Law:

Section:

Section 104 and 109(iii) of the income-tax act, 1961 read with section 2(7)(d) of the finance Act, 1966-Additional Income-tax on undistributed profits-Industrial company-Assessee-company, carrying on business of construction of building, distributed 64 per cent of its net distributable income and claimed exemption from levy of super tax under section 104 on ground of being "industrial company"-Whether tribunal right in law in accepting assessee's claim-Held, on facts, no Facts The assessee-company was carrying on business of undertaking, building, constructing, erecting, planting, executing, carrying out, improving, repairing, enlarging, etc., buildings, structures, factories, etc. In the process and for the purpose of the said construction and repairs of buildings, it manufactured windows, door frames, concrete beams and slabs. These were neither manufactured nor sold independently of the buildings. For the assessment year 1966-67, it declared dividend to the extent of 64 per cent of its net distributable income and claimed immunity from liability to super tax under section 104 as it was an "industrial company" and distributed more than 45 per cent of its total profit. The ITO, however, disallowed the exemption, holding that the assessee was not an "industrial company" and as it had not declared 90 per cent of such profits as dividends, assessee was liable to super tax. The AAC held that the activity of construction of buildings was in the nature of manufacturing or processing of goods and, as such, the assessee was an industrial company for the purposes of section 109(iii). The Tribunal took the view that manufacture of windows, door frames, beams, etc., was directly related to the actual business of the company and manufacture of said items involve manufacture and processing of goods which activities will make it eligible as industrial company. Accordingly, it confirmed the AAC's decision and directed the ITO to treat the company as such. On reference: Held 1. The assessee manufactured windows, door frames, concrete slabs and beams for the purpose of particular building under construction or repair and not independently. These were not manufactured for sale…

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