2004 (7) TMI 71 - HC - Income Tax

Whether the assessee company was an industrial company within the meaning of clause 8(c) of Chapter 2 of the Finance Act, 1977? - Commissioner of Income-tax (Appeals) arrived at a conclusion that the operation and activities performed by the assessee with regard to nearly all its contracts really amounted to manufacture and/or processing of goods and it involved process of manufacture/production of commercially different articles out of the raw materials. - Commissioner of Income-tax (Appeals) held that the assessee was an industrial company. - this finding of fact has been affirmed by the Tribunal that the assessee was involved in processing or manufacturing of goods and was, therefore, an industrial company. - The contracts executed by the assessee involved processing of goods and could not be treated as trading items. In view of this finding of fact, we have to answer against the Revenue and in favour of the assessee.

Summary

Issues:
Identification of whether the assessee company qualifies as an 'industrial company' under clause 8(c) of Chapter 2 of the Finance Act, 1977.

Analysis:
The judgment pertains to a reference made by the Revenue regarding the classification of the assessee company as an 'industrial company' under the Finance Act, 1977. The assessee is engaged in activities related to supervision and commissioning of heaters, erection of gas generation plants, manufacturing equipment, and providing technical know-how, for which it receives design and consultancy fees. The Assessing Officer initially rejected the assessee's contention, leading to an appeal before the Commissioner of Income-tax (Appeals).

The Commissioner of Income-tax (Appeals) analyzed the operations and activities of the assessee and concluded that the company's actions essentially amounted to manufacturing or processing of goods, involving the production of commercially distinct articles from raw materials. This assessment led the Commissioner to determine that the assessee qualified as an industrial company. Subsequently, the Income-tax Appellate Tribunal considered the facts and affirmed the Commissioner's finding that the assessee was indeed engaged in the processing or manufacturing of goods, thereby meeting the criteria of being an industrial company.

The Tribunal's decision was based on the understanding that the contracts executed by the assessee involved processing of goods rather than mere trading items. Consequently, the Tribunal upheld the classification of the assessee as an industrial company. In light of these findings of fact, the court ruled in favor of the assessee and against the Revenue's appeal, affirming that the assessee company qualified as an 'industrial company' under the relevant provisions of the Finance Act, 1977.

Therefore, the judgment concludes by answering the referred question in favor of the assessee, confirming its status as an 'industrial company' within the scope of clause 8(c) of Chapter 2 of the Finance Act, 1977.