TMI Blog1997 (3) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... te work in the Plate Mill Area of Bhilai. In this case, the initial assessments were made on a total income of Rs. 3,63,440 and Rs. 13,44,030 for the assessment years 1981-82 and 1982-83 respectively. The Assessing Officer noticed that the assessee has not disclosed any dividend for the assessment year 1981-82 and declared the dividend of Rs. 28,680 only for the assessment year 1982-83. He issued notice under section 104 of the Income-tax Act, 1961, asking the reason as to why the additional tax under sections 104 to 109 should not be levied on it. The assessee furnished the reply submitting that the assessee is an industrial undertaking. The Assessing Officer took the view that the definition of an industrial company was enlarged only with effect from 1-4-1984. Prior to that an industrial company cannot cover a company engaged in the execution of projects as an industrial company. it was under these circumstances, the additional tax was levied at Rs. 27,371 and Rs. 1,04,972 respectively. It was the case of the assessee that for section 80J, the revenue itself has considered the assessee as an industrial company and, therefore, there could not be a different view for applying the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld meticulously follow the decision in its entirety. So far as the words used in section 104(4) are concerned, they exclude an Indian company whose business consists mainly in the construction of ships or in the manufacture or processing of goods or in mining or in the generation or distribution of electricity or any other form of power. The Special Bench had an occasion to interpret these very words in relation to the assessee's claim for lower rate of taxation. The Bench ultimately remanded the matter to the Assessing Officer to determine the extent of activity by looking into the nature of activities for each year separately and if the predominant activity was such that it would come under the head 'Manufacture or processing of goods', the benefit should be given to the assessee. Since none of the authorities below have specifically considered this issue from this angle, we are of the opinion that the matter should be restored to the file of the assessing authority, namely, the Income-tax Officer to decide this issue afresh in the light of the observations made by the Special Bench which have been quoted in extenso above." Consequential order was passed on 28-2-1990. It was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was the case of the assessee that the Assessing Officer went wrong in following the decision of the Delhi High Court in the case of Minocha Bros. (P.) Ltd.'s case. It was the case wherein the assessee was actually in the field of construction of building and the manufacture that was to be done like the manufacture of doors, windows and it was really a part of the construction work. The same is not the case with the assessee. Further it was contended before the learned CIT(Appeals) that the Tribunal had given specific direction and the Assessing Officer should not have acted beyond the direction that was given. For this proposition, the assessee relied upon the decision of the Allahabad High Court in the case of CIT v. Kamla Town Trust [1992] 198 ITR 191. In this case, the Hon'ble High Court held that even erroneous decisions operate as res judicata between the parties. The finding recorded by the Tribunal in its original order were binding between the parties and the Income-tax Officer had not properly interpreted and implemented that order which had become final between the parties on the facts and circumstances of the present case. The Income-tax Officer had erred in recomputing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. Hence, the learned counsel submitted that the intermediary product was and the assessee like one before the Tribunal - whether entitled for benefit as claimed by the assessee is still open. The Hon'ble Court has not decided the issue so far. The learned counsel further submitted that in the decision of the Special Bench of the Tribunal in the case of R.M. Enterprises v. First/Forth ITO [1992] 42 ITD 23 (Bom.) even after discussing the Delhi High Court decision, the Tribunal (SB) came to the conclusion that the deduction under section 80-I shall be available with reference to profit and gains attributable to manufacture and production of doors, frames, windows as well as cement concrete slabs and other allied articles which were used in building construction activity. In the light of the above decision, the learned counsel submitted that the assessee who is doing civil engineering works in Group II Plate Mill Area of Bhilai Steel Plant is entitled for the benefit. The learned counsel submitted that the total contract value undertaken by the assessee was Rs. 2,43,15,275. The work of concrete section comes to Rs. 1,48,42,100 and earthwork section comes to Rs. 38,05,000 and if bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the assessee at the first appellate stage does not indicate that this issue was either agitated before the CIT(Appeals) or before the Tribunal. Since this ground has not been agitated by the assessee either at the first inning before the Tribunal or at an earlier stage in second inning, we find no reason to entertain this additional ground. The permission to raise the additional ground sought for by the assessee's counsel is rejected. 10. We have considered the rival submissions, gone through the orders of the revenue authorities and the decisions relied upon by the contending parties. The case of the assessee is that the definition of 'an industrial company' as given in section 104 is much wider as compared to the definitions given in the other sections, like sections 32A, 80HH and 80-I of the Act. The word 'processing' of goods used in Explanation to section 104 is concerned with the activity carried on by the company and has no relevance to manufacturing or end product, Thus, these words are wide enough to include the assessee who carries on construction business provided the activity involved in processing of goods account for more than 51 of the total work as envisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s recognised as a new and distinct article that a 'manufacture' can be said to take place. The test that is required to be applied is: does the processing of the original commodity bring into existence a commercially different and distinct commodity ? 12. The Oxford Dictionary defines the word 'process' as "a continuous and regular action or succession of actions taking place or carried on in a definite manner and leading to the accomplishment of some result". In the case of Moka Narasimhulu v. WTO [1979] 119 ITR 105, the Hon'ble High Court of Andhra Pradesh held that in common parlance, by processing of goods, meant that the goods are dealt with either mechanically or by manual labour and something is done to them to change them into some other article or to keep them fine or clean. In the case of CIT v. Sterling Foods (Goa) [1995] 213 ITR 851, the Hon'ble Bombay High Court held as under:-- " 'Processing' means subjecting a commodity to a process or treatment so as to develop it or make it fit for market. Processing is, thus, an operation or an article so that it undergoes a change. The three expressions 'processing', 'manufacture' and 'production' used in various taxing statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concrete and not a building. The main activity of the assessee is to manufacture or process a concrete and not construction of building (paper book page 15, assessee's letter to DCIT dated 26-2-1990). In the case of N.C. Budharaja Co. , one of the assessees, i.e., respondent in Pressure Piling Co. (India) (P.) Ltd.'s case was a company engaged in the business of laying foundation for building and other structures by specialised patented known as pressure piling. Coming to the present assessee, the assessee in its letter dated 8th June, 1993 to the CIT(Appeals), submitted that the assessee has been awarded civil engineering work in group II of Plate Mill area of B.S.P., the assessee undertakes the work of laying heavy concrete foundation casting concrete pillars/slabs/columns, etc., laying them in a position and also in order to lay heavy concrete foundations and erect concrete pillars, columns, etc., earthwork is necessary and put together the earthwork and concrete work, it constituted 77% of the assessee's total work. Hence, this being not a civil construction work and only processing, the levy of additional tax under section 104 is not in accordance with law in view of Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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