JUDGMENT Heard learned counsel for the parties. 2. This is reference under Section 256(1) of the I.T. Act, 1961. 3. Following two questions have been referred to this Court :- 1. Whether on the facts and in the circumstances of the case the Hon'ble I.T.A.T. was justified in holding that the assessee company is an industrial undertaking and also in holding that it was producing article or thing and thus eligible for investment allowance under Section 32A of the I.T. Act? 2. Whether on the facts and circumstances of the case for the assessment year 198182 the Tribunal was justified in holding that the sum of Rs. 9,20,886/- was a revenue expenditure allowable under Section 37(1) of the I.T. Act? 4. As per statement of facts, assessee is a subsidiary company of Coal India Ltd. and itself is also a public sector undertaking and carries on business primarily of mining consultancy and exploration. The assessee submitted return originally on 27.03.1981 disclosing net loss of Rs.7,08,073/excluding carry forward loss of earlier years of Rs.28,88,564/. Subsequently, the assessee filed a revised return on 08.02.1983 in which the assessee disclosed net business income of Rs.6,87,331/and after claiming carry forward loss of its earlier years of Rs.28,88,564/and investment allowance of Rs.22,80,000/and submitted return of net loss of Rs.44,81,233/. 5. The dispute before us is with respect to the investment allowance of Rs. 22,80,000/-allowed to the assessee by the Tribunal, and therefore, question has arisen that whether the Tribunal was right in holding that the petitioner was entitled to investment allowance under Section 32A of the I.T. Act, 1961 and whether the petitioner's work can be said to be the work of industry because of the reason that assessee admittedly for the purpose of giving consultancy services has to undertake certain digging and extraction of the coal without which assessee cannot form opinion so as to give it to its client as advised under its consultancy business. 6. The contention of the revenue is that the petitioner's work is of the consultancy and it produces nothing, and therefore, is not selling any product produced by it. Therefore, the petitioner was not entitled to any investment allowance. 7. Learned counsel, Sri Binod Poddar vehemently submitted that issue has been considered by the Karnatka High Court in the case of C.I.T. Vs. Therefore, the petitioner was not entitled to any investment allowance. 7. Learned counsel, Sri Binod Poddar vehemently submitted that issue has been considered by the Karnatka High Court in the case of C.I.T. Vs. General Research Development Corporation reported in (1992) 194 I.T.R. 120 (KAR) and it has been held, that for the purpose of running consultancy service if the consultant is required to undertake certain activities like extraction of the mineral form earth without which they cannot give any consultancy, then, in that situation, the machineries used for such purpose for finding out the data base are absolutely necessary for the purpose of business of the assessee and in this context meaning of the industrial activity is required to be given widest possible range to include such activities. Learned counsel for the assessee further submitted that the consultancy as given by the assessee includes preparation of the complete report for the large area, which report is prepared after digging and extracting certain material from under the soil and that report is sold by the consultant assessee, therefore, that report is a “product” produced by the assessee. 8. We have considered the submission of the learned counsel for the parties and perused the facts of the case which have been mentioned in various orders passed by the Assessing authority, Appellate authority and the Tribunal. 9. Section 32(A) provides for investment allowance in respect of the plant and machinery specified in Sub Section 2 which is owned by the assessee and it is wholly used for the purpose of business carried on by the assessee. Sub Section 2 of Section 32(A) says that machinery or plant referred in Sub Section 1 shall be the items mentioned under various clauses under Sub Section 2. As per the Sub Clause (ii) of Clause (b) of Sub Section (2) of Section 32A, the plant and machineries are those plant and machineries, which are used in small scale undertaking for the purpose of business of manufacture or production of any article. As per Sub-Clause (iii) thereunder, the plant and machineries are if used for any other industrial undertaking then it should be for the purpose of business of construction, manufacture or production of any article or thing not being an article or not specified in the list in the 11th Schedule. As per Sub-Clause (iii) thereunder, the plant and machineries are if used for any other industrial undertaking then it should be for the purpose of business of construction, manufacture or production of any article or thing not being an article or not specified in the list in the 11th Schedule. So the requirement for claiming the investment allowance under Section 32(A), the plant and machineries should be used for the purpose of business of the assessee and it should either be small scale undertaking as per Sub Clause (ii) under Clause (b) of Sub Section 2 or it may be any other industrial undertaking as per the Sub Clause (iii) under Clause (b) of Sub Section 2 of Section 32 (A). The main activity of the assessee is of giving consultancy. The assessee consultancy is dependent