1. The assessee is aggrieved of the order dated 14-3-1983 of the learned Commissioner (Appeals).
2. The assessee, Budhwar Cold Storage, Ujhani, Budaun is an unregistered firm. The assessee claimed investment allowance of Rs. 66,148 under Section 32A of the Income-tax Act, 1961 ('the Act') at the rate of 25 per cent on machinery and plant worth Rs. 2,64,554. The assessee claimed before the ITO that the cold storage involved manufacturing. However, the ITO held that the cold storage only involved processing and not manufacture or production of an article or thing Therefore, the claim of investment allowance was disallowed.
Since the industrial undertaking, in question, is situated in a backward district, deduction under Section 80HH of the Act was also claimed by the assessee. The assessee did not file the prescribed audit report in Form No. 10C, as required under Section 80HH(5), read with Rule 18B of the Income-tax Rules, 1962 ('the Rules') and, therefore, the claim was rejected by the ITO, The first two grounds of appeal relate to these claims. In appeal, the learned Commissioner (Appeals) upheld the rejection of the claims.
3. In further appeal before us, Shri K.L. Goel, the learned counsel for the assessee, placed reliance on the following decisions-CIT v. Kanodia Cold Storage  100 ITR 155 (All.), Addl. CIT v. Farrukhabad Cold Storage (P.) Ltd. [19771 107 ITR 816 (All.), Farrukhabad Cold Storage (P.) Ltd. v. CIT  119 ITR 895 (All.) and CIT v. Yamuna Cold Storage  129 ITR 728 (Punj. & Har.). He also relied upon the definition of 'manufacturing process' in Section 2(k) of the Factories Act, 1948 and particularly drew our attention to the Factories (Amendment) Act, 1976, by which a new Sub-clause (vi) was added to Section 2(k) in the following terms : '(vi) Preserving or storing any article in cold storage'. On the other hand, Shri S.D. Kapila, the learned departmental representative, strongly supported the orders of the income-tax authorities. In particular, he pointed out that the Factories Act would be relevant only for the purposes of factory building. He pointed out that in Section 80J(4) of the Act since a specific reference was made to cold storage plant, which did not find mention in Section 32A or 80HH, it was a clear indication that relief under Section 32A or Section 80HH was not intended to be given in cases of cold storage. He also pointed out that when potatoes were kept in a cold storage, they were only preserved and that neither did they undergo any transformation, nor did a commercially different article or thing resulted by putting them in the cold storage. He submitted that none of the decisions, referred to on behalf of the assessee, was of assistance to it.
4. We have considered the rival submissions as also the decisions, referred to above. Section 32 of the Act, which deals with depreciation, uses the expression 'plant'. Section 43(3) of the Act defines 'plant'. It is with reference to the said definition that it was held by the Hon'ble Allahabad High Court in the case of Kanodia Cold Storage (supra) that the freezing chamber with insulated walls in a cold storage amounted to a 'plant' which was entitled to depreciation at the rate of 15 per cent on its written down value. It does not help the assessee as this is not the point in issue before us. Section 2(7)(d) of the Finance Act, 1966 and the Finance (No. 2) Act, 1967, defined an 'industrial company' as a company which was mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining. It is with reference to the said definition that it was held by the Hon'ble Allahabad High Court in the case of Farrukhabad Cold Storage (P.) Ltd. (supra) that a company doing cold storage business answered the description of an industrial company, so defined. This again is not the point at issue before us. Again, in the latter case of Farrukhabad Cold Storage (P.) Ltd. (supra), decided by the Hon'ble Allahabad High Court, the question examined was whether the assessee was a 'priority industry' under Section 80-I of the Act on the ground that it was engaged in the activity of production of processed seed within the meaning of Section 80B(7), read with item (28) of the Sixth Schedule of the Act. It was held that processing of seed was different from the keeping of potatoes in the cold storage and that even if the keeping or preservation of potatoes in the cold storage amounted to 'processing', it would not amount to the assessee's engagement in the production of processed seeds as the potatoes could be used for multifarious purposes. Here also, the question dealt with and answered by the Hon'ble High Court was not under Section 32A or 80HH. In the case of Yamuna Cold Storage (supra), again, though a cold storage was held to be a factory under the Factories Act, the Hon'ble Punjab and Haryana High Court was only considering the meaning of 'plant' under Section 43(3) with reference to thermocole insulation. It was held that as a factory building, the building of cold storage was entitled to depreciation at the rate of 15 per cent. That is how the definition of 'manufacturing process' under the Factories Act, as amended by the Factories (Amendment) Act, 1976 does not assist the assessee on the facts of the present case. We have to see whether, on the wordings of Sections 32A and 80HH, the assessee was entitled to investment allowance and deduction. Here, it will be noticed that Section 32A uses the expression 'business of manufacture or production of any article or thing'. The expression used in Section 80HH is similar, namely, 'to manufacture or produce articles'. There is no reference to processing as used in the definition of 'industrial company' under Section 2(7)(d) of the Finance Act, 1966 and the Finance (No. 2) Act, 1967. There is force in the submission made on behalf of the department that unlike Section 80J(4)(iii), reference is not made in Section 32A or 80HH regarding the 'operation of the cold storage plant'. This would show that mere processing (even if the potatoes were held to undergo processing in a cold storage) is not recognised under Sections 32A and 80HH to amount to manufacture or production of any article or thing. The same expression is used in Sections 80HHA and 80-I(2)(iii) of the Act. There is another factor also which we may mention in passing. Section 35C of the Act, which deals with agricultural development allowance, refers to a company or a co-operative society being engaged in the manufacture or processing of any article or thing which is made from or used in such manufacture or processing as raw material, any product of agriculture, animal husbandry or dairy or poultry farming. As already noticed above, neither Section 32A, nor Section 80HH refers to processing of any article or thing. Viewed in this context, we are of the view that the income-tax authorities were quite justified in not upholding the claims of the assessee under Sections 32A and 80HH as the assessee did not satisfy the requirements of these provisions.
5 to 10. [These paras are not reproduced here as they involve minor issues.] 11. The last ground relates to the disallowance out of the expenses for the maintenance of vehicles. The ITO disallowed Rs. 2,270 out of the expenses of maintenance of vehicles, amounting to 50 per cent of the expenditure. In appeal, the learned Commissioner (Appeals) reduced the disallowance to one-fourth of the expenditure. Here also, we see no reason to interfere as the user of the vehicles for personal purposes is not under dispute and the extent of diallowance seems to be reasonable.
12. In the result, the appeal filed by the assessee is only partly allowed, as above.