1. Since common contentions are involved in these two appeals filed by the revenue, they are disposed of by a common order for the sake of convenience.
2. The assessee is a company, which derives income from photocopying of documents. These appeals relate to its income-tax assessments for the two assessment years 1979-80 and 1980-81, for the previous years ended 31-3-1979 and 31-3-1980, respectively.
3. to 8. [These paras are not reproduced here as they involve minor issues].
9. In the next ground, the revenue objects to the order of the Commissioner (Appeals) directing the ITO to allow investment allowance by holding that the assessee is a manufacturing company. The ITO had negatived this claim for such investment allowance in both the years for the reason that the assessee-company was not engaged in the production of any article but that it only earned income by photocopying of documents, which could not be considered as a manufacturing activity. In this connection, the ITO relied on the auditor's report, wherein (in para 10) it was stated that the company was not a manufacturing company.
10. Before the Commissioner (Appeals), it was contended that the business of the assessee was making zerox copies of the documents, etc., which involved a process and use of various articles like papers, ink, etc., and which gave a product totally different from the raw materials used and that, therefore, in terms of the various decisions of the High Court and the Tribunal, the process should be considered as a manufacturing process. It was, therefore, argued that the assessee would be entitled to investment allowance in accordance with the provisions of the Income-tax Act, 1961 ('the Act'). The Commissioner (Appeals) agreed with these contentions and directed the ITO to allow the assessee's claim in respect of the investment allowance in both the years. This is being objected to by the revenue before us.
11. Shri M.N. Nambiar, the learned departmental representative, relied on the orders of the ITO and argued that the work done by the assessee-company did not involve any manufacturing process, but represented merely job works done by the assessee-company in taking photocopies of documents for its clients and that this would not amount to a manufacturing activity contemplated by Section 32A of the Act. He, therefore, submitted that the Commissioner (Appeals) erred in directing the ITO to allow investment allowance to the assessee-company as claimed by it in both the years.
12. Shri Y.P. Trivedi, the learned counsel for the assessee, submitted that the assessee was a small-scale industry, that the work done by the assessee was in the nature of zerox printing and rotary copying and that the process involved in the photocopying of documents by the assessee required the following types of machinery and as well as the use of the following materials:(1) Rank Zerox : For taking out Masters for printing.(2) Transfer Printing : Masters are put to these machines Machines which take out copies from 1 to 5,000 or more.(3) Auto Copies Cannon : Which takes out copies 1 to 20 in few seconds.(4) I.B.M. Typewriter : For typing like printed letters and then (1) Toner, (2) Developer, (3) Masters, (4) Ratafix and Rotafound Solutions, (5) Ink, (6) Papers, (7) Folders, etc.
He, therefore, argued that the decision of the Gujarat High Court in the case of CIT v. Ajay Printery (P.) Ltd.  58 ITR 811 would support the case of the assessee for claiming investment allowance under Section 32A.13. The assessee's claim for investment allowance is on the basis that it is a 'small-scale industrial undertaking', contemplated in Section 32A(2)(b)(ii) and that its machinery or plant is used for the purpose of business of manufacture or production of any article or thing as specified in the said provision of law. The first question for our consideration is whether the assessee could be considered as an industrial undertaking. In our view, the assessee cannot be considered to be an industrial undertaking for the simple reason that its activity consists of merely rendering services for charges or fees in taking photocopies of documents on behalf of its clients.
14. First we have to decide whether the zerox copies made out by the assessee is an 'article or thing'. The expression 'article or thing' is not defined in the Act. 'Article' is defined in 20th Century Dictionary as a commodity or an item. A thing is an inanimate object. These two words convey more or less the same meaning. They are synonymous with the expression 'goods'. Now the expression 'goods' has been construed by the Madras High Court in CIT v. Buhari Sons (P.) Ltd.  144 ITR 12 to mean 'merchandise, that is, article for sale'. Their Lordships were construing the definition section of 'Industrial company' in the Finance Act, 1966, in Section 2(7)(d). The definition requires a company to manufacture or process goods--an expression in substance the same as manufacture or production of article or thing in Section 32A of the 1961 Act. So, whatever may be the nature of the article or thing, it must be meant for sale. It should be a mercantile commodity. It should be purchased and sold in the market.
15. Now, can we say that the zerox copies made out by the assessee for the customer is a mercantile commodity in this sense No, definitely not.
16. The activity carried on by the assessee is that of rendering services to its clients in taking out the necessary copies required by them by employing the process of photocopying with the necessary machinery and equipments mentioned in para 12 above. For these services rendered by it, the assessee-company is charging a fee from its clients, which may be so charged as to cover the cost of the materials used by the assessee for taking out the photocopies or zerox copies.
But certainly by no stretch of imagination or argument can the assessee-company be regarded as manufacturing and selling these photocopies or zerox copies of documents to its clients.
17. It is just like the work of a job typist or a job copyist, taking out copies of documents either by typing or by using a duplicating machine for taking out the necessary number of copies for the customers, who require such copies to be taken. This activity does not involve any industrial activity as is ordinarily and normally understood in business circles. Whatever the assessee is doing, is the work of a job typist or a job copyist. Even for executing jobs entrusted to them, a job typist or a copyist will have to use paper, ink and other materials on a typewriter or a duplicating machine and then take out the necessary copies by use of carbon papers or other process. On that account, a job typist or a job copyist cannot be considered as carrying on an industrial activity or running an industrial undertaking. If the assessee's business is not an industrial undertaking, then it cannot be considered as qualifying for investment allowance contemplated in Section 32A. In our view, the decision of the Gujarat High Court in Ajay Printery (P.) Ltd.'s case (supra) is clearly distinguishable on facts, as in the said case, the assessee was entrusted with the work of printing balance sheets, profit and loss account, dividend warrants, pamphlets, share certificates, etc., required by companies. We cannot extend the ratio of this decision by analogy to the facts of the present case. We are, therefore, of the view that the Commissioner (Appeals) was in error in accepting the assessee's contentions and in directing the allowance of investment allowance to the assessee under Section 32A in both these years.
Accordingly, we reverse the orders of the Commissioner (Appeals) on this point in both the years and restore the disallowance made by the ITO.