Kerala High Court
Commissioner Of Income-Tax vs Rajmohan Cashews (I.) Ltd. on 4 October, 1994
Equivalent citations: [1995]211ITR659(KER)
JUDGMENT T.L. Viswanatha Iyer, J.
1. The main issue involved in these three cases is whether the assessee is entitled to the benefit as an industrial company as defined under Section 2(7)(c) of the Finance Act, 1979, which corresponds to Section 2(6)(c) of the earlier Finance Act. The contention of Sri P.K. Ravindranatha Menon, senior standing counsel for the Revenue, is that for the assessment year 1978-79, the assessee had got a good portion of the cashew nuts processed in other factories and only less than 50 per cent. of the total cashew processed related to the processing in his own factory. According to him, this took the assessee out of the purview of the definition of industrial company as mentioned earlier.
2. What the Tribunal had done in this case was to follow its earlier orders which had been the subject of reference to this court in Income-tax References Nos. 123 and 124 of 1983 CIT v. Rajamohan Cashews Ltd. [1991] 187 ITR 670, and also Income-tax Reference No. 375 of 1980-CIT v. Rajmohan Cashews (P.) Ltd. [1990] 185 ITR 472. In Income-tax Reference No. 375 of 1980--CIT v. Rajmohan Cashews (P.) Ltd. [1990] 185 ITR 472 precisely the same question was involved as to whether when a substantial portion of the cashew nuts processed by the petitioner was in other factories owned by others and not in his own factory whether the assessee could get the benefit as an industrial company. Kochu Thommen and Pareed Pillay JJ., held that the fact that the processing was not done in the factory of the assessee, but in the factory of someone else would not necessarily mean that the assessee is not mainly engaged in the processing of the goods, provided there is material to show that the processing was done by the outside agency for and on behalf of the assessee and the charges incurred therefor were met by the assessee directly. It was accordingly held that the assessee, namely, the respondent, was entitled to benefit as an industrial company. This decision was followed in the subsequent decision in Income-tax References Nos. 123 and 124 of 1983--CIT v. Rajamohan Cashews Ltd. [1991] 187 ITR 670 also.
3. The facts relating to the year 1978-79 on which considerable reliance was placed by Sri Ravindranatha Menon, are also similar. There is no material on record, so far as the other two years are concerned as to whether any processing of the cashew was done in outside factories. But having regard to the decision in Income-tax Reference No. 375 of 1980 --CIT v. Rajmohan Cashews (P.) Ltd. [1990] 185 ITR 472, from which we do not find any reason to differ, it has to be held that the fact that a good portion of the processing of the cashew was done in outside factories with the processing charges being paid by the assessee will not take the assessee outside the ambit of the definition of industrial company in the Finance Act.
4. We must also mention here that the matter, in the way in which it was put before us, does not appear to have been pressed either before the Commissioner (Appeals) or before the Tribunal. The Tribunal particularly chose to follow their earlier decision, which, as stated earlier, had been affirmed in reference by this court, since they have found no distinction in the facts relating to the earlier years and this case.
5. Having regard to the circumstances and having regard to the decision in Income-tax Reference No. 375 of 1980--CIT v. Rajmohan Cashews (P.) Ltd. [1990] 185 ITR 472, there is no question liable to be referred to this court.
6. These petitions are, therefore, dismissed.