1. The only question involved in this appeal is whether the assessee is entitled to investment allowance under Section 32A(2)(a)(iii) of the Income-tax Act, 1961 ('the Act').
2. The assessee, a company, is engaged in the business of exhibiting films in theatres. It has installed machineries such as air-conditioning plant, water pump, projector and screen, electrical fittings, cinema chairs and curtains. In respect of these items, investment allowance of Rs. 50,000 was claimed, which the ITO rejected.
The Commissioner (Appeals) also rejected this claim in the appeal by the assessee. The assessee is renewing its prayer before us by way of this second appeal.
3. Shri Ganesh, the learned counsel for the assessee, contended that both mechanical and human activity are involved in the process of exhibition of films in theatres and that the sound and visual image produced in the process of exhibition should be taken as an 'article' or 'thing' within the meaning of Section 32A(2)(a)(iii). It was also his argument that 'article' or 'thing' is not defined either in the Act or any other statute and that the dictionary meaning of these two terms is wide enough to include an image produced on the screen coupled with sound effect when a film is projected. We shall advert to the case law relied upon by him a little later, when we get into discussion.
4. Shri Mahadeshwar, the learned departmental representative, contended that the image on the screen, which is nothing but an illusion does not have any physical existence and that 'article' or 'thing' necessarily as to be a property capable of marketability since these words are used in the context of industrial undertaking. It was also his argument that cinematographic films and projectors, included in the Eleventh Schedule, of the Act, having been themselves excepted from the operation, Sub-clause (iii) of Section 32A(2)(ii), a momentary entertainment given to the audience by visual and sound effect cannot certainly be considered as an 'article' or 'thing' though the dictionary meaning of these expressions may have wider dimension in different contexts.
5. The dictionary meaning of the word 'produce', no doubt, includes 'to bring forth ; to exhibit' ; and on that basis, it may perhaps be possible to say that an image synchronised with sound system is produced on the screen. For being eligible to investment allowance under the provision under consideration, it must be an industrial undertaking engaged in the business of 'manufacture or production of any article or thing', leaving away the business of construction, which is not pertinent for this case. We may here alone say that exhibition of films in a theatre is not 'engaged in the business of manufacture' in view of what has been stated by the Supreme Court in Union of India v. Delhi Cloth & General Mills Co. Ltd. AIR ...The word 'manufacture' used as a verb is generally understood to mean as 'bringing into existence a new substance' and does not mean merely 'to produce some change in a substance', however minor in consequence the change may be. This distinction is well brought about in a passage thus quoted in Permanent Edition of Words and Phrases, Vol. 26, from an American Judgment. The passage runs thus : 'Manufacture' implies a change but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation ; a new and different article must emerge having a distinctive name, character or use. (p. 794) 6. What remains for discussion is whether the assessee is engaged in the activity of producing any 'article' or 'thing'. No doubt, machinery such as projector is used and human element is also involved in projection of the film. Projection, no doubt, produces both sound and light effect which constitutes entertainment to the audience. What is of saleable value here is the element of enjoyment or entertainment and not the image or sound effect as such. It cannot be denied that no article or thing which can be equated to property of physical nature is acquired by the person who experiences the enjoyment.
7. On behalf of the assessee, our attention was invited to the decision of the Supreme Court in Christian Mica Industries Ltd. v. State of Bihar  12 STC 150 to contend that the dictionary meaning of the word production' had been adopted in dealing with a case under the Bihar Sales Tax Act, where that expression had not been statutorily denned and that we would be justified in adopting the same course in understanding 'production' used in Section 32A as this has not been statutorily defined in the Act.
8. Aluminium Corpn. of India v. Coal Board AIR 1967 Cal. 222 was another case cited to say that it is not necessary that some goods should be manufactured in the sense that raw material should be used to turn out something altogether different and that it is enough if human activity is spent on something which may be subjected to a process in order that something else is brought out. To repeat, the attempt of Shri Ganesh had been that human element involved in projecting a film with the help of a projector to bring about vision and sound effect for the benefit of the audience is sufficient to say that an 'article' or 'thing' is produced.
9. It was also the point of Shri Ganesh that 'article' or 'thing' need not be a corporeal property and that even incorporeal property such as copy-right could be goods as pointed out by the Madras High Court in A.V. Meiyappan v. CCT  20 STC 115.
10. Elaborating his argument, Shri Ganesh contended that the phrase 'manufacture or produce articles' by an industrial undertaking is also used in Section 80J of the Act and that the benefit thereunder has been extended to cases where human agency is associated with natural processes such as hatching of eggs by a mechanical process which are said to have produced article or thing and, to illustrate, the decision of the Tribunal in the case of Venkateswara Hatcheries (P.) Ltd. [IT Appeal Nos. 290 and 291 (Hyd.) of 1981] was relied upon.
11. We have given our fullest thought to the matter and, in our view, the assessee cannot be said to be an industrial undertaking engaged in the production of an article or thing. It is not sufficient if merely the assessee is producing something capable of being felt by perception of an eye and ear ; but whether an article or thing has resulted in the projection of films. The case law relied upon by Shri Ganesh does not readily help us for they take us no further than to show that the assessee is producing picture effect on the eye synchronised with sound effect. We must note here that both in A.V. Mciyappan's case (supra) and Aluminium Corpn. of India's case (supra), where a wider meaning was ascribed to the word 'produce', the result of the business carried on by those sales tax assessees was to produce some physical substance. It is true that incorporeal right could also be property in some context.
But here we are concerned with an industrial undertaking and by no stretch of imagination or argument, the projection of films in a theatre could be said to be an industrial undertaking. Photo copying or zeroxing is held not to involve any industrial activity by the Tribunal, Bombay Bench in the case of ITO v. Daks Copy Services (P.) Ltd.  8 ITD 245, we may also usefully refer to [the decision of the Tribunal, Ahmedabad Bench in the case of New Indian Textile Products v. ITO  1 ITD 837 where development rebate had been claimed more or less on a similar situation and the following stated therein is worth of note : The meaning given to the word 'process', relied upon by the assessee, was not appropriate in the context of taxation statute dealing with the definition of an 'industrial company', which emphasises two aspects, namely, manufacture of goods or processing of goods. Processing involves certain changes in the goods produced and no such change occurs when a film is exhibited qualitatively by projecting it on the screen except the wear and tear caused by its use. Thus, mere use of goods as in this case cannot amount to processing of goods. Accordingly, the assessee's claim for being treated as an industrial company had been correctly rejected by the lower authorities. (p. 838) 12. As Section 32A is designed to give relief in certain cases of business venture, the article or thing for being eligible for investment allowance under the said provision must be a property capable of marketability. Assuming that the entertainment is the subject of sale to the person who enjoys the film, there is nothing which he in turn could sell to others and, thus, it is clear that there is no subject-matter of saleable value. 'Article' or 'thing' must be a property capable of sale and the nature of activity carried on by the assessee does not answer to this description. We are, therefore, of the view that the authorities below were right in rejecting the claim for investment allowance and the assessee, in our opinion too, is not eligible for this benefit.