THE COMM. OF INCOME TAX vs. REDIFFUSION ADVERTISING P LTD
What did the High Court hold?
The High Court held that the issue was squarely covered by the Supreme Court's decision in Commissioner of Income Tax v. Shilpi Advertising Ltd. (2003) 263 I.T.R. 479. In that case, the Supreme Court had ruled that an advertising agency could be considered an 'industrial company' for the purpose of concessional rates of tax under the Finance Act. The High Court noted that the ITAT's earlier finding, which was relied upon, stated that the transition of advertising ideas into visual or audio-visual material through modern technology and equipment involves manufacture and processing of goods to a considerable extent. Therefore, the assessee advertising agency could legitimately claim to be engaged in manufacture or processing of goods within the meaning of Section 2(7)(c) of the Finance Act, 1978. The Court found no reason to interfere with the ITAT's order. Consequently, the Rule was discharged, and the application was disposed of.
What were the facts?
The Commissioner of Income Tax (the petitioner) filed an application before the Bombay High Court challenging an order of the Income Tax Appellate Tribunal (ITAT). The application pertains to assessment year 1980-81. The ITAT, in its order dated September 17, 1988, had held that the assessee, Rediffusion Advertising Pvt. Ltd. (the respondent), should be treated as an Industrial Company. This decision was based on the ITAT's own prior findings for assessment years 1982-83, 1983-84, and 1984-85, where the assessee was similarly classified. The ITAT reasoned that the process of transforming advertising ideas into visual or audio-visual material using modern technology and equipment involves a considerable extent of manufacture and processing of goods.
What were the issues?
1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the assessee should be granted status as an Industrial Company? (Question of law and fact, concerning the definition of 'Industrial Company' under the Finance Act, 1978, specifically Section 2(7)(c)). Assessee's Contentions: The assessee contended that the ITAT's decision was correct. They relied on the ITAT's own previous orders for assessment years 1982-83, 1983-84, and 1984-85, which classified them as an Industrial Company. Furthermore, the assessee's counsel pointed to the Supreme Court's decision in Commissioner of Income Tax v. Shilpi Advertising Ltd. (2003) 263 I.T.R. 479, which held that the respondent company therein, also an advertising agency, was an 'industrial company' for concessional tax rates. Revenue's Contentions: The judgment does not explicitly record any specific arguments made by the revenue's counsel against the assessee's classification as an industrial company, other than the general implication of challenging the ITAT's order.
Which sections of the Income-tax Act were involved?
2(7)(c)
AI-generated summary — verify with the full judgment below
IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION INCOME TAX APPLICATION NO.88 OF 1999 INCOME TAX APPLICATION NO.88 OF 1999 INCOME TAX APPLICATION NO.88 OF 1999 The Commissioner of Income tax ..Petitioner. V/s. Rediffusion Advertising Pvt. Ltd. ..Respondent. Mr.P.S. Sahadevan for petitioner. Mr.Percy Pardiwalla i/b. M/s.Matabhai Janietram for respondent. CORAM : DR. S.RADHAKRISHNAN AND CORAM : DR. S.RADHAKRISHNAN AND CORAM : DR. S.RADHAKRISHNAN AND J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ.
DATED : 6TH MARCH, 2007. DATED : 6TH MARCH, 2007. DATED : 6TH MARCH, 2007. ORAL JUDGMENT (PER DR.S.RADHAKRSIHNAN, J.) ORAL JUDGMENT (PER DR.S.RADHAKRSIHNAN, J.) ORAL JUDGMENT (PER DR.S.RADHAKRSIHNAN, J.) Heard the learned counsel for the petitioner and the respondent. The above application was admitted on the following question of law:-
" Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the assessee should be grated as an Industrial Company ? " 2. The above application pertains to assessment year 1980-81. 3. The Tribunal in its order dated 17th September, 1988 has relied on the orders with regard to the assessee’s own case for the assessment years CNR No : HCBM020027291999 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:56:01
- = : 2 : = - 1982-83, 1983-84 and 1984-85 wherein the assessee was treated as an Industrial Company. In the earlier order the finding recorded is as follows:-
" In our view, transition of advertising ideas, concepts into visual or audio visual material by application of modern technology and equipment involves manufacture as well as processing of goods to a considerable extent. Although, as contended on behalf of the Department, the Advertising agency may not sell such products as such, it derives its income from the appropriate display or exhibition and propagation of such material. The assessee advertising agency can, therefore, legitimately claim to be engaged in manufacture or processing of goods within the meaning of section 2(7) (c) of the Finance Act, 1978 ? " 4. The learned counsel for the respondents also states that with regard to another Advertising agency namely in the case of Commissioner of Income Tax V/s. Commissioner of Income Tax V/s. Commissioner of Income Tax V/s. Shilpi Advertising Ltd. Shilpi Advertising Ltd. Shilpi Advertising Ltd. reported in (2003) 263 I.T.R. (2003) 263 I.T.R. (2003) 263 I.T.R. 479 479 479 it was held by the Supreme Court that the respondent Company therein to be an "industrial company" for the purpose of concessional rate of tax under the Finance Act. In view thereof, the issue is squarely covered by the above Judgment. Hence Rule stands discharged. 5. Application stands disposed of. (DR.S.RADHAKRISHNAN, J.) (DR.S.RADHAKRISHNAN, J.) (DR.S.RADHAKRISHNAN, J.) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:56:01
- = : 3 : = - (J.P. DEVADHAR, J.) (J.P. DEVADHAR, J.) (J.P. DEVADHAR, J.) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:56:01 Powered by TCPDF (www.tcpdf.org)
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