1982 (9) TMI 97 - AT - Income Tax

Summary

Issues:
1. Classification of the assessee as an industrial company for the assessment year.
2. Acceptance of the claim by the Income Tax Officer (ITO) regarding manufacturing activity.
3. Upholding of the ITO's decision by the Commissioner of Income Tax (Appeals) (CIT(A)).
4. Arguments presented in the appeal before the Appellate Tribunal.
5. Determination of the assessee's status as an industrial company based on the activities conducted.

Analysis:

The appeal before the Appellate Tribunal concerned the classification of the assessee as an industrial company for the assessment year. The assessee, a company engaged in the manufacture of precast concrete housing components, claimed to be treated as an industrial company due to its manufacturing activities. However, the ITO rejected this claim, stating that the assessee did not engage in manufacturing activity as all materials were supplied by customers, and the manufacturing process took place at the customer's site. Consequently, the ITO concluded that the company did not meet the definition of an industrial company.

The CIT(A) upheld the ITO's decision, concurring with the reasons provided. The appeal before the Tribunal involved arguments from both sides. The assessee's counsel argued for the company to be recognized as an industrial company, while the Departmental representative supported the decisions of the lower authorities.

Upon reviewing the facts and contentions, the Tribunal observed that the assessee received materials from customers, rented machinery, and paid employee wages, which were then charged to customers under contract. The Tribunal determined that the assessee's income derived from providing services to customers for manufacturing goods based on supplied materials. Consequently, the Tribunal concluded that the assessee did not engage in manufacturing activities, leading to the rejection of its classification as an industrial company.

The Tribunal agreed with the lower authorities' reasoning and decision, confirming the orders issued. As a result, the appeal was dismissed, and the classification of the assessee as a non-industrial company for the assessment year was upheld based on the nature of the services provided to customers rather than manufacturing activities conducted by the company.