ORDER

1. HEARD THE LEARNED COUNSEL FOR THE PARTIES.

2. DELAY CONDONED.

3. LEAVE GRANTED.

4. THE FOLLOWING QUESTION RAISED AT THE INSTANCE OF THE REVENUE IN AN APPEAL BEFORE THE BOMBAY HIGH COURT WAS ANSWERED IN FAVOUR OF THE ASSESSEE:

"WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, ITAT WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION OF INVESTMENT ALLOWANCE UNDER SECTION 32-A OF THE INCOME TAX ACT, 1961 IN RESPECT OF MACHINERY USED IN MINING ACTIVITY IGNORING THE FACT THAT THE ASSESSEE IS ENGAGED IN EXTRACTION AND PROCESSING OF IRON ORE, NOT AMOUNTING TO MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING?"

5. THE HIGH COURT, WHILE DISMISSING THE APPEAL PREFERRED BY THE REVENUE, HELD THAT EXTRACTION AND PROCESSING OF IRON ORE DID NOT AMOUNT TO "MANUFACTURE". HOWEVER, IT CAME TO THE CONCLUSION THAT EXTRACTION OF IRON ORE AND THE VARIOUS PROCESSES WOULD INVOLVE "PRODUCTION" WITHIN THE MEANING OF SECTION 32-A(2)(B)(III) OF THE INCOME TAX ACT, 1961 (FOR SHORT "THE ACT") ENTITLING THE ASSESSEE TO INVESTMENT ALLOWANCE UNDER THE SAID PROVISION.

6. ACCORDING TO THE REVENUE, WHICH IS IN APPEAL BEFORE US, THE HIGH COURT ERRED IN ITS CONCLUSION AS IT FAILED TO CONSIDER THAT EXTRACTION AND PROCESSING OF IRON ORE DID NOT PRODUCE ANY NEW PRODUCT. THE DEFINITION OF THE WORD "ORE" IN STROUDS JUDICIAL DICTIONARY, VOL. 3, 5TH EDN., HAS BEEN RELIED UPON IN THIS CONTEXT. RELIANCE HAS ALSO BEEN PLACED UPON THE DECISION OF THIS D COURT IN MINERALS AND METALS TRADING CORPN. OF INDIA LTD. V. UNION OF INDIA1 AND ON CHAPTER NOTE II OF CHAPTER 26 OF THE CENTRAL EXCISE TARIFF ACT, 1985.

7. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS CONTENDED THAT THE HIGH COURT HAD CORRECTLY RELIED UPON EARLIER DECISIONS OF THIS COURT IN ARRIVING AT THE CONCLUSION IT DID. WE HAVE ALSO BEEN REFERRED TO OTHER PROVISIONS OF THE ACT, WHICH ARE SUBSTANTIALLY PHRASED IN THE SAME MANNER AS SECTION 32-A(2)(B)(III) OF THE ACT, WHEREFROM, ACCORDING TO THE ASSESSEE, IT WILL BE ABUNDANTLY CLEAR THAT PARLIAMENT HAD INTENDED TO INCLUDE THE MINING OF ORES WITHIN THE MEANING OF THE WORD "PRODUCTION".

8. AT THE OUTSET, IT MAY BE NOTED THAT SECTION 32-A(2)(B)(III) MAKES IT CLEAR THAT INVESTMENT ALLOWANCE IS DEDUCTIBLE IN RESPECT OF, INTER ALIA, A PLANT OWNED BY THE ASSESSEE WHICH IS WHOLLY USED FOR THE PURPOSES OF THE ASSESSEES BUSINESS UNDER SECTION 32-A(1) IF THE PLANT IS INSTALLED AFTER 31-3-1976 IN AN INDUSTRIAL UNDERTAKING FOR THE PURPOSE OF THE BUSINESS OF CONSTRUCTION OR MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, EXCEPT THOSE ARTICLES OR THINGS MENTIONED IN THE ELEVENTH SCHEDULE TO THE ACT. THERE IS NO DISPUTE THAT THE PLANT IN RESPECT OF WHICH THE ASSESSEE CLAIMED DEDUCTION WAS OWNED BY IT AND WAS INSTALLED AFTER 31-3-1976 IN THE ASSESSEES INDUSTRIAL G UNDERTAKING FOR EXCAVATING, MINING AND PROCESSING MINERAL ORE. MINERAL ORE IS NOT EXCLUDED BY THE ELEVENTH SCHEDULE. THE ONLY QUESTION IS WHETHER SUCH BUSINESS IS ONE OF MANUFACTURE OR PRODUCTION OF ORE. THE ISSUE HAD ARISEN BEFORE DIFFERENT HIGH COURTS OVER A PERIOD OF TIME. THE HIGH COURTS HAVE HELD THAT THE ACTIVITY AMOUNTED TO "PRODUCTION" AND ANSWERED THE ISSUE IN QUESTION IN FAVOUR OF THE ASSESSEE. THE HIGH COURT OF ANDHRA PRADESH DID SO IN CIT V. SINGARENI COLLIERIES CO. LTD.2, THE CALCUTTA HIGH COURT IN KHALSA BROS. V. CIT3 AND CIT V. MERCANTILE CONSTRUCTION CO.4 AND THE DELHI HIGH COURT IN CIT V. UNIVMINE (P) LTD.5 THE REVENUE HAS NOT QUESTIONED ANY OF THESE DECISIONS, AT LEAST NOT SUCCESSFULLY, AND THE POSITION OF LAW, THEREFORE, WAS TAKEN AS SETTLED.

9. THE REASONING GIVEN BY THE HIGH COURTS, IN THE DECISIONS NOTED BY US EARLIER, IS, IN OUR OPINION, UNIMPEACHABLE. THIS COURT HAD, AS EARLY AS IN 1961, IN CHRESTIEN MICA INDUSTRIES LTD. V. STATE OF BIHAR6 DEFINED THE WORD "PRODUCTION", ALBEIT, IN CONNECTION WITH THE BIHAR SALES TAX ACT, 1947. THE DEFINITION WAS ADOPTED FROM THE MEANING ASCRIBED TO THE WORD IN THE OXFORD ENGLISH DICTIONARY AS MEANING "AMONGST OTHER THINGS TH