Industrial company status survives outsourced processing when work is done for the assessee and charges are borne by it.

An assessee could still qualify as an industrial company where substantial cashew processing was carried out in outside factories, provided the work was done for and on behalf of the assessee and the processing charges were borne by it. The decisive test was whether the assessee was mainly engaged in processing goods for the statutory definition, and third-party processing did not by itself take the activity outside that scope. Following earlier reference decisions on the same issue, the Kerala HC found no reason to depart from that view and held that the assessee remained within the definition of industrial company under the Finance Act, with the corresponding benefit.

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Issues: Whether the assessee was entitled to be treated as an industrial company where a substantial part of the cashew processing was carried on in outside factories and the processing charges were paid by the assessee.

Analysis: The relevant test was whether the assessee was mainly engaged in processing goods for the purposes of the statutory definition. Processing done by another factory did not by itself exclude the assessee from that definition where the outside processing was undertaken for and on behalf of the assessee and the charges were borne directly by it. Following the earlier reference decisions on the same question, the Court found no reason to differ from that view.

Conclusion: The assessee remained within the ambit of the definition of industrial company under the Finance Act and was entitled to the benefit.

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