Ashok Bhan, J.

1. The Revenue has filed this appeal against the order passed by the Income Tax Appellate Tribunal, Bangalore (for short, "the Tribunal"), in ITA No. 2208/Bang. of 1991 dated December 22, 1998, for the assessment year 1987-88. By the impugned order, the Tribunal has upheld the order passed by the Commissioner of Income Tax (Appeals) which allowed the claim of the assessee for investment allowance under Section 32A of the Income Tax Act, 1961 (for short, "the Act"), on earth moving equipment, crane, oil engine, pumps and machinery for a sum of Rs. 39,03,596.

2. According to the Revenue, the following two substantial questions of law arise from the order of the Tribunal :

"1. Whether, the assessee is entitled to investment allowance on earth moving equipment, crane, oil engine and machinery foundations for gang saws under Section 32A of the Income Tax Act

2. Whether, the Income Tax Appellate Tribunal was right in granting investment allowance by following the judgment of this court reported in CIT v. Mysore Minerals Ltd. , which had been impliedly overruled by the Supreme Court in CIT v. N. C. Budharaja and Co. : [1993]204ITR412(SC) ."

3. The assessee, a Government of Karnataka undertaking, carries on the activity of mining. For the assessment year 1987-88, it had claimed investment allowance under Section 32A of the Act on earth moving equipment, crane, oil engine pumps and machinery in the sum of Rs. 39,03,596. The Assessing Officer did not grant the claim of the assessee. Aggrieved against the order of the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) which was accepted. It was held that the earth moving equipment, crane, oil engine, pumps and machinery foundations for gang saws were items of plant used for the purpose of extraction and production of an article or thing and, therefore, the investment allowance under Section 32A was admissible. The Assessing Officer was directed to allow the investment allowance to the extent claimed by the assessee. Aggrieved by the order of the Commissioner of Income Tax (Appeals), the Revenue filed the appeal before the Tribunal. The Tribunal dismissed the appeal relying upon the decision of this court in the assessees own case, CIT v. Mysore Minerals Ltd. : [1994]205ITR461(KAR) , wherein this court had held that extraction of granite from a quarry and cutting them into various sizes and polishing them was one of manufacture or production of an article or thing and therefore entitled to investment allowance under Section 32A.

4. The Revenue has come up in further appeal under Section 260A of the Act to this court on the two questions of law set forth in para. 2 of this order. As the two questions raised are interlinked and intertwined with each other, we propose to deal with them together.

5. Counsel appearing for the Revenue has argued that this court in CIT v. Mysore Minerals Ltd. : [1994]205ITR461(KAR) had answered the questions referred to it in favour of the assessee relying upon a judgment of this court in Shankar Construction Co. v. CIT : [1991]189ITR463(KAR) which has been overruled by the Supreme Court in CIT v. N. C. Budharaja and Co. : [1993]204ITR412(SC) . As the judgment of this court in Shankar Construction Co. : [1991]189ITR463(KAR) has been overruled by the Supreme Court, the decision in CIT v. Mysore Minerals Ltd. : [1994]205ITR461(KAR) , ipso facto, would be deemed to have been overruled.

6. The argument raised, though prima facie attractive, cannot be sustained on close scrutiny. In N. C. Budharaja and Co.s case : [1993]204ITR412(SC) , the Supreme Court held that the activity of construction of a dam, project building or road does not amount to production of an article or a thing. The Supreme Court after tracing the legislative history of the provision for the purpose of understanding the meaning of the word "article" or "thing" occurring in Section 32A(2) pointed out that it referred to movable objects only. It was difficult to hold that the process of construction of a dam is a process of manufacture or production of an article or a thing. A dam is constructed ; and not manufactured or produced. It was held that the expression "manufacture" and "produce" are normally associated with movables-articles and goods--big and small--but they are never employed to denote construction activity of the nature involved in the construction of a dam or for that matter a bridge, a road or a building. So far as the judgment of this court in Shankar Construction Co. , in extending the benefit of Section 32A to the new machinery employed in digging borewells is concerned, the Supreme Court merely held (page 435): "Special Leave Petition No. 16839 of 1992 is preferred against the judgment of the Karnataka High Court extending the benefit of Section 32A to the new machinery employed in digging borewells. For the reasons given hereinabove, leave is granted and the appeal is allowed."

7. Though no specific reasons are given for allowing the appeal, we would take it that the reasons given were similar to the one given with regard to the construction of a dam which was held to be not a process of manufacture or production of an article or a thing.

8. This court in two other cases of the assessee itself relating to earlier assessment years has taken the same view. The same are I. T. R. C. No. 22 of 1995, dated September 9, 1999 (CIT v. Mysore Minerals Ltd. (No. 1) : [2001]250ITR725(KAR) and I. T. A. No. 91 of 1999, dated November 15, 2000 (CIT v. Mysore Minerals Ltd. (No. 2) : [2001]250ITR728(KAR) . In those two cases, the effect of the judgment of the Supreme Court in N. C. Budhuraju and Co.s case : [1993]204ITR412(SC) had not been considered. We deem it appropriate to consider the effect of the judgment of the Supreme Court in this case.

9. In the present case, the business of the assessee is extracting granite from quarry, converting it into slabs, and after cutting and polishing, effecting their sale. The process of extracting granite and converting it into slabs, cutting and polishing them would be a manufacturing activity. The assessee is producing an article or a thing in the shape of finished slabs/ tiles of granite. The condition to be satisfied for allowing deduction by way of investment allowance under Section 32A is that the new machinery should have been installed in an industrial undertaking "for the purpose of business of construction, manufacture or production of an article or thing, not being an article or thing specified in the Eleventh Schedule to the Act". Such condition being satisfied, the assessee would be entitled to the investment allowance under Section 32A. It is not the case of the Revenue that extracting of granite from the quarry ; converting it into slabs, further cutting and polishing them does not amount to manufacture or production of an article or a thing. The question of law raised is as to whether the assessee is entitled to the investment allowance on the machinery involved in the manufacture or production of an article or a thing. A reading of Section 32A plainly indicates that if an assessee installs new machinery for the purpose of manufacture or production of an article or a thing, then he would be entitled to the investment allowance. In the present case, the assessee is manufacturing or producing an article or thing, and, therefore the assessee would be entitled to the investment allowance on the new machinery employed in the manufacture or production of an article or thing ; such as earth moving equipment, crane, oil engines, pumps and machinery foundations for gang saws under Section 32A of the Act. The law laid down by the Supreme Court in N. C. Budharaja and Co.s case : [1993]204ITR412(SC) would not be applicable to the facts of the present appeal.

10. For the reasons stated above, we answer question No. 1 in the affirmative, i.e., in favour of the assessee and against the Revenue. For the reasons stated in the foregoing paragraphs, question No. 2 is also answered in the affirmative, i.e., in favour of the assessee and against the Revenue. It is held that the Supreme Court in N. C. Budharaja and Co.s case : [1993]204ITR412(SC) did not overrule the decision of this court in CIT v. Mysore Minerals Ltd. : [1994]205ITR461(KAR) . Appeal dismissed.