1985 (5) TMI 28

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....ning of section 2(6)(d) of the Finance Act, 1968 ? " As it happens, the facts of this case are quite simple. The assessee-company carries on business which can be divided into three classes. It makes ready-made garments, it trades in clothes and it does tailoring for customers. In the year 1971-72, the following figures indicate these business activities : " Assessment year 1971-72 : Sales Gross profits Rs. Rs. (1) Ready-made garments 2,12,601 47,330 (2) Cloth trading accounts 74,509 16,395 (3) Tailoring charges received 2,35,699 52,072 In 1973-74, the following figures are given : " Assessment year 1971-72 : Sales Gross profits Rs. Rs. (1) Ready-made garments 2,52,603 53,300 (2) Cloth trading accounts....

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....s profits at least should be from this source. It is the admitted case before us, as indicated from the figures set out earlier, that in the case of this company, if the tailoring charges are treated as profits from manufacturing or processing of goods, then the assessee-company qualifies as an industrial company. The learned counsel before us cited a very large number of judgments. We think it is unnecessary to cite all those judgments ; just a few will be sufficient. In CIT v. Ajay Printery Private Ltd. [1965] 58 ITR 811 (Guj), it was held that the business of printing balance-sheets, profit and loss accounts, dividend warrants, etc., was that of manufacturing of goods. On a parity of reasoning, it is urged that the making of clothe....

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....dy-made garments, it uses its own cloth to make clothes or garments, and in the case of its relations with customers who bring their own cloth, the assessee does the same thing by making garments for the customers but out of their own cloth. Can it be said that these too activities are different from each other ? After all, what does the assessee do ? Obviously, it converts cloth into garments. The result is the same. In one case, the cloth belongs to the assessee and the completed article is sold. In the other, the cloth belongs to the customers which is converted into garments for those customers. There is essentially no difference in the two activities. We think this case is covered by the decision in the case of Kalsi Tyre (Pvt.) Ltd....