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28. In the case of SESA Goa Ltd.11, the Supreme Court considered an appeal filed at the instance of the revenue on the grant of Investment Allowance that hinged on the assessee being involved in the activity of manufacture. The substantial question of law in that case read thus:

“Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the assessee is entitled to deduction of investment allowance under section 32A of the Income-tax Act, 1961, in respect of machinery used in mining activity 11 Foot Note Supra (2) https://www.mhc.tn.gov.in/judis 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?”

29. Section 32A(2)(b)(iii) of the Income Tax Act uses the term ‘manufacture’ or ‘production’. The Bombay High Court had considered whether the activity of extraction and processing of iron ore would satisfy either term, i.e., production or manufacture. The High Court held that the activity of extraction and processing of iron ore did not amount to manufacture, but came to the conclusion that such activity and the processes involve production would satisfy the term ‘production’, within the meaning of Section 32A(2)(b)(iii) of the Income Tax Act.