K.S. Paripoornan, J. - (1.)AT the instance of the Revenue, the Income-tax Appellate Tribunal, Cochin Bench, has referred the following two questions of law for the decision of this court :
"1. Whether, on the facts and in the circumstances of the case, the amount contributed by the assessee to the unrecognised executive staff provident fund is an allowable deduction ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that the assessee's activity of curing coffee amounts to manufacturing and the assessee is entitled to relief under Section 32A of the Income-tax Act ?"

(2.)THE respondent/assessee is a public limited company. It is engaged in the business of coffee curing, shipping and allied businesses. We are concerned with the assessment year 1978-79, for which the accounting period ended on December 31, 1977. For the assessment year 1978-79, the assessee claimed deduction of Rs. 47,549 being contribution to an unrecognised executive staff provident fund. Since the fund was not a recognised one, the Income-tax Officer disallowed the deduction. In appeal, the Commissioner of Income-tax (Appeals) directed the Income-tax Officer to allow the deduction. THE Appellate Tribunal, following its decision in the case of the very same assessee for the earlier year (1977-78), held that it is an admissible deduction. THE assessee had also claimed investment allowance of Rs. 12,417 in respect of machinery installed by the assessee for curing of coffee. THE Income-tax Officer held that investment allowance under Section 32A of the Act is admissible only in relation to machinery or plant installed in a small-scale industrial undertaking for the purpose of the business of manufacture or production of any article or thing and that it is difficult to conceive the process of curing coffee as a process involving manufacture or production and the Income-tax Officer disallowed the allowance. In appeal, the Commissioner of Income-tax (Appeals), by order dated February 15, 1984, held that this issue has been decided in favour of the assessee by the Income-tax Appellate Tribunal and deleted the disallowance. THE Income-tax Officer was directed to allow the investment allowance in respect of the machinery installed in its coffee curing works. In further appeal before the Income-tax Appellate Tribunal, the Appellate Tribunal, after adverting to the rival pleas of the Revenue and the assessee in paragraphs 7 and 8 of its order dated October 6, 1988, concluded in paragraph 9 thus :
"9. We have considered the rival submissions. Curing of coffee, as we understand it, involves removal of foreign matter and passing the coffee seeds through peeling machines for removing the husk from the coffee without hampering its size and quality and keeping the silver skin of coffee, grading it and classifying the seeds. THE Supreme Court and the Kerala High Court held that cutting off the heads and tails of prawns, lobsters and shrimps, peeling, deveining, cleaning and after freezing exporting them did not amount to manufacturing activity. THEse cases are decided under the Sales Tax Act and after considering the processes involved in that activity. THEre is no decision of any High Court brought to our notice in the case of coffee curing. However, the decision of the Tribunal in the case of Bharathi Coffee Curing Works is directly on the issue of coffee curing. For the sake of consistency, we follow the decision of the Bangalore Bench and hold that the assessee's activity of curing coffee amounts to manufacturing and the assessee is entitled to relief under Section 32A."

The Tribunal allowed relief to the assessee under Section 32A of the Act. It is thereafter at the instance of the Revenue that the questions of law formulated hereinabove have been referred to this court for decision by the Income-tax Appellate Tribunal.

We heard counsel.

(3.)IT is common ground that the answer to question No. 1 is governed by the earlier Bench decision of this court in the case of the very same assessee and the decision in CIT v. Aspinwall and Co. (Travancore) Ltd. [1992] 194 ITR 739. In the said case, this court held that contribution to an unrecognised executive staff provident fund, in the case of the very same assessee, is an allowable deduction. In the light of the aforesaid Bench decision of this court, we answer question No. 1 in the affirmative, against the Revenue and in favour of the assessee.
Counsel on both sides invited us to a catena of decisions for the purpose of deciding whether curing of coffee amounts to manufacture. Sections 32A(1) and 32A(2)(b) of the Income-tax Act, 1961, are relevant in this context. They are as follows :

"32A. Investment allowance.--(1) In respect of a ship or an aircraft or machinery or plant specified in Sub-section (2), which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance equal to twenty-five per cent. of the actual cost of the ship, aircraft, machinery or plant to the assessee :

Provided that no deduction shall be allowed under this section in respect of-- ....

(2) The ship or aircraft or machinery or plant referred to in Sub-section (1) shall be the following, namely :--....

(b) any new machinery or plant installed after the 31st day of March, 1976,-

(i) for the purposes of business of generation or distribution of electricity or any other form of power ; or

(ii) in a small-scale industrial undertaking for the purposes of business of manufacture or production of any article or thing ; or

(iii) in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule."

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