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Issues involved:
The judgment involves determining whether the assessee-company can be considered a manufacturer of the articles in question and whether it qualifies as an 'industrial company' entitled to a concessional tax rate under the Finance Act, 1969. Manufacturing Status Issue: The Income-tax Appellate Tribunal considered whether the assessee-company, engaged in manufacturing steel scaffolding and construction equipment, qualified as a manufacturer. The Tribunal found that the assessee exercised control over the manufacturing process, provided machinery and raw materials, and had technical know-how. The Tribunal concluded that the assessee was indeed an "industrial company" based on these findings. Legal Precedents: The judgment referenced the case law of CIT v. Neo Pharma Pvt. Ltd., where it was established that an entity need not physically manufacture goods itself to be considered an industrial company. The court emphasized that supervision over the manufacturing process, even through written instructions and inspections, could meet the criteria for being classified as an industrial company. Contrasting Cases: The judgment distinguished cases such as CIT v. Minocha Brothers P. Ltd. and CIT v. Oricon Pvt. Ltd., where entities engaged in construction activities were not considered industrial companies. The court clarified that construction activities do not equate to manufacturing goods. Supporting Precedent: The judgment also cited the case of CIT v. Rajmohan Cashews (P.) Ltd., where it was held that an entity could engage in manufacturing or processing activities using plant and machinery belonging to others. This case supported the view that engaging an outside agency for manufacturing under supervision could still qualify an entity as an industrial company. Final Decision: The High Court held that the assessee was rightly considered an industrial company, as determined by the Tribunal. The first question regarding manufacturing status was answered affirmatively in favor of the assessee, while the second question on concessional tax rate eligibility was answered negatively in favor of the assessee. Costs were not awarded in this matter.
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