TMI Blog1982 (3) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... ject, the assessee entered into a loan-licence agreement with another company called Pharmed Private Ltd. (referred to hereinafter as " Pharmed ") to make available to the assessee their premises, plant, machinery and the services of the staff such as chemists and labourers to carry on manufacturing activities for and on behalf of the assessee. In respect of these services, the assessee agreed to pay to Pharmed a charge at a fixed rate, which was inclusive of Pharmed's share of profits. It is recorded by the Income-tax Appellate Tribunal that the admitted position is that the assessee holds manufacturing licences in its own name to manufacture various drugs and medicines and that it got its products manufactured by Pharmed under the direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other assessment years under consideration and charged income-tax at 55 per cent. and 60 per cent., respectively, under s. 1(A)(2)(i)(1) and (2) of Para. P of the later Finance Acts, which rates were applicable to what was known as an " industrial company ". The Finance Act, 1966, defines an " industrial company " in s. 2(7)(d) as follows : " 'Industrial company' means a company which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining. Explanation.-For the purposes of this clause, a company shall be deemed to be mainly engaged in the business of generation or distribution of electricity or any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of the case. The Tribunal further pointed out that the packing materials used for packing the goods and the labels and cartons applied to the drugs and products, which comprised the said goods, had the name of the assessee printed on them and the goods manufactured were the property of the assessee, the same having been manufactured at its cost and risk. The Tribunal further held that the business of the assessee consisted mainly in the manufacture or processing of goods for the purposes of s. 104 of the said Act. From this decision of the Tribunal the following two questions have been referred to us for our determination: " (1) Whether, on the facts and in the circumstances of the case, the assessee-company is a manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial company ". We are concerned with the interpretation of a taxing statute and what we have primarily to see is whether the assessee's case clearly falls within the plain words used in the definition of the term "industrial company". Secondly, it appears that, in the present case, although the plant and machinery employed for the purpose of manufacture belonged to Pharmed and the services of certain employees of Pharmed were also utilised in that process, the manufacturing activity was really that of the assessee. It was the assessee which paid the hire charges for the machinery and the plant. It was the assessee which Purchased the raw materials and the packing materials. The employees of Pharmed carried out the manufacture of drugs and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing and also of processing books which were goods. In that case, the facts found further showed that the assessee did not own a printing press. It was observed that in order that a publisher of books should be a manufacturer of books, it was wholly unnecessary for him to be a book binder himself. A publisher may get the books printed by any printer but the printer is not the manufacturer but a mere contractor. This decision has been followed by another Division Bench of the Calcutta High Court in Griffon Laboratories (P.) Ltd. v. CIT [1979] 119 ITR 145, where it has been held that a manufacturer may hire a plant or machinery and employ hired labour and manufacture the goods. But to earn the benefit of the concessional rate of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aded them as per Agmark specifications, clipped and stemmed them, and subjected them to fumigation under expert technical hands in order to prevent deterioration and with a view to give better polish and appearance, and, during that process, they were treated with methyl bromide. The assessee got the fumigation done by a third party. The assessee claimed that it was an " industrial company " within s. 2(6)(c) of the Finance (No. 2) Act, 1971, and hence was entitled to be taxed at the concessional rate of 55 per cent. That claim of the assessee was negatived by the ITO and the AAC on the ground that the treatment given by the assessee to the chillies did not amount to processing and, even if it did, as the assessee did not do it itself but g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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