D.R. Dhanuka, J.
1. The Income-tax Appellate Tribunal, Bombay Bench 'A', has referred the following questions to this court under section 256(1) of the Income-tax Act, 1961 :
' (1) Whether, on the facts and in the circumstances of the case and having regarding to the activities of the assessee-company, it could be held that the assessee-company was a manufacturer of the articles in question
(2) Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the assessee-company was in 'industrial company' entitled to the concessional rate of tax applicable to that class of assessees under Paragraph 'F' of Part I of the First Schedule to the Finance Act, 1969?'
2. Relevant portion of section 2(6) (c) of the Finance Act, 1969, defines the expression 'industrial company' for the purpose of the said Act as under (See [1969] 72 ITR 22) :
'Industrial company' means a company which is mainly engaged in the business of generation or distribution of electric or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining :.
3. It is necessary to state the material facts as found by the Income-tax Appellate Tribunal before the questions referred to us are considered. The relevant facts, in brief, are as under :
The assessee-company is a limited liability company carrying on business as stated hereinafter. The relevant previous year ended on June 30, 1968. At all material times, the assessee-company had only two shareholders, namely, (1) Hindustan Construction Company Limited, and (Acrow Engineering Limited of London. The assessee-company was incorporated for manufacturing steel scaffolding structural props and other building construction equipment. For carrying out the said object, the assessee-company entered into a written agreement with Vikhroli Metal Fabricators Limited, a fully owned subsidiary company of Hindustan Construction Co. Ltd., on December 18, 1962. Under the said agreement, the assessee agreed to place all orders for the production of different articles with Vikhroli Metal Fabricators. The assessee agreed to provide Vikhroli Metal Fabricators Limited with all drawings necessary for the fabrication of various components and their assembly for supplying complete specification of the materials to be used and finished products to be manufactured. The assessee agreed to provide detailed written instructions to Messrs. Vikhroli Metal Fabricators for various process of manufacture and assembly. The assessee agreed to supply machinery, jigs and tools free on board not exceeding Rs. 3,25,000 to the contractor. The said agreement clearly provided that the assessee was obliged to provide machinery, drawings, specifications and instructions relating to manufacture of the said over the manufacturing process undertaken by Messrs. Vikhroli Metal Fabricators Limited. It was specifically provided by the said agreement that the assessee shall be responsible for supply of all the raw materials required and the assessee shall accept the finished goods only after a final inspection. The assessee reserved to itself the right to inspect the manufacturing process, etc. The assessee did not depute its own staff to work in the factory of Vikhroli Metal Fabricators.
4. The assessee employed Messrs. Vikhroli metal Fabricators as their contractors. In substance and reality, the assessee was engaged in manufacturing activity with the assistance of Messrs. Vikhroli Metal Fabricators.
5. The question before the assessing authorities was whether the assessee was engaged in manufacturing or processing of goods and whether the assessee was liable to be treated as an 'industrial company' within meaning of the said expression as defined in the relevant Finance Act. The Income-tax Officer rejected the assessee's claim to its status as an industrial company within the meaning of the said expression as defined in the relevant Finance Act. The Appellate Assistant Commissioner held that the assessee accepted the claim of the assessee. The Income-tax Appellate Tribunal recorded the following findings of fact :
(1) The plant and machinery for fabrication was supplied by the assessee-company.
(2) The raw materials were mostly supplied by the assessee-company.
(3) The technical know-how was made available by the assessee through the assistance of Acrow Engineering Limited of London.
(4) Vikhroli Metal Fabricators Limited acted more or less as labour contractors for the assessee.
(iv) Having regard to the above findings of fact and the terms and conditions of the agreement dated December 18, 1962, the Tribunal held that the assessee was an 'industrial company'. The Tribunal has taken a similar view in the case of the assessee itself in the appeal arising from assessment pertaining to the assessment year 1965-66.
