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TMI Blog1984 (3) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... carried on by it, the ITO was not justified in coming to the conclusion that the assessee-company could not be treated as a manufacturing company. It was further submitted that the business of the assessee-company consisted of undertaking survey of work site, planning, fabrication of materials, assembling, testing, installation and commissioning of electrical apparatus, and of contract work with industrial and steel projects. It was also argued that the assessee-company by its very nature is a manufacturing company and that the ITO was not justified in levying income-tax at 65 per cent in place of concessional rate of tax applicable to industrial companies at 55 per cent. 4. The Commissioner (Appeals) was of the view that the work of the assessee-company consists mainly of assembling and testing of electrical equipments, in respect of which, it carries on contract business, operations with different agencies. It was held that there is no justification to treat the assessee-company as a manufacturing company engaged in manufacturing or processing of goods. The action of the ITO was, accordingly, upheld. Aggrieved, the assessee has come up in second appeal before the Tribunal. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 212 (Ori.), National Planning Construction Ltd. v. CIT [1980] 122 ITR 197 (Cal.) and CIT v. Pressure Piling Co. (India) (P.) Ltd. [1980] 126 ITR 333 (Bom.). 6. Shri B.N. Sarkar, the learned authorised representative for the department, has, on the other hand, fully supported the orders of the authorities below. It was contended that the amended definition, of the expression 'industrial undertaking' as given in the Finance Act, 1983 does not have retrospective effect and cannot be made applicable to the cases of the assessee for the assessment year 1980-81. It was specifically pointed out that it was for the first time that the expression 'execution of projects and assembling or installation of any machinery or plant' were used in connection with definition of the expression 'industrial company' by the amendment introduced by the Finance Act, 1983. It was further submitted that as the word 'assembling' did not occur in the definition of the expression 'industrial undertaking' as given under section 2(7)(c) the mere fact that the assessee while executing the contract work assembled electrical equipments, cannot lead to the conclusion that it is an industrial company and is entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mining. Note II to the Explanation to Paragraph 'E' further lays down that 'project' means a project for the construction of a building, road, dam, bridge or other structure or assembling or installation of any machinery or plant. It may thus be seen that under the Finance Act, 1983, the definition of the expression 'industrial undertaking' has undergone material change as a result of which its scope has been considerably widened. Under the Finance Act, 1983, even a company engaged in the business of execution of projects has been brought within the ambit of the expression 'industrial company' and the word 'project' has been so defined that it brings within its purview assembling or installation of any machinery or plant. The Finance Act, 1979 defines 'industrial company' as a company which in mainly 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. It is noticeable that an assessee engaged in the business of execution of projects or assembly or installation of any machinery or plant, cannot be regarded as an industrial company under the Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was observed by the Calcutta High Court that a paper is not a book, though it is printed on papers. The publisher may get the books printed from any printer but the printer is not the manufacturer, but a mere contractor. It was held that the assessee was carrying on the activity of manufacturing and also of processing of books which are also goods. 11. The case of N.C. Budharaja decided by the Orissa High Court involved interpretation of the expression 'industrial undertaking' occurring in section 80HH of the Income-tax Act, 1961 ('the 1961 Act'). As the expression 'industrial undertaking' had no statutory definition for the purpose of section 80HH, their Lordships of the Orissa High Court held that it would be open to look for the meaning of this expression by referring to the definitions in sister legislations and failing that to adopt the common parlance meaning. The Tribunal in that case had recorded a finding of fact that the assessee had undertaken manufacturing of certain materials which it ultimately utilised in the construction of dam and it worked for the ultimate production of a dam. It was, thus, held by the High Court that the assessee was entitled to the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ression 'manufacturing and processing of goods' occurring in section 2(6)(d) of the Finance Act, 1968 was considered in detail by their Lordships of the Kerala High Court in CIT v. Casino (P.) Ltd. [1973] 91 ITR 289. It was held in this case that manufacture is a process which results in an alteration or change in the goods which are subjected to such manufacture. A commercially new different article is produced. May be, that is produced by manual labour or mechanical force or even by nature's own process such as drying by heat of the sun as in a salt pan. The essential question is whether a commodity which in a commercial sense, is different from the raw materials has resulted due to the manufacture. It was further held that it is evident from the context in which the word 'processing' is used that it is complementary to the term 'manufacture' and, therefore, would not be such as to cover manufacture also. In other words, activities of a nature in regard to goods which may not amount to manufacture but which would result in the doing of something to the goods to change or alter their form may be taken in by the term 'processing'. 16. After having surveyed various authorities we ..... 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