Law:

Section:

Section 2(6)(c) of the Finance (No. 2) Act, 1971 – Industrial company – Assessment year 1971-72 – Assessee company was exporter of chillies-Chillies purchased by assessee were sorted and graded as per Agmark specifications and before export they were clipped and stammed and subjected to fumigation under expert technical hands – Assessee had got chillies fumigated by other company by paying charges therefore – Whether activity which alone was carried on by assessee did not fall within definition of 'processing' and, therefore, assessee was not industrial company within meaning of section 2(6)(c) and was not entitled to concessional rate of levy of tax - Held, yes FACTS The assessee company was an exporter of chillies. The chillies purchased by the assessee-company were sorted, graded as per Agmark specifications, better quality chillies were picked and sorted out for export and before export they were clipped and stammed and subjected 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 chillies fumigated by the other company by paying changes therefore. The assessee-company claimed that it was an industrial company within the meaning of section 2(6)(c) and the tax should be levied on it at a concessional rate of 55 per cent only. The ITO rejected the assessee's claimed and levied tax at the rate of 65 per cent. The AAC dismissed the assessee's appeal. The Tribunal, however, held that the treatment given to the chillies by the assessee before exporting would amount to 'processing' and, therefore, the assessee fell under the definition of 'industrial company' and was thus, entitled to the benefit of the concessional rate of 55 per cent. On reference: HELD A reading of the definition of 'Industrial company' suggests that it is the company which should engage itself and that should be the business of the company. Business, as is well known, is a systematic course of activity. Lastly, that company must do the processing of goods. In the instant case, there were two aspects which require to be considered. One…

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