1983 (12) TMI 11

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....ithin the meaning of section 2(8)(c) of the Finance Act, 1975 ? " The assessee is a private limited company. For the assessment year 1975-76, it had income from departmental stores, bakery, restaurant and bar. Its total income for the year was Rs. 3,88,333 out of which a sum of Rs. 1,69,428 was attributable to the bakery and an income of Rs. 72,807 was attributable to the restaurant. If the latter two sums are taken together, it would exceed more than 51 percent. of the total income of the company. The assessee made that claim so as to be considered as an industrial company for the purpose of getting the benefit of concessional rate of tax. Section 2(8) of the Finance Act, 1975, provides for rates of levy of tax in respect of the differen....

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....pply of vegetarian and non-vegetarian dishes in a hotel could be considered as processing of goods. Being dissatisfied with the order of the AAC, the Department appealed to the Tribunal. The Tribunal accepted the appeal and held that the restaurant section cannot be considered as a manufacturing or processing unit. The Tribunal, while reaching the conclusion, relied upon the decision of the Kerala High Court in CIT v. Casino Pvt. Ltd. [1973] 91 ITR 289, in which an identical question was considered and determined against the assessee therein. The Tribunal, accordingly, reversed the order of the AAC and restored the assessment order. The controversy raised in this case lies in a narrow compass. It primarily relates to the nature of the acti....

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....ch they originally existed, the actual operation incident to changing them into marketable products. " In Union of India v. Delhi Cloth and General Mills, AIR 1963 SC 791 at page 794, the Supreme Court observed (p. 794): " `The word 'manufacture ' used as a verb is generally understood to mean as 'bringing into existence a new substance' and does not mean merely 'to produce some change in a substance,' however minor in consequence the change may be. This distinction is well brought about in passage thus quoted in Permanent Edition of Words and Phrases, Vol. 26, from an American judgment. The passage runs thus: `Manufacture' implies a change, but every change is not manufacture and yet every change of an article is the result of treatm....

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....ich comes into existence after the manufacturing process is complete should have a different name and should be put to a different use. In other words, the commodity should be so transformed so as to lose its original character." The processing has in one sense a wider meaning than the term "manufacture ". At some point, " processing " and " manufacturing " may merge, but where the commodity retains a substantial identity through the processing stage, it will be said to have been processed and not manufactured. In a manufacture, a commodity undergoes a change as a result of some operation. It should be so transformed as to lose its original character. A manufacture may involve several processes but the ultimate product that emerges can ....