Delhi H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee be declared an industrial company within the meaning of s. 2(7)(c) of the Finance Act, 1979, and thus the concessional rate of tax should have been levied ?

Counsel Appeared

R.D. Jolly, Mrs. Prem Lata Bansal, Ajay Jha and Sanjeev Khanna, for the Revenue : None, for the Assessee

JUDGMENT

R.C. LAHOTI, J. :

The following question has been referred for the opinion of the High Court at the instance of the Revenue, referable to the asst. yr. 1979-80 : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee be declared an industrial company within the meaning of s. 2(7)(c) of the Finance Act, 1979, and thus the concessional rate of tax should have been levied ?” The assessee is a limited company engaged in the construction and sale of commercial flats in multi-storeyed 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 assesseecompany not to be an industrial company. The assessee filed an appeal. The CIT(A) 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 CIT(A) has been upheld by the Tribunal. Subsequent to the decision of the Tribunal we have available to law laid down by the Supreme Court in CIT vs. N.C. Budharaja & Co. (1994) 122 CTR (SC) 543 : (1993) 204 ITR 412 (SC) TC 28R.233, 25R.185, 68R.139, and Builders Associations of India vs. Union of India (1994) 116 CTR (SC) 476 : (1994) 209 ITR 877 (SC) TC 28R.240, 69R.368, 68R.395, and a decision by the Delhi High Court in CIT vs. Minocha Bros. P. Ltd. (1986) 52 CTR (Del) 346 : (1986) 160 ITR 134 (Del) TC 24R.207. The decision of the Delhi High Court in CIT vs.Minocha Bros. P. Ltd. (supra) has been upheld by the Supreme Court in Minocha Bros. P. Ltd. vs. CIT (1994) 116 CTR (SC) 476 : (1993) 204 ITR 628 (SC) TC 24R.205, though on different grounds. However, their Lordships have not over ruled or expressed disagreement with any of the views expressed by the Delhi High Court. Some of the aboveside decisions have been referred to in a recent decision of the Delhi High Court in Bhagat Construction Co. Pvt. Ltd. vs. CIT (1998) 150 CTR (Del) 167 : (1998) 232 ITR 722 (Del) : TC S.54.4273 (1997) VI AD (Del) 1072. It was a 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 down in the decisions referred to hereinabove the question in answered in the negative, i.e., in favour of the Revenue and against the assessee.

[Citation : 246 ITR 159]