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TMI Blog1983 (1) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... part of an industrial undertaking belonging to a firm or an association of persons of which the assessee is a partner or, as the case may be, a member." The Explanation which defines " industrial undertaking " reads thus: "For the purposes of clause (xxxa), this clause, clause (xxxii) and clause (xxxiv), the term "industrial undertaking" means an undertaking engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining." We are more concerned with the definition of " industrial undertaking ". It is, therefore, necessary to closely examine the Explanations. The Explanation can be sub-divided thus: (1) " Industrial undertaking " means an undertaking engaged in the business of generation or distribution of electricity or any other form of power : (ii) " An industrial undertaking " means an undertaking engaged in the construction of ships. (iii) " An industrial undertaking " means an undertaking engaged in the manufacture or processing of goods? and (iv) " An industrial undertaking " means an undertaking engaged in mining. The expression " in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cases where he gets the goods prepared by an outside agency. At the same time, we are not inclined to accept the argument of the Revenue that even though the assessee is responsible for a processing, the assessee would not be entitled to the benefits contemplated under the above provision. If we turn to the Explanation extracted above, the word used is " processing of goods ". It does not predicate that it should be all the processes resulting in the end manufacture. Further, it cannot be disputed that the end manufacture may involve several processing. We are, therefore, of the opinion that if the assessee has done any processing, which ultimately brought about the product, he is entitled to avail of the above provision. We find support from the decision reported in CIT v. Commercial Laws of India Pvt. Ltd. [1977] 107 ITR 822 (Mad). The learned judge, who spoke for the Bench, has observed thus (p. 825) : " The short point to be considered is whether the folding and stitching of the printed sheets would come within the scope of 'processing of goods'. The learned counsel for the Revenue submitted that this is a case where there are actually no operations of manufacture condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the assessee's claim for exemption following the decision of the Appellate Tribunal in the meanwhile. T.C. Nos. 1369 and 1370 of 1977 : The facts, as could be culled out from the records, are that the assessee purchases art silk yarn, dyes, lace, etc., and gives to the weavers to convert them into cloth for which weaving charges, dyeing charges, etc., are paid. The cloth so manufactured is being sold by the assessee. As already pointed out by us, the Tribunal, relying on the definition expressed by the Supreme Court regarding the word " business ", held that even though the cloth was loomed by outside agency, still it can be stated as a part of the activity in the process of manufacturing attributable to the assessee. But, we have held, that is not the correct understanding of the section and the word " business " has no impact at all on the expression " engaged in the manufacture or processing of goods". On the facts and applying the principle of law referred to above, we have necessarily to hold that the assessee cannot be said to have been engaged in the manufacture or processing of goods. With reference to the request for remand, we will be dealing with it at the end of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provision prescribing that unless the whole manufacturing is done by the assessee, he cannot avail of the exemption. As long as the word is generally used, we will have to take that even if the manufacturing is done in part by the assessee, he is entitled to take advantage of this provision. In that view, we hold that so far as V.G.L. Company is concerned, it is said to be engaged in the manufacturing of the goods. Therefore, we answer the question in the affirmative and in favour of the assessee. T.C. No. 187 of 1978 : The facts are identical as in T.C. No. 186 of 1978, except that it relates to another partner of the two partnership firms, viz., Goodwill Company and V.G.L. Company. We, therefore, answer the question in the same manner as we have done in T.C. No. 186 of 1978. T.C. Nos. 384 and 385 of 1978 : The facts reveal that the firm, Arthanari Pandaram, in which the assessee is a partner, was engaged in dyeing yarn and also twisting yarn. We have held that the manufacturing may contain a series of processing and if the assessee is directly involved in any of the processing, he will be said to have been engaged in processing of goods. We have already held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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