Industrial company status denied where electrical contracting work did not amount to manufacture or processing of goods.

An electrical contractor engaged in survey, planning, fabrication, assembling, testing, installation and commissioning was held not to qualify as an industrial company for concessional tax treatment because its work did not amount to manufacture or processing of goods under section 2(7)(c) of the Finance Act, 1979. The later, broader definition inserted by the Finance Act, 1983, which covered execution of projects and assembling or installation of machinery or plant, was held not to apply retrospectively. On the facts, the assessee failed to show that assembling and testing created a commercially new or different article, or that testing and commissioning constituted processing of goods, so the concessional rate was denied.

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Issues: Whether the assessee, an electrical contractor engaged in survey, planning, fabrication, assembling, testing, installation and commissioning of equipment, was an industrial company entitled to concessional tax treatment on the footing that its activities amounted to manufacture or processing of goods.

Analysis: The relevant definition for the assessment year was that contained in section 2(7)(c) of the Finance Act, 1979. The wider definition later introduced in the Finance Act, 1983, which expressly extended the concept to execution of projects and assembling or installation of machinery or plant, had no retrospective application. On the facts, the assessee did not establish that the assembling and testing of electrical equipments resulted in a commercially new or different article or in any alteration of the goods so as to amount to processing. Testing and commissioning were also not shown to constitute processing of goods. The earlier authorities relied on by the assessee were distinguished on their facts, while the decision supporting the Revenue view that a contractor engaged in such work did not fall within the definition of industrial company was accepted.

Conclusion: The assessee was not an industrial company and was not entitled to the concessional rate of tax.

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