TMI Blog1977 (12) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... to the reference may be stated as under : The assessee is a public limited company carrying on the business of purchase and sale of chillies mostly by exporting to U.S.S.R., U.S.A. and Ceylon. It filed a return disclosing an income of Rs. 36,655 for the assessment year 1971-72, the relevant previous year ending with March 31, 1971. The Income-tax Officer, Madurai, by his order dated February 18, 1972, determined the total income at Rs. 37,315 after disallowing Rs.660 under the head " entertainment expenses ". Thereafter, he levied tax thereon at 65%. In so doing, he rejected the assessee's contention that it was an industrial company within the meaning of section 2(6)(c) of the Finance (No. 2) Act, 1971, hereinafter referred to as the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter quality chillies were picked and sorted out for export and that before export they were clipped and stemmed and subjected to fumigation under expert technical hands in order to prevent deterioration and with a view to give better polish and appearance and that during that process they were treated with methyl bromide. It was also not disputed that out of the total turnover of Rs. 35.75 lakhs, turnover relating to exports amounted to Rs. 33.70 lakhs. The Tribunal, after considering the meaning of the expression " processing " given in Webster's New International Dictionary and Ramantha Aiyar's Law Lexicon and also the decision in Sri Om Prakash Gupta v. Commissioner of Commercial Taxes [1965] 16 STC 935 (Cal), held that the treatment gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Commercial Taxes [1965] 16 STC 935 (Cal) is incorrect since in the instant case the assessee makes the goods fit for being marketed. As regards the fumigation by methyl bromide the assessee does nothing at all. It is admittedly done by some other company. Bulbu Prasad Amarnath v. Commissioner of Sales Tax [1964] 15 STC 46 (All) related to definition of "manufacture" occurring under that particular section wherein it was held that even if a person dealing in linseed, had it crushed and converted into oil, he would fall under the definition of manufacturer. In the instant case, having regard to the definition which requires that the assessee himself should engage in the processing, the decision has no relevance. Mr. Ramamani, learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in the manufacture or processing of goods or in mining, if the income attributable to any one or more of the aforesaid activities included in its total income of the previous year (as computed before making any deduction under Chapter VI-A of the Income-tax Act) is not less than fifty-one per cent. of such total income." A careful reading of the above definition discloses the following : (1) An industrial company should mainly engage itself, (2) in the business of ...... (3) processing of goods. This provision is one relating to exemption wherein the assessee is enabled to get a concessional rate of 55 per cent. Therefore, this has to be strictly construed. A reading of the definition suggests that it is the company which should engage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in Commissioner of Sales Tax v. Damodar Padmanath Rao [1968] 22 STC 187 (Bom), it was held that the preparation of bidas with betels, betelnuts, lime and kattha is processing. That would undoubtedly be so, because many ingredients go to make a "bida" resulting in a different product. Therefore, it will amount to processing. No such question arises in this case. Turning to the activity relating to the fumigation by the treatment with methyl bromide, admittedly it was done by Mysodet Private Ltd., Bangalore. Therefore, having regard to what we have said above, the assessee, if it did not engage in this treatment of preservation, cannot claim the benefit of the definition. It is not necessary for our purpose to consider whether Mysodet Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
