Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, made at the instance of the assessee, the following questions have been referred to this court : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the company was not an industrial company mainly engaged in manufacture of goods Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the rate of income-tax applicable to the company will be that applicable to a non-industrial company ?"
(2.) This reference relates to the income-tax assessment of the assessee-company for the previous year ending on October 26, 1981, corresponding to the assessment year 1982-83. The assessee-company runs a five-star hotel in Calcutta styled "Hotel Hindusthan International". The only issue involved in this reference relates to the rate of income-tax chargeable on the total income of the assessee-company for the year under reference. The Income-tax Officer charged tax at 65 per cent. by treating the assessee as a non-industrial company. This order was confirmed in appeal by the Commissioner of Income-tax (Appeals) as well as by the Tribunal. The case of the assessee is that it is an industrial company and it should be charged to tax at 60 per cent. which is applicable to an industrial company under the Finance Act, 1982. At the outset, we would like to mention that this court has considered the case of the assessee-company in the context of its claim for investment allowance under Section 32A of the Income-tax Act, 1961, in respect of the assessment year 1981-82. There the question was whether the Tribunal was justified in law in holding that preparation of food in the hotel constituted manufacture or production of any article or thing within the meaning of Section 52A of the Income-tax Act, 1961, and in that view whether the assessee was entitled to get investment allowance under that section. This court held that an assessee who claims investment allowance under Section 32A of the Income-tax Act, 1961, has to be an industrial undertaking carrying on the business of manufacture or production of any article or thing. The business of a hotel is distinct and separate from an industrial undertaking manufacturing or producing articles. Though a hotel also produces eatables from raw materials, such manufacturing or producing of goods that may be involved therein is only incidental or ancillary to the business of hotel running. There is no scope for separation of the integrated activity of the industrial undertaking and treating any part thereof as an activity of the nature referred to in Section 32A. Therefore, this court held that preparation of food in a hotel does not constitute manufacture or production of any article or thing within the meaning of Section 32A of the Act and the assessee running the hotel is not entitled to investment allowance under the said section. The decision of this court in CIT v. S.P. Jaiswal Estates (P.) Ltd. has since been reported in [1992] 196 ITR 179.
(3.) Having regard to the decision of this court in the assessee's own case for the assessment year 1981-82, there would have been no difficulty in answering the first question in the affirmative and against the assessee, but on a reading of the statement of the case as sent by the Tribunal as well as the orders of the Tribunal, it appears to us that the real controversy involved in this case in relation to the assessment year 1982-83 is not whether the assessee-company could be said to have been engaged in the manufacture of goods ; but the controversy is whether the assessee could be said to be an industrial company or not for the purpose of determining the rate of taxes applicable to it under the relevant Finance Act, 1982. Therefore, it is necessary to reframe question No. 1 as under : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee-company was not an industrial company";