9911796707
TMI Blog1979 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ng ended on the 31st March of 1974 and 1975, respectively, the ITO taxed the assessee at the rate of 65% for income-tax and at the rate of 5% thereon for surcharge. Being aggrieved the assessee preferred appeals and contended before the AAC that, though it was a manufacturing and processing company within the meaning of s. 194(4) of the I.T. Act, 1961, the ITO had treated the assessee as a trading company and charged tax at the rate applicable to the latter class of companies. It was contended further that, as the assessee was mainly engaged in processing and manufacturing concrete slabs as also in building constructions, it should have been treated as a company engaged in manufacturing and processing. The AAC held that the activity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ineers. There was no sale of the items concerned. The Tribunal considered the respective submissions of the parties, the directors' reports and also the accounts of the assessee and came to the conclusion that the business of the assessee was mainly building and construction. The Tribunal found that there was no evidence to establish that the assessee sold the items manufactured to its customers. The Tribunal was of the opinion that, in order to be an " industrial company " within the meaning of the said Finance Acts, the assessee would have to establish that it was manufacturing and selling processed items in the open market for profit or income. Following the principles laid down in several decisions cited, the Tribunal held that the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Tribunal was in error in confining its attention only to the actual business carried on by the assessee and in ignoring the Explanation to the said section altogether. Dr. Pal submitted that, under the Explanation, a company would be deemed to be mainly engaged in the business of manufacture or processing of goods and, therefore, an industrial company, if the income attributable to its activity of manufacturing and processing the construction items concerned was not less than fifty-one per tent. of its total income. He contended that in the instant case it was not in dispute that the assessee had a factory where items of construction referred to hereinbefore were manufactured, processed and utilised for the purpose of its busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r excludes or restricts the section itself. In the facts before the Kerala High Court the assessee was mainly engaged in the business of processing and export of fish and claimed that during the relevant accounting period it came within the definition of an " industrial company " as defined in the relevant Finance Act and entitled to be taxed at a concessional rate. The Tribunal held that the assessee-company might have satisfied all the requirements of the definition as contained in the main sub-section but still it could not be treated as an industrial company unless it satisfied the requirements of the Explanation. The High Court rejected the said proposition and held that as the assessee fulfilled the requirement of the main part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved from ', as, for instance, in section 80J. In our view, since the expression of wider import, namely, ' attributable to ', has been used, the legislature intended to cover receipts from sources other than the actual conduct of the business of generation and distribution of electricity." Dr. Pal also cited a decision of the Allahabad High Court in Addl. CIT v. Abbas Wazir (P.) Ltd. [1979] 116 ITR 811, where this construction of the expression " attributable to " was followed and applied in construing the provision of the Finance Act with respect to the provision with which we are concerned. In the instant case, it appears that the Tribunal did not consider the scope and effect of the Explanation to cl. (c) of s. 2(8) of the Finance Acts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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