1989 (3) TMI 10 - HC - Income Tax

Summary

Issues involved:
The issue involves determining whether the assessee can be treated as an industrial company for the assessment year 1975-76 based on its business activities involving processing goods and selling them as foodstuffs and eatables.

Summary of Judgment:

Question of Law:
The Tribunal referred the question of law under section 256(1) of the Income-tax Act, 1961, regarding whether the assessee can be considered an industrial company.

Interpretation of "Industrial Company":
The definition of "industrial company" as per the Finance Act, 1975, includes companies engaged in the manufacture or processing of goods among other activities. The Tribunal held that the preparation of food articles by the assessee qualifies as processing, not limited to non-edible items.

Contentions:
Mr. Dhar argued that an industrial company must be involved in activities like ship construction. However, the court found that the phrase "processing of goods" should not be restricted to specific industrial activities like shipbuilding.

Judicial Precedents:
Referring to a previous judgment, it was noted that the term "processing" is broad and can include activities like blending tea, as held in G. A. Renderian Ltd. v. CIT [1984] 145 ITR 387.

Comparison with Previous Cases:
The court distinguished the present case from CIT v. Casino (Pvt.) Ltd. [1973] 91 ITR 289, where a hotel was considered a trading concern. In this case, the assessee's primary business is the production and sale of foodstuffs.

Legislative Intent:
The court emphasized that the legislative language should be interpreted plainly, and the intention was not solely to classify manufacturing concerns as industrial companies. The definition includes various activities like distribution of electricity or processing of goods.

Final Decision:
The court ruled in favor of the assessee, stating that the company's activities fall within the definition of an industrial company. The question was answered affirmatively, and no costs were awarded.

Separate Judgment:
Justice Bhagabati Prasad Banerjee concurred with the decision.