Bombay High Court
Commissioner Of Income-Tax vs Berry'S Hotels Pvt. Ltd. on 7 June, 1993
Equivalent citations: [1994]207ITR615(BOM)
JUDGMENT V.A. Mohta, J.
1. The following question is referred under section 256(1) of the Income-tax Act, 1961, at the behest of the Commissioner of Income-tax, Bombay :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee is an 'industrial company' as defined in section 2(7) (c) of the Finance Act, 1973 ?"
2. The relevant assessment year is 1973-74. Berry's Hotels Private Ltd., Bombay - the assessee - is a new company, incorporated on September 4, 1971, for carrying on hotel business. It took over the running business of Messrs. Santosh Aruna and Company - a partnership firm. The activity of the assessee consisted of cooking food and preparing dishes for service to the customers. The assessee contended that this activity amounted to "processing" as contemplated by the definition of the term "industrial company" in the Finance Act, 1973, and hence, it fell within the definition and hence was entitled to the concessional rate of income-tax. The Income-tax Officer as well as the Appellate Assistant Commissioner did not accept the claim. The Tribunal, however, on the basis of the decision of the Allahabad High Court in Addl. CIT v. Farrukhabad Cold Storage (P.) Ltd. [1977] 107 ITR 816, held that, as the various ingredients were subjected to different kinds of processing in the form of mixing, grinding, blending, heating, etc., and "processing" as contemplated by the definition was involved in the activity, the assessee could claim the status of an "industrial company".
3. It seems clear to us that the Tribunal's view cannot be sustained since the words used in the definition will have to be interpreted contextually always keeping the purpose of the enactment in view. The Finance Act, 1973, gives the definition of the term "industrial company" thus :
"'industrial company' means a company which is 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."
4. The clear object of the Act was to give concession in the rate of income-tax to manufacturing concerns. The concession was not intended to be given to trading concerns. The activity carried on by the assessee indicates that it essentially belonged to the latter category. It carries on trading activity. The Tribunal gave a wide meaning to the word "processing" used in the definition on the basis of Farrukhabad Cold Storage's case , and, only on that basis, upheld the assessee's contention. In the first place, it may be mentioned that the said decision of the Allahabad High Court has been expressly overruled by the Supreme Court in the case of Delhi Cold Storage P. Ltd. v. CIT [1991] 191 ITR 656. Thus, the very basis for the Tribunal's view no more exists. But that factor is not decisive of the matter.
5. It is true that such activity has been held to be "manufacturing process" as defined under section 2(k) of the Factories Act. But, it is a well-known canon of interpretation of status that the meaning given to the words in one statue cannot be automatically imported for interpretation in another statue. All depends upon the purpose of the Act and the context in which the words appear.
6. To the same effect is the view taken in the following three decisions :
(1) CIT v. Casino (Pvt.) Ltd. [1973] 91 ITR 289, decided by the Kerala High Court;
(2) CIT v. Buhari Sons Pvt. Ltd. [1983] 144 ITR 12, decided by the Madras High Court;
(3) Anjali Hotels Pvt. Ltd. v. CIT [1988] 170 ITR 419, decided by the Kerala High Court.
7. We concur with the basic approach adopted in the above decisions.
8. Hence, the question is answered in the negative and in favour of the Revenue. There will be no order as to costs.