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TMI Blog1971 (8) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... aran Nath in District Kheri in the State of U. P. For manufacturing sugar the company purchases sugarcane in the District of Kheri. It maintains some staff and also makes certain advances to cultivators within the rural area of the said district. It was assessed to what is known as the circumstances and property tax. The relevant provision under which this tax could be levied was section 114 of the District Boards Act, 1922, which was repealed by the U. P. Kshettra Samitis and Zila Parishads Adhiniyam, 1961, hereinafter referred to as the "Adhiniyam" but a similar provision, section 121, was enacted in that statute. The material portion of section 121 is as follows: "121. Conditions and restrictions for Tax on Circumstances and Property.- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made within the rural area it was "carrying on business" in that area and was thus liable to the levy and payment of tax. All that has to be decided, therefore, is whether the company was carrying on business in the rural area within the jurisdiction of the Zila Parishad when the activity attributed to it consisted of regularly buying or purchasing sugarcane for the business of manufacturing sugar in its factory which was outside the rural area. It was not disputed before the learned single judge that the business of the company consisted of manufacturing sugar. For that purpose it was essential to purchase the raw material at the mill gate and in the mofussil area including the rural area in the district of Kheri. The reasoning of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the East Punjab High Court in Chas J. Webb Sons & Co. Inc. v. Commissioner of Income-tax. There the assessee-company which was incorporated in the United States of America was carrying on the business of manufacturing carpets in America. Its only business in British India was to purchase, through its agents in British India, wool as raw material for use in the manufacture of carpets. The company was sought to be assessed in respect of its income from such purchases of raw material under section 42(3) of the Indian Income-tax Act, 1922. It was held that the mere purchase of raw material in British India was an operation within the meaning of section 42(3) of that Act and that the profits which arose out of such purchases were taxable. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities and carried on a business which includes manufacturing, selling and also exporting and importing of goods. Can it not be said that each one of these activities is a part of the business which he carries on? I agree with Mr. Munshi that if a particular process or activity of a continuous character can be distinguished from other processes and if a separate profit can be ascertained and allotted in respect to the same, there is no reason why it should not be regarded as a part of the business which yields income or profits." These observations can hardly be of any avail to the Zila Parishad. The buying of raw material in the shape of sugarcane may be a process or activity of a continuous character but even according to the test la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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