| Case ID |
00d28c1e-6013-4f94-b468-7750aacc5c1c |
| Body |
View case body. Login to View |
| Case Number |
IT REFERENCE NO. 139 OF 1977 |
| Decision Date |
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| Hearing Date |
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| Decision |
The Delhi High Court ruled that the activity of tailoring clothes to the order of customers constitutes 'manufacturing or processing of goods' under section 2(6)(d) of the Finance Act, 1968. The court found that there is no essential difference between making readymade garments from the company's own cloth and tailoring garments from customers' cloth. Both activities involve the conversion of cloth into garments, thus qualifying the company as an industrial company under the Act. The decision overturned the previous ruling by the Tribunal, which had held that tailoring did not constitute manufacturing. |
| Summary |
In the landmark case of Nu-Look (P.) Ltd. v. Commissioner of Income Tax, the Delhi High Court addressed the question of whether the tailoring of clothes for customers qualifies as manufacturing under the Finance Act, 1968. The court analyzed the definitions and criteria for classifying a company as an industrial entity, particularly focusing on the requirement that at least 50% of profits must derive from manufacturing or processing activities. The court concluded that the tailoring services provided by the company, which involved converting customers' cloth into garments, are indeed a form of manufacturing. This ruling is significant for companies engaged in similar businesses, as it clarifies the legal interpretation of manufacturing activities, potentially affecting tax obligations and classifications under the Finance Act. The case also highlights the importance of understanding how different activities within a business can be evaluated under tax law, impacting both compliance and financial strategy. Keywords such as 'manufacturing definition', 'tax law', and 'industrial company classification' are crucial for SEO in this context. |
| Court |
Delhi High Court
|
| Entities Involved |
Not available
|
| Judges |
D.K. Kapur,
S. Ranganathan
|
| Lawyers |
Anoop Sharma,
R.K. Raghavan,
K.K. Wadhera,
D.C. Taneja
|
| Petitioners |
Nu-Look (P.) Ltd.
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| Respondents |
Commissioner of Income Tax
|
| Citations |
1986 SLD 1353,
(1986) 157 ITR 253
|
| Other Citations |
Addl. CIT v. Kalsi Tyre (P.) Ltd. [1981] 131 ITR 636 (Delhi),
CIT v. Ajay Printery (P.) Ltd. [1965] 58 ITR 811 (Guj.),
CIT v. Casino (P.) Ltd. [1973] 91 ITR 289 (Ker.),
Addl. CIT v. A. Mukherjee & Co. (P.) Ltd. [1978] 113 ITR 718 (Cal.),
CIT v. N.U.C.P. Ltd. [1980] 126 ITR 377 (Bom.),
Orient Longman Ltd. v. CIT [1981] 130 ITR 477 (Delhi)
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| Laws Involved |
Finance Act, 1968
|
| Sections |
2(6)(d)
|