Manufacturing vs trading: assembling purchased components into finished equipment qualified the assessee for concessional industrial company tax treatment.

Assembling market-purchased components into metal spraying equipment in its own factory was treated as manufacturing, not mere trading, because the components were put together into a finished product with a distinct commercial character. The factual finding that the assessee manufactured metalizing equipment and earned more than 51% of its profits from manufactured goods supported industrial company status. On those facts, the assessee qualified for concessional tax treatment as an industrial company.

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Issues: Whether the assessee, which assembled purchased components into metal spraying equipment and sold the finished units, was engaged in manufacturing activity so as to qualify as an industrial company entitled to concessional tax treatment.

Analysis: The assembling activity was not in dispute. The determining factor was whether the components were merely traded as such or were put together through a process resulting in a different product. The factual finding was that the assessee manufactured metalizing equipment in its own factory by assembling market-purchased components, and that more than 51% of its profits were derived from manufactured goods. On these facts, the activity was held to be manufacturing and not trading.

Conclusion: The assessee was correctly treated as an industrial company and entitled to the concessional rate of tax.

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