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Issues involved: Interpretation of the definition of an industrial company u/s 2(6)(d) of the Finance Act of 1968 and determination of whether the assessee-company, engaged in retreading tyres, qualifies for the concessional rate of tax for industrial companies.
Summary: The High Court of Delhi addressed the issue of whether the assessee-company, involved in retreading tyres, qualified as an industrial company u/s 2(6)(d) of the Finance Act of 1968. The Tribunal had ruled in favor of the assessee, leading to a reference made by the Commissioner. The AAC had accepted the company's claim based on evidence provided, including certificates from machinery manufacturers and magazine extracts supporting the classification as an industrial company. The Income-tax Appellate Tribunal considered the definitions of "manufacture" and "processing," ultimately concluding that the assessee was engaged in the processing of tyres. The Court agreed with this view, emphasizing that the processing of goods encompasses a wide range of activities beyond mere manufacturing. Citing previous judicial decisions, the Court affirmed that the assessee's activities fell within the definition of processing goods as per the Finance Act, 1968. Regarding contentions raised by the department, the Court dismissed the argument that there was no finding on whether processing was the main activity of the company, as it was not previously raised. The Court also rejected the argument to restrict the connotation of "processing" in the context of the Act, distinguishing the present case from a previous Kerala High Court decision involving a hotel's classification as an industrial company. Ultimately, the Court held in favor of the assessee, determining that the retreading of tyres constituted processing within the Act's definition of an industrial company. The Commissioner was directed to bear the costs of the reference.
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