| Case ID |
22bcaaf9-de1f-4fe4-af54-98fda46582fa |
| Body |
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| Case Number |
IT REFERENCE No. 44 OF 1974 |
| Decision Date |
Oct 03, 1983 |
| Hearing Date |
|
| Decision |
The court ruled that merely because the assessee had given sub-contracts for a part of the work, it would not lose its character of being an industrial company. The assessee was chargeable to tax at the lower rate applicable to industrial companies. The decision highlighted that a construction company can retain its status as an industrial company even if it sub-contracts portions of its work. The judgment emphasized that the essence of industrial activity is not diminished by the outsourcing of certain tasks, thereby reaffirming the principle that a company engaged in the processing of goods is entitled to lower tax rates if it meets certain criteria. |
| Summary |
In the landmark case of Commissioner of Income Tax v. Oricon (P.) Ltd., the Bombay High Court addressed the issue of whether a construction company could maintain its status as an industrial company when it sub-contracts parts of its work. The court concluded that the mere act of sub-contracting does not automatically disqualify a company from being classified as an industrial entity. The ruling is significant for businesses in the construction sector, as it clarifies the criteria for industrial company designation under the Finance Act, 1969. This case serves as a precedent for future tax assessments and emphasizes the importance of operational activities over contractual arrangements. The case is particularly relevant for tax professionals and companies in the construction industry, providing clarity on tax rates and compliance requirements, which could lead to better financial planning and resource management. |
| Court |
Bombay High Court
|
| Entities Involved |
Oricon (P.) Ltd.
|
| Judges |
S.K. Desai,
Sp. Bharucha
|
| Lawyers |
RJ. Joshi,
H.K. Sajnani,
Miss S.G. Shah,
V.H. Patil,
l.M. Munim,
S.J. Mehta
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Oricon (P.) Ltd.
|
| Citations |
1985 SLD 938,
(1985) 151 ITR 296
|
| Other Citations |
CWT v. K. Lakshmi [1983] 142 ITR 656 (Mad.),
CIT v. Shah Construction Co. Ltd. [1983] 142 ITR 696 (Bom.),
CIT v. N.U.C. (P.) Ltd. [1980] 126 ITR 377 (Bom.)
|
| Laws Involved |
Finance Act, 1969
|
| Sections |
2(6)(c)
|