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TMI Blog1982 (6) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... of s. 2(7)(c) of the Finance Act, 1973. That section in so far as we are concerned, reads as under : " For the purposes of this section and the First Schedule . . ...... (c) ' industrial company ' means a company which is mainly engaged........ in the manufacture or processing of goods ...... .. It is not necessary to notice the Explanation to the said sub-section as it is an undisputed fact that more than 80 per cent. of the income derived by the assessee is from pressing charges recovered from its customers. The Commissioner acting in exercise of the powers under s. 263 of the I.T. Act, 1961, felt that the assessee could not be said to be an " industrial company " as more than 80 per cent. of its income was from pressing charges and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was not an "industrial company" within the meaning of s. 2(7)(c) of the Finance Act, 1973. Accordingly, he directed the ITO to levy tax at the rate of 65 per cent. as against 55 per cent. already charged. The assessee feeling aggrieved by the said order carried the matter, in appeal to the Income-tax Appellate Tribunal, Ahmedabad (Bench B). The Tribunal, placing reliance on the decision of the Punjab High Court in Patel Cotton Co. Pvt. Ltd. [1964] 15 STC 865, and the decision of the Kerala High Court in Casino (Pvt.) Ltd. [1973] 91 ITR 289, came to the conclusion that ginning of cotton does not amount to manufacture. So also, it held that pressing of cotton also did not amount to manufacture. Then pointing out that the decisions on which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the goods which are subjected to the process of manufacturing leading to the production of a commercially new article. In determining what constitutes " manufacture ", no hard and fast rule can be applied and each case must be decided on its own facts having regard to the context in which the term is used in the provision under consideration. We, therefore, do not think that it is necessary to refer to a catena of decisions dealing with the expression " manufacturing of goods " used in different statutes. We are concerned with the question whether ginning of cotton can be said to be " manufacturing of goods " within the meaning of the expression " industrial company " defined in the aforesaid two Finance Acts. Now, in taking the view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, to consider whether the Tribunal was right in coming to the conclusion that pressing of loose cotton into bales amounts to processing of cotton within the meaning of the definition of " industrial company)) in the two relevant Finance Acts. Now, before we answer the contention raised by the Revenue, it is necessary to bear in mind the process which cotton undergoes for being compressed into bales. The assessee-company receives cotton in bulk having lighter density which is sprinkled with water and through a mechanical device pressed into small units of convenient sizes and then packed into bales. Cotton packed in bales is commercially acceptable as merchants find it convenient to store cotton in that form because unpressed cot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the relevant Act. After reproducing the definition of the word " dealer " at p. 941 and after referring to the meaning of the word " process " in the Oxford Dictionary-" a continuous and regular action or succession of actions, taking place or carried on in a definite manner, and leading to the accomplishment of some result " the learned judge observed that the activity contemplated by the word " process " is general, requiring only continuous and regular action or succession of actions leading to the accomplishment of some result but it is not one of the requisites that the activity should involve some operation on some material in order to its conversion into some other stuff. In this view that the learned judge took, he held that by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f some operation performed on it or in regard to it, such operation would amount to processing of the commodity. The nature and extent of the change is not material. It may be that camphor powder may just be compressed into camphor cubes by application of mechanical force or pressure without addition or admixture of any other material and yet the operation would amount to processing of camphor powder as held by the Calcutta High Court in Sri Om Prakash Gupta v. Commissioner of Commercial Taxes [1965] 16 STC 935." Therefore, what is necessary in order to characterise an operation as processing is that the commodity must, as a result of the operation, experience some change. The nature of processing of loose cotton into cotton bales after ..... X X X X Extracts X X X X X X X X Extracts X X X X
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