These two appeals, one by department and other by assessee, r e heard together and disposed of by this common order for sake of convenience. 2. We first take up departmental appeal. first ground in this appeal states that Commissioner (Appeals) did not give opportunity of being heard to ITO and so order of Commissioner (Appeals) was bad, illegal and void. Shri S.K. Lahiri, learned representative for department, explained before us that ground means that ITO was not given opportunity of being heard by Commissioner (Appeals) before he finalised appeal. However, he was not able to establish before us that ITO was not indeed informed about hearing of appeal by Commissioner (Appeals) in spite of normal practice of department to call for records of ITO and let him know date of hearing of appeal so that ITO could be present at time of hearing if he so chose. Under circumstances, we do not find any merit in this purely technical ground which was not substantiated. Consequently, we reject this ground. 3. next ground states that Commissioner (Appeals) erred is holding that blending of tea amounts to manufacturing or processing. Shri S.K. Lahiri explained before us that word 'processing' has been typed in ground of appeal due to inadvertence and same may be ignored. He stated that Commissioner (Appeals) has held that blending of tea amounts to manufacturing both for purpose of allowances under sections 32A and 80J of Income- tax Act, 1961 ('the Act'). He stated that Commissioner (Appeals) has not held that blending of tea is activity of processing of goods because that activity is not relevant for purpose of sections 32A and 80J. He urged before us that aforesaid ground might be understood in that sense. Then, he referred to nature of business carried on by assessee which was to buy different types of tea from market, blend them in different proportions, pack blended tea and then sell same. He stated that assessee was not manufacturing or producing any article or thing. All that assessee was doing was to buy tea which was finished product from market, mix them, pack them and then sell them. input of assessee's business was tea and output of assessee also remained tea even though tea sold by assessee might be having different flavour than tea bought by it. According to him, that activity of assessee did not make product sold by assessee new product manufactured or produced by assessee. He stated that language of sections 32A and 80J requires that assessee should manufacture or produce article or thing or is cold storage. language either in section 32A or 80J does not speak of processing of goods. assessee is admittedly not cold storage. Hence, in order to be eligible for relief under section 32A or 80J, it must manufacture or produce article or thing. This essential condition has not been fulfilled in case of assessee and so it was not entitled to relief under either of aforesaid two sections. He pointed out that assessee relied on decision in case of CIT v. Radha Nagar Cold Storage (P.) Ltd. [1980] 126 ITR 66 (Cal.). But that case applies only to cold storage. Apart from that, all that it was decided in that reported case is that act of cold storage is act of processing of goods and so cold storage can be regarded as industrial company engaged in processing of goods and is entitled to be taxed at lower rate of tax under relevant Finance Act. That was not case which empowered all blended tea to be regarded as manufacture or production of article or thing and so Commissioner (Appeals) erred in allowing relief under sections 32A and 80J relying on aforesaid case. In this connection he referred to decision in case of CIT v. Hindusthan Metal Refining Works (P.) Ltd. [1981] 128 ITR 472 wherein, at page 475, Hon'ble Calcutta High Court has explained meaning of word 'manufacture'. It is laid down therein that words 'manufacture' and 'produce' applied to bringing into existence something which was different from its components. In that case, assessee was engaged in galvanisation of iron sheets which involved giving zinc coating on iron or steel in order to protect it from rust. It was held that activity did not amount to manufacture or production. Shri S.K. Lahiri stated before us that in case before us also thing bought by assessee was tea and thing sold by assessee was also tea and assessee was not engaged in manufacture or production of any article or thing. 4. Dr. D. Pal, learned representative for assessee, on other hand, supported order of Commissioner (Appeals). He referred to decision in case of Chrestien Mica Industries Ltd v. State of Bihar [1961] 12 STC 150 (SC). He took us through said decision wherein it has been decided that process of mining mica is process of production within meaning of Bihar Sales Tax Act, 1947. In particular, he invited our attention to following concluding remarks appearing therein: "Neither of words 'production' or 'manufacture' is defined in Bihar Sales Tax Act. But According to Oxford English Dictionary 'production' means amongst other things that which is produced; thing that results from any action, process or effort, product; product of human activity or effort. It is obvious that what is described in report above quoted would fall within dictionary meaning of word 'production'. It is unnecessary to decide what word 'manufacture' means. As what was sold was mica produced in Bihar by appellant, answer to question would be in affirmative and therefore in favour of State." (p. 153) Dr. D. Pal stated before us that in that case assessee was merely splitting mica into different sizes and yet assessee was held to be producing thing in Bihar. On same analogy, he urged that assessee before us who was engaged in blending tea and selling them after blending and packing should also be held to be engaged in producing thing. According to