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Issues Involved:
1. Whether the assessee-company qualifies as an 'industrial company' under the Finance Act, 1979. 2. Whether the activities of the assessee-company constitute manufacturing or processing of goods. Issue-wise Detailed Analysis: 1. Qualification as an 'Industrial Company' under the Finance Act, 1979: The assessee, a private limited company engaged in executing contract works as electrical contractors, claimed entitlement to a concessional tax rate applicable to industrial companies. The Income Tax Officer (ITO) rejected this claim, asserting that the assessee was not engaged in manufacturing operations but merely in contract work. The Commissioner (Appeals) upheld the ITO's decision, concluding that the company's activities did not justify its classification as a manufacturing company. The Tribunal, upon review, determined that the definition of 'industrial undertaking' under the Finance Act, 1983, which included companies engaged in assembling or installation of machinery, could not be applied retrospectively to the assessment year 1980-81. Thus, the Tribunal found no merit in the contention that the assessee should be treated as an industrial company under the Finance Act, 1979, as the latter did not encompass companies engaged in project execution or assembly/installation of machinery. 2. Activities Constituting Manufacturing or Processing of Goods: The assessee argued that its activities, including survey, planning, fabrication, assembling, testing, installation, and commissioning of electrical apparatus, constituted processing of goods, thereby qualifying it as an industrial company. The Tribunal examined various judicial precedents to interpret the terms 'manufacture' and 'processing of goods.' It was noted that manufacturing involves a process resulting in a commercially new and different article, while processing involves activities that alter the form of goods without necessarily manufacturing a new product. The Tribunal found that the assessee's activities did not result in a new product or alter the form of existing goods. Assembling, testing, and commissioning electrical equipment were deemed insufficient to qualify as processing of goods. Consequently, the Tribunal concluded that the assessee's activities did not amount to manufacturing or processing of goods, and therefore, the company could not be classified as an industrial company entitled to a concessional tax rate. Conclusion: The Tribunal dismissed the appeal, affirming that the assessee-company did not qualify as an industrial company under the Finance Act, 1979, and its activities did not constitute manufacturing or processing of goods. The appeal was thus rejected, and the ITO's assessment was upheld.
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