Bombay High Court
Commissioner Of Income-Tax vs Jolly And Maker Pvt. Ltd. on 17 June, 1993
JUDGMENT
V.A. Mohta J.
1. The following question has been referred to this court at the instance of the Commissioner of Income-tax, Bombay, under section 256(1) of the Income-tax Act, 1961 :
"Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in holding that the assessee's business consisted mainly in the manufacture or processing of goods and hence, it was not liable to tax under section 104(4)(a) of the Act ?"
2. The relevant assessment year is 1973-74. The undisputed position is that the assessee-company has been engaged in the activity of constructing buildings. Section 104(4)(a) of the Income-tax Act, 1961, reads thus :
"Without prejudice to the provisions of section 108, nothing contained in this section shall apply to -
(a) an Indian company whose business consists mainly in the construction of ships or in the manufacture or processing of goods or mining or in the generation or distribution of electricity or any other form of power;"
3. The crucial words are "manufacture or processing of goods". In the context of the definition of the term "industrial company" under the Finance Act, 1972, this court, in the case of CIT v. Oricon Pvt. Ltd. [1989] 176 ITR 407, has held that the activity of construction and repair of buildings is neither manufacture nor processing of goods, though incidentally manufacture of windows, door-frames, concrete beams and slabs, etc., may be undertaken.
4. The context of the above expression in section 104(4)(a) is not different. Strong reliance was placed on behalf of the assessee upon a decision of this court in the case of CIT v. Pressure Piling Co. (India) P. Ltd. 126 ITR 333. That was a case of an assessee who carrying on the business of laying pressure pilling, foundations for buildings by specialised patented method. Concrete mixture was subjected to certain processes under pressure along with iron bars in site. A new and independent product "pile" was thereby brought into existence. In that context, it was held that the activity of the assessee amounted to manufacture or processing. We may mention that this distinguishing feature had been noticed in the case of Oricon Pvt. Ltd. [1989] 176 ITR 407 (Bom) and it was held that the point involved in the same was slightly different.
5. We may incidentally mention that the Tribunal had relied upon its earlier decision in the case of Mont Blanc Hotels (P.) Ltd. In Income-tax Reference No. 198 of 1979 decided on February 8, 1993, a Division Bench of this court, to which one of us (Dr. B. P. Saraf J.) was a party, has answered the question against the assessee in that case relying on Oricon is answered in the negative and in favour of the Revenue.
6. No order as to costs.