him, tea sold by assessee is different from tea which it bought and blended together. Next, he referred to decision in case of Chowgule & Co. v. Union of India [1981] 47 STC 124 (SC). In this case, assessee was engaged in mining iron ore and selling it after brushing, washing and screening and blending it. It was held in this case that ore produced by assessee could not be regarded as commercially new and distinct commodity from ore of different specifications blended together. What was produced as result of blending was commercially same article, viz., ore though with different specifications than ore which was blended and it could not be said that any production or manufacture was involved in blending of ore. However, blending of ore amounted to processing of ore within meaning of Central Sales Tax Act, 1952. Dr. D. Pal referred to this case for proposition that blending of ores amounted to processing of goods. He took us through this decision. In paragraph 7 of this decision, Supreme Court referred to decision of Bombay High Court in case of Nilgiri Ceylon Tea Supplying Co. v. State of Bombay [1959] 10 STC 500 and did not agree with decision of High Court in case before Bombay High Court, assessee, like assessee before us, purchased different types of tea, blended them and sold them. High Court held that no processing was involved in activity carried on by that assessee so that assessee did not get benefit under section 8 of Bombay Sales Tax Act, 1953. Supreme Court overruled said decision and held that assessee was engaged in processing of tea. Supreme Court has categorically stated therein that in Nilgiri Ceylon Tea Supplying Co.'s case (supra), as decided by Bombay High Court, it did not lay down correct law. When different brands of tea were mixed producing different tea mixture of different kind and quality, there was plainly and indubitably processing of different brands of tea. point to note at this stage is that blending of tea has been held by Hon'ble Supreme Court in that case as amounting to processing only. Next, he referred to decision in case of G.A. Renderian Ltd. v. CIT [1984] 145 ITR 387 in which it has been held by Calcutta High Court that business of purchasing tea of different qualities, blending same by mixing one type with another and selling it is operation of processing and so it was entitled to lower rate of tax under relevant Finance Act which speaks of processing in addition to manufacture or production. Finally, Dr. D. Pal referred to decision in case of Tarai Development Corpn. v. CIT [1979] 120 ITR 342 (All.). In this case, it was held that undertaking engaged in processing of seeds is industrial undertaking and income derived by it is entitled to relief under section 80J because item 28 of Fifth Schedule of Act refers to processing of seeds and section 33(1)(b)(B) of Act refers to manufacture or production of any one or more of articles or things specified in Fifth Schedule. Dr. D. Pal explained that section 33 speaks of manufacture or production and refers to Fifth Schedule which includes three items consisting of processing seeds and fish. Hence, processing should be regarded as included in production. Hence, he urged that assessee before us, which was evidently engaged in processing, was also engaged in production of goods. 5. Shri S.K. Lahiri replied that cases of Chrestien Mica Industries Ltd. (supra) and Chowgule & Co. (supra) do not apply to facts of present case. Firstly, because they were mining concerns and, secondly, because they were held to be engaged in processing of goods. Apart from above, question involved there was relevant under appropriate Sales Tax Act and not under section 32A or 80J. On contrary, he relied on decision in case of Nilgiri Ceylon Tea Supplying Co. (supra) as discussed in case of Chowgule & Co. (supra) and case of G.A. Renderian Ltd. (supra) for proposition that Supreme Court as well as Calcutta High Court have clearly held operation of blending tea to be activity of processing only. Since processing is not mentioned either in section 32A or 80J, mere processing would not entitle assessee to those reliefs. Regarding Tarai Development Corpn.'s case (supra), he stated that Legislature has specifically given relief under section 33 for only two types of processing activities, viz., processing of seeds and fish. That reported case was one of processing of seeds. He urged that ratio of said case could not be extended to in processing other than seed or fish. 6. We have considered contentions of both parties as well as facts on record. We find force in contention raised for revenue. Both cases of Chrestien Mica Industries Ltd. (supra) and Chowgule & Co. (supra) were engaged in mining activities. activities begun from digging soil, winning ore, sorting them out, etc. All these activities are parts of one integrated activity. It is in this context that aforesaid decisions were given. In fact, in latter case of Chowgule & Co. (supra), Supreme Court has clearly stated that mining activities amounted to processing only. In same judgment, it has overruled decision of Bombay High Court in case of Nilgiri Ceylon Tea Supplying Co. (supra) and held that blending of tea amounts to processing only. This is direct authority on issue before us which has been decided against assessee. Similarly, Hon'ble High Court at Calcutta in case of G.A. Renderian Ltd. (supra) has also decided that blending of tea amounts only to processing. This is also direct authority on issue before us which has been decided against assessee. So far as case of Tarai Development Corpn. (supra) is concerned, we find that said reported case was one dealing with processing of seeds which has been specifically mentioned in item 28 of Fifth Schedule. We agree with learned representative for department that what has been specifically granted by statute to particular items of goods cannot be extended to all other items of goods. In this connection, we find support for our conclusion from item 26 of Fifth Schedule which speaks of tea and not processing of tea. Had intention been otherwise, processing of tea would have been included in Fifth Schedule along with processing of seeds and fish. other cases relied on by Dr. D. Pal are cases of processing only. There is no dispute about fact that section 32A and section 80J allow relief only if assessee is engaged in manufacture of production of article or thing and not when it is engaged only in processing of goods. Respectfully, following aforesaid authorities and for above reasons, we uphold contention of revenue reverse order of Commissioner (Appeals), restore decision of ITO on this point and allow this ground. 