to reproduce (a drawing, etc.) by a mechanical or photographic process 1884.
Firstly, these meanings are not appropriate in the context of a taxation statute dealing with the definition of an "industrial company" which emphasises two aspects "manufacture of goods" or "processing of goods". The processing will involve certain changes in the goods processed. There is no such change in the film exhibited qualitatively by projecting it on the screen and what happened is the use of the film. The changes which result on using of the film are the changes of wear and tear caused by use and these cannot be called a process done to the film. Secondly, we note that even the meanings referred to a special process, as for example, to reproduce a drawing, etc., by a mechanical or photographic process, this is not the situation here. In short, the distinction which we are making is that a use of goods cannot amount to processing of goods. The Jaipur Bench decision related to altogether a different situation, namely, getting rough emeralds cut, shaped and polished in the workshop of karigars on payment of labour charges and the issue was whether this activity on the part of the assessee gave rise to an "industrial undertaking" within the meaning of Section 5(1)(xxxii) of the Wealth-tax Act. Obviously, the position involved here is different. None of the authorities, namely, CIT v. Mubamkali Khan (supra), Addl. CIT v. Farrukhabad Cold Storage (P.) Ltd. (supra) and CIT v. Radha Nagar Cold Storage (P.) Ltd. (supra) help the assessee as the facts involved therein were also different.
CIT v. Mubamkali Khan (supra) is again under the Wealth-tax Act and the question was about an industrial undertaking which manufactured beedies. The other two cases relate to cold storages. In the Calcutta High Court decision in CIT v. Radha Nagar Cold Storage (P.) Ltd. (supra), and the Allahabad High Court decision in Addl. CIT v.Farrukhabad Cold Storage (P.) Ltd. (supra), is followed. In Addl. CIT v. Farrukhabad Cold Storage (P.) Ltd. (supra), the Allahabad High Court considered an English decision at page 819. In that decision, the meaning of the word "procees" were considered to be as under : The word 'process' in its ordinary connotation seems to me to mean no more than the application of a method of manufacture or adaptation of goods or materials towards a particular use, purpose or end, while 'to subject' means no more than to treat in some manner or other.
So far as the word "process" is concerned, it has been stated to mean as no more than the application of a method of manufacture or adaptation of goods or materials towards a particular use, purpose or end. The concept involved is adaptation of goods or materials towards a particular use. This clearly shows that merely use of an item of goods like the film, as in this case, cannot constitute "processing". The use of goods is distinct from processing of goods. In the result, we reject the assessee's contention and uphold the view of the lower authorities.
12. The appeal of the assessee may be treated to be partly allowed for statistical purposes only.