1983 (3) TMI 139 - AT - Income Tax

Summary

Issues:
- Whether the assessee should be treated as an industrial company for tax purposes.
- Whether the construction of flats by the assessee qualifies as the manufacture or processing of goods.

Analysis:
The case involved an appeal by the revenue against the order of the Commissioner (Appeals) allowing a concessional rate of income tax to the assessee, treating it as an industrial company engaged in the construction of flats and sale thereof. The revenue contended that the assessee was not entitled to the concessional rate of tax as it was not mainly engaged in the manufacture or processing of goods. The assessee argued that the decisions cited supported its contention that it should be treated as an industrial company. The Tribunal had to determine whether the construction of flats could be considered as the manufacture or processing of goods to qualify the assessee as an industrial company under the Finance Act.

Upon consideration of the submissions, the Tribunal held that the revenue was entitled to succeed. The definition of 'industrial company' under the Finance Act specified that it includes companies mainly engaged in the manufacture or processing of goods. The Tribunal noted that the word 'goods' has a specific meaning that excludes immovable property. Drawing from various legal sources, including the Sale of Goods Act and constitutional provisions, the Tribunal concluded that construction of flats does not fall under the category of manufacturing or processing of goods. The Tribunal rejected the assessee's argument that the construction activity could be connected to the word 'goods' in the definition of an industrial company. Additionally, the Tribunal dismissed the alternative argument that manufacturing other items for construction would qualify the assessee as an industrial company. Ultimately, the Tribunal held that the assessee was not entitled to the concessional rate of tax as it was mainly engaged in the construction of flats, which did not constitute the manufacture or processing of goods. Consequently, the Tribunal reversed the Commissioner (Appeals) order and upheld the assessment made by the Income Tax Officer, allowing the revenue's appeal.