Industrial company status failed where manufacturing income did not meet the 51% statutory test for concessional tax treatment.

A company qualified as an "industrial company" under the Finance Acts of 1971 and 1972 only if it was mainly engaged in a specified industrial activity, with the Explanation deeming that condition satisfied only where income from those activities formed at least 51% of total income before Chapter VI-A deductions. The assessee carried on building construction and manufactured some materials for use in that work, but it did not produce material showing that manufacturing income met the 51% statutory threshold. A circular could not help because construction of buildings was not among the specified activities. The concession therefore was unavailable.

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Issues: Whether the assessee qualified as an "industrial company" under the Finance Acts of 1971 and 1972 so as to claim the concessional tax rate.

Analysis: The definition required the company to be mainly engaged in one of the specified industrial activities, and the Explanation deemed such engagement only if the income attributable to those activities was not less than 51 per cent of the total income of the relevant previous year, computed before deduction under Chapter VI-A of the Income-tax Act. The assessee was engaged in construction of buildings and also manufactured certain materials for use in that construction, but it failed to place material showing that the income attributable to the manufacturing activity satisfied the statutory 51 per cent requirement. The circular relied upon did not assist the assessee because construction of buildings was not one of the specified activities.

Conclusion: The assessee was not entitled to be treated as an industrial company and the claim for concessional tax rate failed.

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