upon its work, which includes drilling, digging and excavation of the minerals, without which, they cannot form opinion so as to give any consultancy to its client. Therefore, they are producing the reports, and therefore, the assessee is engaged in activity of digging, excavation and analysing the minerals, which can be done with the help of plant and machineries only. This fact is not in dispute and that plant and machineries are essential for the purpose of doing above referred work of the assessee. Therefore, we are also of the view that the narrower construction cannot be given to the phrase “production of any new article in context of Section 32(A)”. Hon'ble Supreme Court in the case of C.I.T. Vs. Malyalam Plantation Ltd. reported in 1964(53) I.T.R. 140 (SC) has held that expression “for the purpose of business” has a wider scope and that its range is wide and that it may take in not only the day to day running of business but also the rationalisation of the assessee administration and modernisation of the industry etc. So long as the machinery is used for the purpose of business, Section 32(A) will be attracted subject to other conditions stated in the said provisions. Such judgment of the Malyalam Plantation was considered by the Karnataka High Court in the case of General Research and Development Corporation (Supra). So long as the machinery is used for the purpose of business, Section 32(A) will be attracted subject to other conditions stated in the said provisions. Such judgment of the Malyalam Plantation was considered by the Karnataka High Court in the case of General Research and Development Corporation (Supra). We are of the view of that the assessee has placed on record the material particulars with respect to its investment for purchase of plant and machineries, which we found essential for the purpose of forming opinion for giving consultancy which is the biggest objective of the assessee in all the orders while recording the statement of fact. The Assessing officer and the Appellate authority also mentioned that the assessee is engaged in the business may be primarily of mining consultancy, but is also engaged in the exploration obviously for the purpose of giving advice to its clients, which involves engagement of plant and machineries. 10. In view of above reasons, we are of the considered opinion that the petitioner was rightly held to be entitled to the investment allowance. The question is answered accordingly. 11. So far as another question is concerned, it relates to the only assessment year 198182. The assessee claimed the loss, which is suffered on the Talcher Coke Plant which should be treated to be a revenue loss, which the Assessing officer treated to be a capital loss. According to the assessee, such project was sanctioned by the Government of India in December, 1973 as R. & D. Unit under control of the Central Coalfields Ltd. for consideration of Rs.3.5 Crores. The said project was taken over by the assessee as a research and development scheme from 1st April, 1977. On careful consideration and examination of the project, the assessee found that the project cost would be around Rs.31.48 Crores as against Rs.3.5 Crores originally sanctioned by the Government. Since, the project was found to be unworkable and the entire project was dropped and the expenditure was incurred upto financial year 197980 was written off by adopting the same in the Profit and Loss Account for the previous year relevant to the assessment year under consideration. Certain material particulars were also placed by the assessee to justify its claim of Rs.9,20,886/as revenue expenditure. The I.T.A.T. after considering judgment of Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. Vs. Certain material particulars were also placed by the assessee to justify its claim of Rs.9,20,886/as revenue expenditure. The I.T.A.T. after considering judgment of Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. Vs. C.I.T. reported in 124 I.T.R. 1 (SC) held that “the assessee is entitled to deduction of Rs. 9,20,886/”. In the case of Empire Jute Co. Ltd. Hon'ble Supreme Court observed and that has been taken note by the I.T.A.T. and that is as under : “What is an outgoing of capital and what is an outgoing on account of revenue depends on what the expenditure is calculated to effect from a practical and business point of view rather than upon a juristic classification of the legal rights, if any accrued, employed for exhausted in the process. The question must be viewed in the larger context of business necessity or expediency”. The I.T.A.T. also took into consideration the ratio, that :- “when there is no addition to or expansion of the profit making apparatus of the assessee, the expenditure towards it would not constitute a capital expenditure and it would be only a revenue expenditure.” 12. After considering above legal position, the I.T.A.T. rightly applied the law on the facts of the case before it and was right in holding that when the assessee in this case has not added or expended the profit making apparatus and the project was found to be unworkable in view of the huge cost difference as such and actual writing off of the expenditure to be incurred and difference is from Rs.3.5 Crores to Rs. 31.48 Crores because of which assessee was left with no option but to drop the project. Therefore, the assessee was rightly held to be entitled for deduction of Rs. 9,20,886/. 13. The question no.2 is answered accordingly.