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TMI Blog1991 (10) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 4,04,992 for the asst. yr. 1987-88. As the Assessing Officer was of the opinion that the profits and gains distributed as dividend by the assessee company within 12 months immediately following the expiry of the previous year were less than the statutory percentage of the distributable income for these years, proceedings under s. 104 were initiated by him. The Assessing Officer rejected the contentions of the assessee and held that the assessee was not a manufacturing company and, as such, was bound to declare the correct dividend. He, therefore, worked out the distributable income for the asst. yr. 1986-87 at Rs. 16,66,833 and charged additional income-tax under s. 104 amounting to Rs. 3,43,400. For the asst. yr. 1987-88, The distribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether the assessee was carrying out the manufacturing activity or not. If it was found that the assessee was carrying on manufacturing activity, then only thing that require to find is as to whether the predominant activity was manufacturing activity. It was submitted that the assessee was manufacturing stone chips, concrete work and timber work. It did not take supply of these things from any other persons. Our attention was invited to the hand-book by P.M. Khanna known as Indian Practical Civil Engineers Hand Book. It was submitted that in an ordinary type of building, the cost of materials come to about 60 per cent and labour about 40 per cent of the total cost of the whole building. This may be further sub-divided as percentage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually constructed. Our attention was also invited to the contents in paras 31 and 32 of the said decision. Our attention was also invited to the decision of the Bombay High Court in the case of CIT vs. Pressure Piling Co. (India) P. Ltd. (1980) 126 ITR 333 (Bom) where it was held that by subjecting the concrete mixture which consisted of several articles to certain process alongwith iron bars, something new was brought into being. It was held that since the end product of the piling process was something which had an independent existence and it was brought into being by a special process of production. It was held that the assessee was engaged in manufacturing or production of article within the meaning of s. 84(2)(iii) of the IT Act. Our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the Delhi High Court held that the assessee engaged in the business of construction of building was not an industrial undertaking as defined in s. 2(vi)(c) of the Finance Act, 1971 and the Finance Act, 1972. Therefore, this decision is not a direct decision under s. 104 but this decision is based on the specific provisions contained in the Finance Act, 1971. It is notable that the Supreme Court has granted special leave to the assessee to appeal against this judgment ((1986) 159 ITR (St) 109). We are of the opinion that this decision does not apply to the facts of this case. 7. The decision of the Karnataka High Court in the case of Shankar Construction Co. though strictly speaking is not applicable to this case, has clearly held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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