1994 (11) TMI 117

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....of the definition of an industrial company under section 2(8)(c) of the Finance Act, 1975 ? " The assessee is a private limited company. This reference pertains to the assessment year 1975-76, the corresponding previous year being the year ended on September 30, 1974. Prior to March 23, 1972, apart from other activities, the assessee was engaged in the business of manufacturing and selling various kinds of brushes including tooth brushes, hair, combs and articles, tooth paste and other toilet articles which were marketed by it under its own brand names. For this purpose, it installed machinery in a building occupied on rent. A number of employees were also employed by it in the factory. On March 23, 1972, the assessee entered into an agre....

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.... also rejected. The Tribunal held that after the letting out of the factory with effect from March 16, 1972, the assessee did not carry on the business or activity consisting of manufacture of goods, and, hence, it could not be held to be an industrial company within the meaning of section 2(8)(c) of the Finance Act, 1975. Hence, this reference at the instance of the assessee. We have heard learned counsel for the assessee. Section 2(8)(c) of the Finance Act, 1975, which defines an " industrial company " reads as under : " 'industrial company' means a company which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of....

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....ng of goods for a period of five years from March, 1972, and being in receipt of a monthly royalty or consideration for the same irrespective of the fact whether the lessee manufactured or processed any goods or not, it cannot be said that it was " engaged " in the manufacture or processing of goods. We find ourselves in agreement with the above conclusion of the Tribunal. A company cannot be held to be an industrial company merely by virtue of its ownership of plant or machinery or factory premises. For that purpose, it must be mainly engaged in the manufacture or processing of goods. Neither the ownership or possession of the manufacturing plant or machinery nor the ownership of the raw materials or the manufactured goods is the determina....