Sabyasachi Mukharji, J. - (1.) This is a reference under Section 256(1) of the I.T. Act, 1961. The Tribunal has referred the following question to this court: "Whether, on the facts and in the circumstances of the case, the assessee is an 'industrial company' in terms of Clause 2(7)(c) of the Finance Act, 1978?"
(2.) The assessment year involved is 1978-79, for which the previous year ended 30th April, 1978. The assessee in this year, as in the past, carried on the business of purchasing tea of different qualities in auction, blending the same by mixing one type of tea with another and then selling the tea so blended in packets. It appears that the assessee in the course of its assessment had claimed that by carrying on the above business it was an "industrial company" in terms of Section 2(7)(c) of the Finance Act, 1978, and so it was entitled to the concessional rate of tax allowed to such a company. In order to appreciate the contentions, it would be necessary to refer to the relevant sections of the Finance Act of the year 1978. The Finance Act provides the definition as follows': "'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 goods or in mining."
(3.) Though the Explanation thereto is not relevant for our present purpose, it is necessary to refer to the Explanation because it being one of the subjects for consideration by the Kerala High Court that decision would be better understood if the Explanation is kept in view. The Explanation reads as follows : "Explanation.--For the purposes of this clause, a company shall be deemed to be 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 goods or in mining, if the income attributable to any one or more of the aforesaid activities included in its total income of the previous year (as computed before making any deduction under Chapter VIA of the Income-tax Act) is not less than fifty-one per cent. of such total income.";