Law:

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Section 2(6)(d) of the Finance Act, 1968 - Industrial company - Assessment year 1968-69 - Assessee's main business, admittedly, was manufacturing activity as a result of which leather goods were processed - In relevant assessment year, assessee imported certain chemicals and earned large profits on sale of such chemicals -Whether in view of fact that bulk of total income of assessee was from sale of imported chemicals which was not attributable to manufacturing activity carried on by it, Tribunal was justified in holding that assessee could not have been considered as 'industrial company' in terms of section 2(6)(d) - Held, yes FACTS The assessee's main business, admittedly, was manufacturing activity as a result of which leather goods were processed. By virtue of the export of such goods in earlier years, the assessee obtained import entitlements and pursuant to the licence issued, the assessee had imported chemicals during the previous year in question and had sold them and earned a profit of Rs. 6,63,658. The Tribunal held that the profits from sale of such imported chemicals were not attributable to the manufacturing activity carried on by it and hence the assessee could not be considered as an 'industrial company' in terms of section 2(6)(d). On reference: HELD The total income of the assessee was Rs. 7,90,756 inclusive of the sum of Rs. 6,63,658. Clearly, the bulk of the income was from the sale of imported chemicals. This had nothing to do directly with the income from the manufacture of leather goods and the sale of such goods, in view of the Explanation to section 2(6)(d). Accordingly, the Tribunal was correct in holding that the assessee could not be considered as an industrial company in terms of section 2(6)(d). Note: The case was decided against the assessee. S. V. Subramaniam, Subbaraya Aiyar, Padmanabhan and Ramamani for the Applicant. A. N. Rangaswamy and Mrs. Nalini Chidambaram for the Respondent. JUDGMENT P. Govindan Nair, CJ. -The question referred to us, in relation to the assessment year 1968-69 by the Income-tax Appellate Tribunal, Madras Bench, reads as follows : "Whether, on the facts and in the circumstances of the case, the Tribunal…

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