7. last ground in this departmental appeal states that Commissioner (Appeals) erred in holding that assessee is entitled to deduction under section 80J even though machines of new unit were not in existence on first day of relevant previous year. ITO had given additional reason for not allowing relief under section 80J. He has stated that aforesaid machines were not in existence on first day of relevant previous year. Commissioner (Appeals) had observed that it was not necessary because section 80J speaks of computation period, and not first day of previous year. We have heard Shri S.K. Lahiri and Dr. D. Pal in t h i s connection. We find that Explanation 2 to section 80J(lA) defines computation period as period for which profits of new unit are to be computed. Hence, we agree with Commissioner (Appeals) that assessee was entitled to relief even though machines were not in existence on first day of relevant previous year provided other conditions prescribed under law are satisfied. As we have already held that conditions of manufacture or production of thing or article is not satisfied, we do not give any direction in favour of assessee. 8. We now come to assessee's appeal. first dispute in this appeal i s covered by first four grounds. It states that Commissioner (Appeals) should have allowed assessee's claim for exclusion of cash subsidy received from Government, from total income of assessee. We have heard b o t h sides in matter. We find that this very issue came up for consideration before Tribunal in earlier year. In paragraph 6 of their order in IT Appeal No. 2028 (Cal.) of 1984, dated 10-2-1986 for assessment year, 1979-80, Tribunal has considered issue and has set aside matter for fresh consideration and decision by ITO. We have gone through aforesaid order of Tribunal and we are in respectful agreement with same. facts and circumstances of year under consideration remained unchanged. Hence, we vacate decision of Commissioner (Appeals) as well as ITO on this point and restore matter to file of ITO with direction to dispose of same afresh in accordance with law and directions of Tribunal in order referred to above after giving reasonable opportunity of being heard to assessee. 9. remaining six grounds in this appeal relate to assessee's claim for deduction of sum of Rs. 95,747 as bad debts. From details filed before us by Shri A.K. Roy Choudhury, learned representative for assessee, we find that assessee advanced sum of Rs. 44,000 on 30-7-1969 to person for purchasing flat. As no flat was delivered to assessee nor amount was returned to assessee, interest was charged year after year from 1969-70 t o 1976-77. This interest amounted in all to Rs. 51,746. Those amounts of interest had been taxed year after year in hands of assessee as shown by it under the, head 'Income from other sources'. total of principal and interest came to Rs. 95,747. assessee wrote off this amount as bad debts and claimed as deduction from its total income. ITO rejected claim of assessee on ground that assessee did not take any steps for recovery of debt. On appeal, Commissioner (Appeals) confirmed disallowance after considering written submission of assessee filed before him. Reliance was placed by assessee on case of Jethabhai Hirji and Jethabhai Ramdas v. CIT [1979] 120 ITR 792 (Bom.) for proposition that assessee need not prove to satisfaction of ITO that debt has become bad. It was also urged that assessee was engaged in business of real estates and so it was trade debt. Commissioner (Appeals) rejected claim of assessee on ground that there was no evidence to show that assessee was doing business in buying and selling flats. Further, no legal steps were taken to recover amount. Hence, he dismissed this ground. 10. We have heard Shri A.K. Roy Choudhury who urged that assessee's claim should have been allowed. We have also heard Shri S.K. Lahiri who supported disallowance. We have considered contentions of both parties as well as facts on record. We find no evidence on record to show that assessee was engaged in buying and selling of flats. This amount was never taxed in past. Hence, this did not constitute trade debt and question of allowing it as bad debt does not arise. We have also considered as to whether amount could be allowed as trading loss. But we do not find any reason to arrive at that conclusion. Admittedly, interest amount was assessed under head 'Income from other sources' which clearly indicates that amount was loan and so it was investment on capital account. Thus, loss, if any has occurred on capital account. Again, assessee has not taken any steps to recover the, debt. Above all, it has not been shown as to how loss arose during previous year under consideration. Under circumstances, we are unable to interfere with finding of revenue authorities. 11. In result, departmental appeal is partly allowed while assessee's appeal may be treated as partly allowed for statistical purposes. *** INCOME TAX OFFICER v. APEEJAY (P.) LTD.