Commissioner of Income Tax vs Kinetics Technology (P) Ltd.

B.C. Patel, C.J.—This reference is placed before the court at the instance of the Revenue where the following question of law is referred to the court :

Whether on the facts and in the circumstances of the case, the assessed company was an "industrial company" within the meaning of clause 8(c) of Chapter 2 of the Finance Act, 1977?

The assessed is deriving income from supervision and commissioning of heaters and erection of gas generation plants, furnaces and also manufactures equipment for these purposes and imparts technical know-how, for which services it received design and consultancy fees.

Against the order of the Assessing Officer, rejecting the contention of the assessed, the appeal was preferred before CIT(Appeals). On facts, CIT(Appeals) arrived at a conclusion " that the operation and activities performed by the assessed with regard to nearly all its contracts really amounted to manufacture and/or processing of goods and it involved process of manufacture/production of commercially different articles out of the raw-materials." Considering these aspects and others as indicated in para 5 of the judgment of the Tribunal, the CIT(Appeals) held that the assessed was an industrial company. It is against this finding, that the appeal was preferred before the Income Tax Appellant Tribunal and this finding of fact has been affirmed by the Tribunal that the assessed was involved in processing or manufacturing of goods and was, Therefore, an industrial company. The contracts executed by the assessed involved processing of goods and could not be treated as trading items. In view of this finding of fact, we have to answer against the revenue and in favor of the assessed.