TMI Blog1990 (11) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... ssembly of parts in a component and of various components resulting in the formation of tractor which has propulsion amounts to manufacture and the assessee was thus an industrial undertaking entitled to relief under sections 80-I and 80J of the Income-tax Act, 1961 ? In I.T.R. No. 614 of 1977, a further question is referred. It reads thus: Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the payment of ₹ 1,06,181 being the additional price paid to the U. P. Government towards the cost of raw material and finished goods was a revenue expenditure and a legitimate deduction from the income of the assessment year 1969-70? The facts relevant to the first question a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived from an industrial undertaking. The assessee claimed the said deduction, which was disallowed by the Income-tax Officer. The Tribunal, however, held that the assessee is an industrial undertaking in so far as it was engaged in assembling of tractors. It is this view which is questioned by the Revenue before us. It is argued by learned standing counsel for the Revenue that what the assessee does is merely to assemble the various parts and that no part of the tractor is manufactured by it. The assessee, it is argued, was merely selling Zetor 2011 tractors manufactured in Czechoslavakia. The tractors were imported not as fully fitted tractors. Various components were imported and what the assessee was doing was to knit them together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing or producing mean in this context ? In other words, the question is whether the activity carried on by the assessee does amount to manufacture or production of articles. Sri Bharatji Agrawal relied upon the decisions of the Bombay High Court and the Madras High Court in CIT v. Tata Locomotive and Engineering Co. Ltd. [1968] 68 ITR 325 and Ashok Motors Ltd. v. CIT [1961] 41 ITR 397 respectively. In CIT v. Tata Locomotive and Engineering Co. Ltd. [1968] 68 ITR 325, the assessee was Tata Locomotive and Engineering Co. Ltd. In November, 1953, it applied to the Government for permission to manufacture bus/truck chassis at its workshop at Jamshedpur in collaboration with a West German company. Its proposal contemplated progressive in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es without bodies. In Ashok Motors Ltd. v. CIT [1961] 41 ITR 397 (Mad), the question considered was altogether different and we do not find any discussion relevant to the question before us. Besides the above decisions, learned counsel relied upon certain other decisions to which brief reference would be in order. In Narne Tulaman Manufacturers Pvt. Ltd. v. Collector of Central Excise [1989] 1 SCC 172, a case arising under the Central Excise Act, the question was whether the appellant therein manufactured weighbridges and as such was liable to duty under the Act. Of the three main components of a weighbridge, the assessee manufactured only one component and imported or purchased the other two components from others. Having thus obtained the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Revenue brought to our notice two decisions, one of the Kerala High Court and another of the Madras High Court. The decision of the Kerala High Court in CIT v. Casino (P.) Ltd. [1973] 91 ITR 289 merely says that a hotel being mainly a trading concern cannot be treated as an industrial company within the meaning of section 2(6)(d) of the Finance Act, 1968. The decision of the Madras High Court in CIT v. Standard Motor Products of India Ltd. [1962] 46 ITR 814 related to an assessee who was engaged in the manufacture of motor cars and tractors. It imported parts and components for assembling cars and tractors. Out of these imported parts it used some of them for assembling cars and the remaining parts were sold as spare parts. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commentary on the Income-tax Act by Kanga and Palkhivala (8th Edition). In the light of the said trend, we are constrained to hold that the activity of the assessee in these cases does amount to manufacture/production of articles and, therefore, it is entitled to the benefit of the said two provisions, though left to ourselves, we would have held otherwise. The first question is accordingly, answered in the affirmative, that is, in favour of the assessee and against the Revenue. Now, coming to the second question referred in I.T. R.No. 614 of 1977, the following facts are relevant. The assessee-Corporation is a Government company. Fifty per cent. of the shares are held by the Government of India and the remaining fifty per cent. by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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