judgement:
Appeal No. 1661 of 1990.
From the Judgment and Order dated 26.10.
1989 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No.
CD/SB/A No. 424 of 1983(A) in Order No. 729/89 A. H.N. Salve, Ms. Meenakshi Arora, Ms. Ayesha Khatri, Ms. Shirin Jain and Ms. Indu Malhotra for the Appellant.
KTS Tulsi, Additional Solicitor General, A.S. Rao and p. Parmeshwaran for the Respondent.
The Judgment of the Court was delivered by FATHIMA BEEVI, J.
The appellant is a federation of glass manufacturers in India.
The Federation entered into a contract with M/s. Magadi Soda Company Ltd., Kenya, for supply of 5000 metric ' tomes of soda ash dense at the rate of US $ 155 per metric tome c.i.f. Bombay.
The consignment arrived from Mombasa, Kenya on 23.12.
198 1.
The goods were cleared on payment of customs duty of 516 Rs.32, 15,904.21 from Bombay.
The appellant on distribution of the goods to various members of the federation, received complaints that the soda ash which had been supplied was of sub standard quality. 'The sellers M/s. Crescent Dyes & Chemicals as well as their agents were approached.
They sent a team of experts to examine the goods.
The inspection confirmed that the goods were defective.
As per agreement dated 9.2.
1982, M/s. Crescent Dyes & Chemical sent a Credit note of US $ 2,40,000 as compensation on account of the defective goods sent by M/s. Magadi Soda Company Ltd. The amount remitted on account of the import made was only US $ 5,35,000 as against the earlier contracted amount of US $ 7,75,000.
In view of such reduction, the appellant filed a refund application before the Customs Department to the tune of Rs.9.95,892.65.
The Assistant Collector was not satisfied as to the extent of deterioration of the goods before clearance as provided by Section 22 of the and rejected the refund application vide order dated 19.7.1982.
The appeal preferred against the order dated 19.7.1982 was rejected by the Collector of Customs on 23.12.
1982 on the reasoning that the damage was discovered after the goods were out of customs control.
The further appeal to the Tribunal was also unsuccessful.
The Tribunal by the order dated 26.10.
1989 held that the alleged inferior nature of goods was discovered after clearance.
This appeal is filed under Section 130E of the against the order of the Tribunal dated 26.10.
The question involved in the present appeal is whether the appellant is entitled to the refund of customs duty on account of the compensation given by the seller to the appellant on supply of goods?The appellant who imported the goods detected defects and the foreign supplier accepted the defects and damages and agreed for payment of compensation.
According to the appellant, goods supplied were not in accordance with the contractual specification.
The defects 'being inherent in nature resulted in diminution in the real value of the goods and what had been agreed upon by the foreign seller is reduction in price on account of these defects.
The appellant claimed that it would be entitled to refund of customs duty under Section 22 of the Act for reasons set out thus.
The value to be assessed under Section 14 of the Act is the real price at which goods imported are ordinarily sold at the time and place of importation and not the price erroneously indicated 517 by the seller at the time of filling the bill of entry.
The buyer who successfully sets up diminution of price on ac count of breach of warranty, which claim is accepted by the seller, can seek refund or adjustment in the customs duty payable where the duty has been paid erroneously on the full price prior to such diminution.
The claim under Section 22 of the Act would be maintainable where imported goods were defective and had deteriorated in quality even prior to the import when the assessment has to be on the basis of the real value of goods.
The contract dated 30.9.1981 is for the supply of 5000 metric tonnes of soda ash dense.
The complaint was that the sodium carbonate content was less than the specified 97%, that there was moisture in the soda ash dense supplied and hence it had turned lumpy.
M/s. Crescent Dyes & Chemicals Ltd. was the agent of the seller M/s. Magadi Soda Company Ltd. The consignment.
arrived in Bombay sometime in Decem ber, 1981.
The appellants filed their bill of entry with the customs and the goods were cleared on payment of customs duty of Rs.32,15,904.21, on 28.12.
the complaint about damage and deterioration was made long after clearance.
The team of experts examined the goods and confirmed the de fects.
The customs authorities were not associated with such inspection.
It is maintained by the appellant that the credit received was recorded in the letter dated 15.3.
1982 and the letter indicated that the amount remitted on account of the import made was only US $ 5,35,000.
The reduction in the amount remitted was to the extent of US $ 2,40,000.
The appellant claimed that on account of the reduction in the value of the consignment, the appellant is entitled to refund of customs duty proportionately.
The Collector of Customs pointed out that: "The duty is leviable on the basis of the value of the such or like goods at the time of clearance.
It has not been proved that the alleged defect on account of which the price has been reduced was present in the goods at the time 01 clearance.
At least some of the defects of the type pointed out, viz., the lumpy character, are such as could develop due to exposure to moisture etc.
during the period the goods were out of customs.
In any case, the customs were not associated even with the post clearance examination.
Any alleged reduc tion in value on the basis of a postclearance agreement between the buyer and the supplier or 518 some alleged grounds which the customs had no chance to verify ' prior to clearance is fraught with great risks to Revenue.
