TMI Blog1994 (11) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... see was an industrial company witnin the meaning of section 2(8) of the Finance Act, 1975 ?" This reference pertains to the assessment year 1975-76. The assessee is a limited company which deals in diamonds. Its main activities comprise import of raw diamonds and after cutting and polishing the same, export thereof out of India. The assessee claimed to be an "industrial company" within the meaning of section 2(8)(c) of the Finance Act, 1975. This claim of the assessee was rejected by the Income-tax Officer. The assessee appealed against the above order to the Commissioner of Income-tax (Appeals) who accepted the contention of the assessee and held it to be an "industrial company". The appeal of the Revenue against the order of the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er VIA of the Income-tax Act) is not less than fifty-one per cent. of such total income." It is clear from the above definition that a company which is mainly engaged in the manufacture or processing of goods and whose income attributable to such activities is more than 51 per cent. of its total income is an "industrial company" within the meaning of the above clause. The only controversy is whether cutting and polishing of rough diamonds for the purpose of export amounts to manufacture or processing of goods. The expressions "manufacturing" and "processing", which came up for interpretation from time to time, have received both wide as well as narrow interpretation from the courts depending upon the context in which they were used. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 2(8) of the Finance Act, 1975, is "engaged in the manufacture or processing of goods". The use of different expressions by the Legislature in the definition of the same expression for different purposes is not accidental. It rather appears to be a deliberate act of the Legislature intended to extend the benefit of the particular provisions also to companies which are engaged in the business of processing of goods which in the ordinary course would not tantamount to or be regarded as "manufacture". The words "processing" has not been defined in the Income-tax Act or the relevant Finance Act. According to the New Webster's Dictionary of the English Language (Encyclopaedic Edition), "process" means "to treat or prepare by some p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. " From the above discussion, it is clear that the expressions "manufacture" and "processing" used in section 2(8)(c) of the Finance Act, 1975, are not inter-changeable. These two expressions have been used to bring within the definition of "industrial company", companies which strictly speaking, do not "manufacture" goods but are engaged merely in the "processing" of goods. The expression "processing" has thus been used to widen the meaning of "industrial company". So construed, a company engaged in processing of good ..... X X X X Extracts X X X X X X X X Extracts X X X X
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