6. Mr. Jetley, learned counsel for the Revenue, has fairly invited our attention to the judgment of our High Court in the case of CIT v. Neo Pharma Pvt. Ltd. : [1982]137ITR879(Bom) . In this case also, the question before the court was whether the assessee was an 'industrial company' within the meaning of the said expression, as defined in the Finance Act, 1965, and whether the assessee was, therefore, entitled to concessional rate of tax. It was held by our court that the assessee need not manufacture the goods and articles in question by itself and even if the assessee got the same manufactured through some other party, it could be held, if the facts so warranted, that the assessee was engaged in the business of manufacturing goods and was, therefore, an industrial company. In the aforesaid case, it was held by the court that although the plant and machinery employed for the purpose of manufacturing belong to Pharma and the services of certain employees of Pharma were also utilised in that process, the manufacturing activity was really that of the assessee. While deciding this case, our High Court relied upon several judgments of the High Court of Calcutta referred to in this case and particularly its judgment in Addl. CIT v. A.M. Mukherjee and Co. (p.) Ltd. : [1978]113ITR718(Cal) . In the Calcutta case, the assessee-company carried on the business of publishing books. It was held by the High Court of Calcutta that the assessee was a manufacturing or industrial company although it did not own a printing press and it got the books printed somewhere else. By its Circular No. 347 dated July 7, 1982 (see [1982] 137 ITR 14), the Central Board of Direct Taxes accepted the above-referred decision. In a given case, the assessee may exercise direct supervision over the process of manufacture by deputing its staff at the factory and paying their wages. In another case, the assessee may exercise similar supervision by issuing written instructions to the contractor and by supplying drawings and specifications and inspecting the manufacturing process from time to time. In substance, the relevant test is satisfied although the facts of one case are not identical with the facts of the above-referred case.
7. Mr. Jetley, learned counsel for the Revenue, also relied upon the judgment of the High Court of Delhi in the case of CIT v. Minocha Brothers P. Ltd. : [1986]160ITR134(Delhi) . In this case, the assessee was engaged in the business of construction of buildings and the question before the court was whether the assessee could be considered as a company engaged in manufacture of goods and thus an 'industrial company'. It was held by the High Court of Delhi that the assessee in that case not an industrial company and was not entitled to facility of tax at the concessional rate. In our judgment, this case is clearly distinguishable and is of no assistance to us. It is obvious that the business of constructing building cannot be considered as a business of manufacturing articles or goods.
8. Mr. Jetley also relied upon the judgment of our High Court in the case of CIT v. Oricon Pvt. Ltd. : [1989]176ITR407(Bom) . In this case also, the assessee-company used to carry on the business of construction and repair of buildings. The assessee, incidentally, manufactured windows and doorframes as well as concrete beams and slabs for the purpose of construction and repair of buildings. It was held by our High Court in this case that the assessee could not be considered as an industrial company. In CIT v. Shah Construction Co. Ltd. [1983] 142 ITR 696, this court held that an activity of construction and repair of buildings could not be considered as an activity of manufacture of goods. In our judgment, the above cases cited by learned counsel for the Revenue are not relevant for the consideration of the questions referred to us.
9. Mr. Jetley has also relied upon the judgment of the High Court of Kerala in the case of CIT v. Rajmohan Cashews (P.) Ltd. : [1990]185ITR472(Ker) . In this case, the Income-tax Tribunal had, inter alia, held as under (at p. 273) :
'... An activity of 'manufacture or processing' could be carried on by an assessee either with plant and machinery belonging to other by paying the necessary charges for the use of such plant and machinery.'
10. The above view of the Tribunal found favour with the High Court of Kerala. In the above-referred Kerala case, it was held by the court that the assessee was an industrial company since the manufacturing process was undertaken by the outside agency for and on behalf of the assessee. In this case, there is enough material to show that the assessee has engaged the services of Vikhroli Metal Fabricators Limited for the fabrication of the goods and things mentioned in the said agreement under its supervision and control with the help of technical know-how supplied by the assessee. The assessee also supplied all the raw materials to the contractor. The all practical purposes, this case is on all fours with the case decided by our High Court in the case of CIT v. Neo Pharma Pvt. Ltd. : [1982]137ITR879(Bom) .
11. Neither learned counsel has been able to tell us as to what happened in the reference arising from the decision of the Income-tax Tribunal in ITA No. 3299 of 1967 (assessment year 1965-66). It appears that, during this year also, the Tribunal held that the assessee was an industrial company within the meaning of the said expression as defined under the Finance Act and was, therefore, entitled to the benefit of concessional rate of tax. We have decided the reference on its own merits.
12. We, therefore, hold that the assessee was rightly held to be an industrial company and that the decision of the Tribunal in this behalf is correct. The assessee is thus liable to be considered as an industrial company under the relevant Finance Act.
13. We answer question No. 1 in the affirmative and in favour of the assessee. We answer the second question in the negative and in favour of the assessee. No order as to costs.