TMI Blog1997 (4) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of the Madras High Court (see [1989] 179 ITR 181), dated February 14, 1978, in Tax Case No. 33 of 1975 relating to the assessment year 1966-67. The assessee is a private limited company carrying on the business of tanning hides and skins by chemical process and selling the resultant leather as well as purchase and sale of leather on commission basis. It owns a tannery known as Southern India Tanneries where the tanning of hides and skins by chemical, process is done. During the assessment year 1966-67, the total profit of the assessee was Rs. 5,05,045 which included Rs. 3,73,870 earned by sale of chemicals imported on the strength of licences granted on the basis of export of leather, hides and skins in earlier years. The distrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 per cent. of the total export and that the rest were all goods of third parties, purchased and exported by it on commission basis. On these facts, the Tribunal held that it could not be said that the profit derived by the appellant by sale of imported chemicals had direct relationship or connection with its manufacturing activity. At the instance of the assessee, the Tribunal referred the following question for the opinion of the High Court : " Whether the profit of Rs. 3,73,870 obtained by the assessee during the relevant previous year by the sale of chemicals imported by it on the strength of licences issued to it, based on its export performance of leather, both manufactured and purchased by it, was rightly held as not attributable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not less than fifty-one per cent. of such total income. " The submission is that the expression " income attributable to any of the aforesaid activities " in the Explanation are words of wide amplitude and that income earned by the assessee on the sale of chemicals imported under import licences obtained by the assessee on the basis of the export of leather, hides and skins should be treated as income attributable to the business of manufacture of such goods by the assessee. In support of the said submission, learned counsel has placed reliance on the decisions of this court Cambay Electric Supply Industrial Co. Ltd. [1978] 113 ITR 84 and Ashok Leyland Ltd. v. CIT [1997] 224 ITR 122. We have perused the said judgments of this court. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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