Ahuja Kashyap (P.) Ltd. vs Commissioner of Income Tax

R.C. Lahoti, J.—This is a reference at the instance of the assessee referable to the assessment year 1981-82 seeking opinion of the High Court on the following question of law : Whether, the Tribunal was right in holding that the petitioner-company was not an industrial company within the meaning of section 2(7)(c) of the Finance Act, 1980 so as to be entitled to be taxed at concessional rate of tax applicable to industrial companies ?

The assessee is a limited company engaged in the construction and sale of commercial flats in multi-storey buildings. It claimed to be an ''industrial company'' liable to concessional rate of taxation in accordance with the provisions of the Finance Act, 1979. The ITO held the assessee-company not to be an industrial company. The assessee filed an appeal. The Commissioner (Appeals) reversed the finding of the ITO and held the assessee-company to be an industrial company though engaged in the business of civil construction work. The view of the Commissioner (Appeals) has been upheld by the Tribunal. 2. Subsequent to the decision of the Tribunal, we have available the law laid down by the Supreme Court in Commissioner of Income Tax, Orissa and Others Vs. N.C. Budharaja and Company and Others, and Builders Associations of India Vs. Union of India and others, and a decision by the Delhi High Court in Commissioner of Income Tax, Delhi-I Vs. Minocha Brothers P. Ltd., The decision of the Delhi High Court in Minocha Brothers (P.) Ltd.''s case (supra) has been upheld by the Supreme Court in Minocha Bros. Pvt. Ltd. Vs. Commissioner of Income Tax, though on different grounds. However, their Lordships have not overruled or expressed disagreement with any of the views expressed by the Delhi High Court. Some of the abovesaid decisions have been referred to in a recent decision of the Delhi High Court in Bhagat Construction (P.) Ltd. v. CIT 1997 (VI) A.D. (Delhi) 1072. It was the case of an assessee engaged in the business of building work and extracting minerals so as to be consumed in the process of building activity. It was held that the end- product was the test and inasmuch as the product of such manufacturing activity (i.e., extracting minerals) would not result in production of final goods by the assessee but the product of such activity would be consumed by the assessee in its building work so the assessee would not be a producer but only a consumer. The building activity was held not to be a manufacturing activity. In view of the law laid down in the decisions referred to hereinabove the question is answered in the negative, i.e., in favour of the revenue and against the assessee