The Commissioner Of Income Tax-I(Central), Ludhiana v. M/S Bahadur Chand Investment (P) Ltd

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.R. No.20 of 1997Date of decision: 10.8.2009 The Commissioner of Income Tax-I(Central), Ludhiana. -----Applicant Vs. M/s Bahadur Chand Investment (P) Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MRS. JUSTICE DAYA CHAUDHARYHON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:-Mr. Krishan Mehta, Sr. Standing Counselfor the applicant.for the applicant. ORDER: Mr. Akshay Bhan, Advocatefor respondent. ----- 1.The Income Tax Appellate Tribunal, Chandigarh hasreferred following question of law for opinion of this Court, arisingout of its order dated 15.5.1996 in I.T.A No.1386/Chandi/90relating to assessment year 1985-86:- “Whether, on the facts and in the circumstances of thecase, the ITAT was right in law in holding that theassessee be treated as industrial company and thatthe tax be charged at low rate applicable to anindustrial company.” 2. The assessee claimed itself to be an industrialcompany for claiming lesser rate of tax. The Assessing Officer rejected the said claim. The CIT(A) upheld the plea of theassessee, following its order in the case of the assessee in theearlier assessment year, concluding as under:- “Considering the Delhi High Court decision and thisoffice order in Freeman Sales (P) Ltd. it is held thatwhat is to be decided is the percentage of incomefrom various sources. No doubt the assesseecompany is not manufacturing anything but it hasinvested in the manufacturing process and beingpartner in the firm is a criteria to determine the sourceof income and which determines it is a non-tradingand non-investment company: the lessor rate formanufacturing company or industrial company is toencourage the industrial activity and investment by acompany in a firm which is involved in amanufacturing process satisfies the object of lessorrate. Therefore, following the Delhi High Courtdecision it is held that this company gets major part ofits income from a manufacturing activity and thusliable to lessor rate of taxation? 3. The Tribunal upheld the said view. 4. We have heard learned counsel for the parties. 5. Learned counsel for the revenue relies upon order ofthis Court dated 7.8.2009 in I.T.R. No.187 of 1996 TheCommissioner of Income Tax (Central), Ludhianav. M/sBhagyoday Investment (P) Limited, Ludhiana, wherein it washeld that in view of clear language of the definition of ‘industrialcompany’, the assessee must itself be engaged in manufacturing activity of the nature specified in the definition and mere holdingof shares of an industrial company, was not enough to declare aninvestment company to be an ‘industrial company’. The referencewas made by the Tribunal on account of pendency of thereference in the above case, as is clear from paras 5 and 7 of thestatement of this case. 5. Learned counsel for the assessee does not disputethat the issue involved in the present case is covered by orderpassed by this Court inM/s Bhagyoday Investment (P) Limited(supra). 6. Accordingly, the reference is answered in favour ofthe revenue and against the assessee. (ADARSH KUMAR GOEL) JUDGE August 10, 2009CHAUDHARY )ashwani ( JUDGE DAYA