(emphasis supplied) According to the appellant, this reasoning is wrong.
The appellant stated that most of the defects were due to non adherence to specification provided under the contract.
The defects being inherent in character, the appellant could not have known about the same at the time of clearance of the consignment from customs.
The ground of deterioration of goods was not relevant as the claim for refund was based on the ground of diminution in value of the goods as the same were not as per the standard contracted for.
The assessable value of the goods under Section 14 of the Act is the price at which such goods were actually sold in the course of international trade.
It is the real price of the goods actually imported which is ordinarily the basis for assessa ble value.
Where goods do not conform to the description or stipulation as to quality or fitness, it is open to the buyer to treat the defect as a breach of warranty.
It is also open to the buyer to set up against the seller the breach of warranty in diminution of the price.
It is the diminished price which will be the real price of the goods and not the price claimed by the buyer initially which is reflected as c.i.f. value on the invoice.
Customs duty paid on the c.i.f. value is a duty paid under mistake of fact.
At the time of clearance of goods, the buyer did not have any knowledge of the defects in the goods.
Where defect which constitutes a breach of warranty and which the buyer elects to treat as a breach of warranty became apparent and ulti mately culminated in diminution of price, it would be open to the buyer to claim refund of the customs duty paid under mistake of fact.
It is not relevant as to when the defect became apparent to the buyer.
The fact that the documents proving the true and real value of the goods were not in existence at the time when the goods were cleared from the customes is wholly irrelevant This in short, is the argu ment advanced on behalf of the appellant.
Duties of customs shall be levied under Section 12 at such rate as may be specified under the Customs Tariff Act or any other law for the time being in force on goods im ported into or exported from India.
Section 14 of the Cus toms Act provides that value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation in the course of international trade.
Such price shall be calculated with reference to the rate of exchange as in force on the date on which 519 a bill of entry is presented under Section 46.
The duty is ordinarily chargeable with reference to the tariff value in the case of goods entered for home consumption on the date on which the bill of entry in respect of such goods is presented.
Section 22 provides for payment of duty on damaged or deteriorated goods.
It reads thus: "22.
Abatement of duty on damaged or deterio rated goods.
(1) Where it is shown to the satisfaction of the Assistant Collector of Customs (a) that any imported goods had been damaged or had deteriorated at any time before or during the unloading of the goods in India; or (b) that any imported goods, other than ware housed goods, had been damaged at any time after the unloading thereof in India but before their examination under Section 17, on account of any accident not due to any wilful act, negligence or default of the importer, his employee or agent; or (c) that any warehoused goods had been damaged at any time before clearance for home consump tion on account of any accident not due to any wilful act, negligence or default of the owner, his employee or agent; such goods shall be chargeable to duty in accordance with the provisions of sub section (2).
(2) The duty to be charged on the goods re ferred to in sub section (1) shall bear the same proportion to the duty chargeable on the goods before the damage or deterioration which the value of the damaged or deteriorated goods bears to the value of the goods before the damage or deterioration.
" Where it is shown to the satisfaction of the Assistant Collector that any imported goods have been lost or de stroyed at any time before clearance for home consumption.
the Assistant Collector of 520 Customs shall remit the duty on such goods.
The period of six months has been prescribed under Section 27 to claim refund of duty paid with protest.
Refund is allowed when the Assistant Collector of Customs is satisfied that the whole or any part of the duty paid should be refunded.
No claim for refund of any duty shall be entertained except in ac cordance with the provisions of Section 27.
Chapter VII of the deals with the clearance of imported goods.
The imported goods unloaded in a customs area remain in the custody of the approved person until they are cleared for home consumption.
Without permission in writing of the appropriate officer, such goods are not removed or otherwise dealt with.
The importer shall give a declaration as to the truth of the contents of the bill of entry supported by the invoice.
The order permitting clear ance of the goods for home consumption is made on payment of the import duty, if any, assessed.
Thus, under the scheme of the Act, the importer is entitled to clear the goods on payment of duty assessed and such assessment is to be made with reference to the tariff value of the goods where tariff values are fixed.
In other cases, the price at which the goods are ordinarily sold for delivery at the time and place of importation represents the tariff value for the purpose of the assessment.
When the value is assessed on the basis of the invoice and the goods are cleared, the implication is that no remission is allowed and no abatement has been occasioned.
There is no express provision which enables the proper officer to make a re assessment for the purpose of remission on the ground that the goods at the time of their importation or at the time of the clearance was sub standard or damaged and the invoice price does not represent the real value.
Even if it is assumed that in view of the provisions contained in Section 28(a) enabling the proper office to determine the amount of duty due in cases where duty has not been levied or has been short levied or erroneously refunded after issuing show cause notice, there is a corresponding right on the importer to claim refund of the excess duty levied, it is necessary for the importer to prove to the satisfaction of the proper officer that the goods at the time of the clearance was chargeable to a lesser or lower duty for anyone of the reasons contained in Section 22 which alone provides for abatement of duty.
Any error in the assessment of the value by itself does not enable the importer to claim re assess ment or refund.
