2002 (6) TMI 12 - HC - Income Tax

1. Whether on the facts and in the circumstances of the appellant s case the Income-tax Appellate Tribunal was right in law in holding that the appellant could not be considered to be an industrial company ? - 2. Whether on the facts and in the circumstances of the appellant s case the Income-tax Appellate Tribunal was right in law in holding that the definition of industrial company in section 2(7)(c) of the Finance Act 1978 did not cover the activities of the appellant for the purpose of determining the rate at which the appellant was liable to income-tax? The first question is answered against the assessee and in favour of the Revenue and in view of that it is felt not necessary to answer the second question.

Summary

Issues:
1. Whether the assessee can be considered an 'industrial company' for tax purposes.
2. Whether the definition of 'industrial company' in the Finance Act covers the activities of the assessee for determining the tax rate.

Analysis:
The case involved an engineering company, The Coromandel Engineering Co. Ltd., claiming to be taxed at a lower rate as an industrial company for the assessment year 1975-76. The lower authorities and the Commissioner of Income-tax (Appeals) concluded that the company was not an industrial company based on the fact that it was only involved in construction activities, not manufacturing, power generation, ship construction, goods processing, or mining. The Tribunal also affirmed this finding. The definition of an industrial company was clarified by the apex court in a previous case, stating that such a company must be mainly engaged in specific activities like power generation, ship construction, goods processing, or mining, with income from these activities constituting at least 51% of the total income.

The burden of proof to establish the status of an industrial company lies with the assessee. In this case, the assessee failed to provide any material to challenge the Tribunal's factual findings. As a result, the High Court upheld the Tribunal's decision, confirming that the assessee did not qualify as an industrial company. Consequently, the first issue was decided in favor of the Revenue, and the second issue did not require an answer. The judgment concluded without any costs awarded.