TaxTMI 
TaxTMI 
2007 (7) TMI 297
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....bunal was right in not following the judgment in the case of CIT v. Western India Pharmaceutical Services P. Ltd. [1998] 230 ITR 96 wherein it was held by the Bombay High Court that the activity of printing manufacturer name on pharmaceutical capsules will not amount to manufacture ?" 2. The facts leading to the above substantial questions of law are as under : The assessee is a widely held public limited company and is engaged in the construction and promotion of a five star hotel project. The hotel project has not commenced its business activity during the year. The assessee-company, however, derived income from various other units and divisions by selling IMFL, beer, steel and labels. The relevant assessment year is 1999-2000 and the corresponding accounting year ended on March 31, 1999. The assessee filed its return of income on December 30, 1999, admit-ting income of Rs. 3,07,55,690. The return of income was processed under section 143(1)(a) of the Income-tax Act ("the Act" in short) on March 31, 2000. Later, notice was issued under section 143(2) of the Act. During the year, the assessee reported an income of Rs. 1,55,20,243 from its printing unit at Pondicherry a....
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....cherry, has issued the licence in No. 39/95/VCP on April 25, 1995, to the assessee-company for manufacture of printed paper label. The Government of Pondicherry, Industries Department has issued a certificate on June 10, 1996, to the effect that the assessee-company is a medium scale unit set up at B-20 and 34, Industrial Estate, Sedarapet, Pondicherry, for the manufacture of printed paper labels. Further, it has granted exemption from the payment of CST/PGST for a period of five years with effect from January 19, 1995. The Factory Inspectorate, Pondicherry, has issued registration and licence to the assessee-company to work as factory, vide their letter in No. 6247/ 4976 during February, 1996. The printing unit of the assessee-company is mainly engaged in the manufacture of printed paper labels. The assessee-company uses paper, ink, fountain solution and varnish as raw materials and transforms them into printed labels, books and pamphlets, depending on the nature of the order. The raw materials mentioned above are converted into different and distinct commercial products. The word "manufacture" has not been defined in the Income-tax Act. The word "manufacture" has been defined in ....
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....nd residual products which emerge in the course of manufacture of goods." 6. In the case of CIT v. Tara Agencies [2007] 292 ITR 444, the Supreme Court considered the scope, distinction and the meaning of the words "manufacture", "production" and "processing" by considering its various earlier decisions. In the present case, the assessee produces printed paper labels which is recognised in the trade as a new and distinct commodity. The raw materials required for producing these printed paper labels are paper rolls, inks, fountain solution and varnish. Out of these raw materials, the assessee produces new and different article, namely, labels. The raw materials and the end product are different and distinct and the end product was also sold to various parties and the entire sales were exempt from sales tax for a period of five years. The land allotted by the Pondicherry Industrial Estate is only for setting up a factory for manufacture of the printed labels. The relevant provision of the Act as on the relevant period reads as under : "80-IA. Deduction in respect of profits and gains from industrial undertakings, etc., in certain cases.- . . . (2) This section applies to any ....
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.... would have any commercial value would be the finished product, namely, the balance-sheet or the profit and loss account, the share certificate, the pamphlet, etc. Considering the consistent view that has been adopted by the various High Courts while deducing the meaning of the word 'manufacture' or 'manufacturer' and the object with which Explanation 2 has been inserted in section 23A of the Act, we are of the view that the business carried on by the respondent-company of printing balance-sheets, profit and loss accounts, dividend warrants, pamphlets, share certificates, etc., required by the textile mills referred to in the statement of the case and other textile mills would be a business which consists wholly of manufacture and, therefore, clause (ii) of Explanation 2 to section 23A would apply in the present case. The Calcutta case in Sati Prasanna Mukherjee v. Md. Fazel, AIR 1952 Cal 320, had a different problem and cannot apply. In our view, the construction placed upon clause (ii) of Explanation 2 by the Tribunal was correct." Having regard to the fact that the assessee has fulfilled the conditions prescribed under sub-section (2)(iii) of section 80-IA of the Act, whic....
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....garded as the business of processing goods within the meaning of clause (c) of sub-section (9) of section 2 of the Finance Act, 1976, and a company engaged in such activity cannot be regarded as an 'industrial company'. In our view, by printing of manufacturers' names on the pharmaceutical capsules cannot be regarded as processed. In fact, the pharmaceutical capsules do not undergo any 'process' whatsoever in the course of printing of the manufacturer\qs name thereon. The capsules remain in the same condition. There is no alteration in the nature and character thereof. Moreover, the expression 'processing' appears in the definition of 'industrial company' with the expression 'manufacture'. The full expression is 'engaged in the business of manufacture or processing of goods'. The expression 'processing' has not been defined. It is, therefore, to be interpreted in a practical and workable manner in the context and setting in which it appears. That can be done by applying the doctrine of noscitur a sociis by reference to the words, phrases or expressions associated with it, which in the instant case is 'manufacture'. So construed, for the purpose of the definition of 'industrial comp....