Commissioner of Income Tax vs Air Survey Co. of India (P.) Ltd.

The following question of law has been referred for our opinion :

"Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the assessee was entitled to investment allowance u/s 32A on the aircraft radio ?"

The answer to this question revolves around the interpretation to be put to Section 32A of the Income Tax Act, 1961, particularly, the expression "manufacture or production of any article or thing" as occurring in Sub-section (2) of that section.

The assessee is Air Survey Co. of India (P.) Ltd., and the assessment year relevant for our purpose is 1983-84. The assessee derives its income from surveying, mapping, aerial photography and aero-magnetic photography done for the Surveyor-General of India and the Atomic Mineral Division of Government of India. The assessee claimed investment allowance u/s 32A of the Income Tax Act, 1961, in respect of the aircraft-radio purchased in the previous year relevant to assessment year 1982-83. The Inspecting Assistant Commissioner (Assessment) rejected the assessee''s claim on the ground that the activity of the assessee could not be called as manufacture or production and that in the nature of the assessee''s business no thing or article was produced as such. The Commissioner of Income Tax (Appeals) upheld the aforesaid finding of the Inspecting Assistant Commissioner. The Tribunal, in appeal, however, reversed the aforesaid finding and allowed the relief in favour of the assessee by holding that the activity of the assessee was such that it would fall within the purview of the expressions "manufacture" or "production" and that the ultimate photographs which came to be produced as a result of the business activity of the assessee came within the expressions "article" or "thing".

We have given our considered opinion to the rival contentions at the Bar and find that the view taken by the Tribunal is correct. We are fortified by two Bench decisions on the point, one of the Rajasthan High Court in the case of Commissioner of Income Tax Vs. Trinity Hospital, and the other of the Kerala High Court in the case of Commissioner of Income Tax Vs. Upasana Hospital, .

The question is accordingly answered in the affirmative and in favour of the assessee.