1997 (4) TMI 9

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....ern India Tanneries where the tanning of hides and skins by chemical, process is done. During the assessment year 1966-67, the total profit of the assessee was Rs. 5,05,045 which included Rs. 3,73,870 earned by sale of chemicals imported on the strength of licences granted on the basis of export of leather, hides and skins in earlier years. The distributable income of the assessee for the assessment year in question was Rs. 2,59,289 but it had distributed only Rs, 1,00,000 as dividend. The assessee claimed that it was a company whose main business was manufacture of leather, processing of hides and skins with chemical process and the provisions of section 104 of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), do not apply....

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....following question for the opinion of the High Court : " Whether the profit of Rs. 3,73,870 obtained by the assessee during the relevant previous year by the sale of chemicals imported by it on the strength of licences issued to it, based on its export performance of leather, both manufactured and purchased by it, was rightly held as not attributable to the manufacturing activity carried on by it ? " By the impugned judgment, the High Court has answered the said question in the affirmative, i.e., against the assessee and in favour of the Revenue. The High Court has held that though the export business of leather manufactured or purchased by the assessee was the remote cause for import entitlement which in turn had given rise to the ea....

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....be treated as income attributable to the business of manufacture of such goods by the assessee. In support of the said submission, learned counsel has placed reliance on the decisions of this court Cambay Electric Supply Industrial Co. Ltd. [1978] 113 ITR 84 and Ashok Leyland Ltd. v. CIT [1997] 224 ITR 122. We have perused the said judgments of this court. It is no doubt true that the words " attributable to " have a wider meaning than the words " derived from ". But at the same time it cannot be ignored that normally the word " attributable " implies that " for a result to be attributable to anything it must be wholly, or in material part, caused by that thing ". [See : Stroud's Judicial Dictionary, 5th edn., volume I, page 223]. A caus....