OBEETEE P LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a limited company and derives income from manufacture and processing of carpets. For the assessment years 1966-67 and 1967-68 the ITO taxed the income at 65 per cent. when he completed the original assessment. THE assessee went up in appeal. It also made an application before the ITO under Section 154 of the I.T. Act on December 3, 1968, claiming that it was an industrial company in which the public are not substantially interested and it was liable to be taxed at fifty-five per cent. instead of sixty-five per cent.

(2.) THE AAC granted certain reliefs to the assessee in the appeals preferred by it. THE ITO, while revising his assessment orders pursuant to the order of the AAC, calculated tax at the rate of 55 per cent. Subse- quently, he issued a show-cause notice under Section 154 for rectification of the mistake on the ground that the tax should have been charged at sixty-five per cent.

(3.) THERE is no dispute that the assessee-company derives its income from the manufacture and processing of carpets. In its application under Section 154 the assessee claimed to be an industrial company with an income below rupees ten lakhs and prayed for rectification of the assessment order by taxing the income at the rate of 55% instead of 65%. In response to the notice issued by the ITO under Section 154 the same stand was taken. The relevant and material portion of Clause (d) of Section 2(7) which defines an " industrial company " is as follows :