1. These two appeals, filed by the assessee, relating to the assessment years 1979-80 and 1980-81, against the orders of the Commissioner (Appeals)-II, Kanpur, deal with common issues and are, therefore, for the sake of convenience, disposed of by a consolidated order.
2. The assessee is a registered firm, which runs a cold storage. Before the ITO it was claimed that the assessee was entitled to investment allowance as laid down by Section 32 A of the Income-tax Act, 1961 ('the Act"), on additions to plant and machinery. This claim of the assessee was, however, not allowed by the ITO. The Commissioner (Appeals) also did not accept this claim of the assessee. The assessee has, therefore, come up with the first common point of dispute in the two appeals before us.
3. The assessee's learned counsel Shri Gulati submitted to us that the cold storage involves machinery and plant in order to keep the cold storage chamber at a reduced temperature which is controlled by a thermostat and this is enough to show that the cold storage means manufacture or production of goods. Our attention was also invited to the ruling of the Hon'ble Punjab and Haryana High Court in the case of CIT v. Yamuna Cold Storage  129 ITR 728 wherein their Lordships observed that the cold storage was a factory as defined under the Factories Act, 1948, and, therefore, the cold storage can be said to be involved in manufacture. Summing up, Shri Gulati vehemently argued before us that in the instant case it is not under dispute that the assessee is a small scale industry and the only point for consideration on which claim of investment allowance can be refused is whether the assessee manufactures or produces any articles or things and here again in view of the observations of their Lordships of the Hon'ble Punjab and Haryana High Court in the case of CIT v. Yamuna Cold Storage (supra), the second condition is also met. He, therefore, vehemently argued before us that the claim of investment allowance was perfectly justified and was wrongly not allowed by the revenue authorities.
4. On the other hand, the learned departmental representative, Shri Jauhari, pointed out that in the case of CIT v. Yamuna Cold Storage (supra), the issue before their Lordships was whether the cold storage chamber was part of air-conditioning plant of the cold storage or was a godown for the purpose of what rate of depreciation is admissible and, therefore, the ruling of the Hon'ble Punjab and Haryana High Court will not be applicable to the facts of the present case. Our attention was also invited to the words of Section 32A, which lays down that for the grant of investment allowance not only the business should be a small scale industrial undertaking, it should also be of manufacture or produce of any article or thing. Proceeding further, Shri Jauhari submitted that while the function of the cold storage to preserve articles or things for their use at a later date by the scientific process of refrigeration may be a process, it certainly cannot be said to be manufacture or production of goods. He, therefore, vehemently argued before us that the claim of investment allowance was not admissible and was rightly not allowed by the revenue authorities.
5. We have carefully considered the rival submissions. At the outset, it will be necessary to point out that in the ease of CIT v. Yamuna Cold Storage (supra), the issue before their Lordships of the Hon'ble Punjab and Haryana High Court was whether the cold storage chamber was to be treated as a godown or part of the air-conditioning plant of the cold storage for the purpose of what should be the appropriate rate of depreciation and their Lordships took into consideration the definition of "manufacturing process" as laid down in Section 2(k) of the Factories Act, 1948, and came to the conclusion that the process undertaken in the cold storage is a process of treating the articles or goods with a view to preserve them for their use or sale, and, therefore, the requirements of Clause (k)(i) of Section 2 of the Factories Act, 1948, were satisfied in that case. The issue here is different, inasmuch as for the purpose of determining whether the assessee's cold storage is entitled to investment allowance, it is for consideration whether the assessee manufactures or produces any article or thing. Their Lordships of the Hon'ble Supreme Court in the case of Union of India v. Delhi Cloth & General Mills Co. Ltd. AIR 1963 SC 791 laid down that processing cannot be equated with manufacture and the word "manufacture" means to bring into existence a new substance and not merely produce some change in the substance, however minor in consequence the change may be. Section 32A requires that the machinery or plant entitled to investment allowance should not only be used in a small scale industrial undertaking but should also be used for the business of manufacture or production of any article or thing. While the business of a, cold storage may satisfy the test of carrying on the business of processing of goods as laid down by the Hon'ble Allahabad High Court in the case of Addl. CIT v. Farrukhabad Cold Storage (P.) Ltd.  107 ITR 816, it does not satisfy the test of manufacture or production of any article or thing. The assessee was, therefore, not entitled to investment allowance on additions to plant and machinery and this claim of the assessee was rightly not allowed by the revenue authorities.
6 to 9. [These paras are not reproduced here as they deal with a minor issue],