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of <h1>Private limited company leasing facilities not an industrial company under Finance Act, 1975.</h1> The High Court of Bombay ruled that a private limited company leasing out its manufacturing facilities could not be considered an industrial company under ... Concessional Rate, Industrial Company, Processing Of Goods Issues:1. Interpretation of the definition of an industrial company under section 2(8)(c) of the Finance Act, 1975.2. Determination of whether a company is mainly engaged in the manufacture or processing of goods.3. Assessment of whether an assessee can be considered an industrial company despite leasing out its manufacturing facilities.Analysis:The judgment by the High Court of Bombay dealt with the interpretation of the definition of an industrial company under section 2(8)(c) of the Finance Act, 1975. The case involved an assessee, a private limited company, which claimed to be an industrial company despite leasing out its manufacturing facilities. The company had entered into an agreement with another entity to carry on the manufacturing business for a period of five years, receiving a monthly sum as consideration. The primary issue was whether the company could still be considered engaged in the manufacture or processing of goods under the definition of an industrial company.The court analyzed the definition of an industrial company under section 2(8)(c) of the Finance Act, 1975, which requires a company to be mainly engaged in the business of manufacturing or processing goods to qualify as an industrial company. The court emphasized that ownership of plant or machinery alone does not determine industrial status; the company must be actively involved in manufacturing or processing goods. The court highlighted that a company ceases to be an industrial company if it suspends manufacturing activities and leases out its manufacturing apparatus to a third party.In this case, the court found that the assessee had effectively ceased its manufacturing activities by leasing out its factory and machinery, with the lessee assuming full responsibility for the business operations. The court noted that the assessee was receiving a fixed monthly sum as consideration, regardless of whether the lessee engaged in manufacturing activities. As a result, the court concluded that the assessee could not be considered an industrial company under the Finance Act, 1975, as it was no longer engaged in the manufacture or processing of goods.Ultimately, the court upheld the decisions of the lower authorities, including the Income-tax Tribunal, in ruling that the assessee was not an industrial company. The court answered the question referred to it in the affirmative and in favor of the Revenue, emphasizing that the assessee's leasing arrangement did not meet the criteria for being classified as an industrial company under the relevant legislation.In conclusion, the judgment clarified the requirements for a company to qualify as an industrial company under the Finance Act, 1975, emphasizing the necessity for active engagement in manufacturing or processing activities to maintain industrial status.
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