It has necessarily to be shown that on account of the damaged or deteriorated condition of the imported goods before or during the unloading the goods in India, the duty to be charged on the goods was propor 521 tionate to the value of the damaged or deteriorated goods.
The question of redetermining the value of the imported goods can arise only in a case where such damage or deterio ration before the clearance is proved to the Satisfaction of the proper officer.
When there had been no indication of any such condition and the duty has been assessed on the basis of the invoice value and duty is paid, the assessment would be binding.
The importer on finding the goods cleared and distributed not to his entire satisfaction may have a claim in contract against the seller for providing sub standard, damaged or deteriorated goods for the value in the invoice, and it may be open to the buyer to realize from the seller such damages as he would in law be entitled to.
That claim for damages cannot have any bearing to the assessment at the time of the clearance.
The price at which the goods had been sold is represented by the invoice price and whatever amount is realized on subsequent agreement is only by way of com pensation as damages.
It cannot be said that the damages thus received represents the difference in price that had been paid and that ought to have been paid.
When the seller had agreed to compensate the buyer for the quality of the goods imported, the buyer does not get the right to claim abatement of duty on the assumption that the real price was some thing less than what has been indicated in the invoice.
Learned counsel for the appellant referred para 574 at page 12 1, Vol.
Halsbury 's Laws of England: "574.
Goods not in accordance with contract.
Where it is shown to the satisfaction of the Commissioners of Customs and Excise that goods were imported in pursuance of a contract of sale and that their description, quality, state or condition was not in accordance with the contract, or that they were damaged in transit, and also that the importer, with the consent of the seller, either returned the goods to him or destroyed them unused, the importer is entitled to obtain from the Com missioners repayment of any customs duty paid on their importation.
The foregoing, however, does not apply to the goods imported on ap proval, or on sale or return, or on other similar terms.
" It deals with the returning of goods or destroying the goods unused without acceptance and not where the goods have been accepted and used and the importer had been compensated for the reduction in 522 standard.
The learned counsel also referred to the decision in Biggin & Co. Ltd. vs Premanite, LD., Berry Wiggins & Co. LD. ; Cehave NV vs Bremer, ; Ford Motor Company of India vs Secretary of State for India, [1937] 381 L.R. 65 I.A. 32 and vacuum Oil Co. vs Secretary of State for India, [1932] L.R. 59 I.A.258.
On the basis of these decisions, the learned counsel for the appellant contended that when the seller has allowed the reduction, the real price of the goods is that which has been accepted by the seller and that the assessment made on a higher value on the basis of the invoice price is in excess and such excess is refundable to the appellant.
It is not necessary to elaborate on the principle stated in the decisions on the facts of the present case.
It is admitted case of the appellants that the alleged inferior nature of goods was discovered by the appellant after clearance.
Until the refund application was made, no requisition appears to have been made to the customs author ities to have the value of the goods determined for the purpose of Section 22.
The correspondence between the appel lants and the sellers ,red their agents could only reveal that the appellant put forward a claim for compensation on the ground that the goods imported had become lumpy and was also of inferior standard.
Ultimately the sellers agreed to reimburse the appellants and pay compensation to the tune of US $ 2,40,000.
What appellants have received from the sell ers is compensation for the damage for breach of warranty.
It does not appear that the value was reduced or amount remitted by the appellant was the reduced value of tire goods.
The amount was the total compensation extended by the sellers to the appellants.
From that fact of payment of compensation or reimbursement by the sellers it cannot be taken that at the time and place of importation the goods imported was worth only the amount stated in the invoice less the compensation paid.
In other words, there is no proof that the real value of the goods at the time and place of importation was less than that what had been entered in the invoice and stated in the Bill of Entry.
So long as examination of the goods had not been made or its value re assessed to the satisfaction of the assessing authorities, it cannot be said that duty was charged not on the real value of the goods but on a higher amount.
The contention that the inherent defect in the supply of goods resulted in the diminution of the value of the goods cannot be counte nanced when it is conceded that what had been paid by the seller is only compensation for the breach of war 523 ranty.
Furthermore, there is no material on record to show that even by the team of experts there had been a re assess ment of the value of the goods.
What had been estimated is only quantum of damages sustained by the buyers and to that extent they had been compensated.
That arrangement between the buyer and the seller cannot be linked with the assess ment of duty and no claim for abatement of duty under the provisions of Section 22 or a claim for refund under Section 27 could be legitimately entertained.
For the reasons given above, the appeal must fail.
The appeal is dismissed with no order as to costs.
V.P.R. Appeal dismissed.

summary:
The appellant Federation entered into a contract with a Soda Company of Kenya, for supply of 5000 metric tonnes of soda ash dense and the consignment arrived at Bombay on 23.12.1981.
The goods were cleared on payment of customs duty of Rs.32,15,904.21.
The appellant on distribution of the goods to various members of the Federation, received complaints that the soda ash which had been supplied was of sub standard quality.
When the sellers as well as their agents were approached, they sent a team of experts to examine the goods and on inspection the goods were found defective.
As per agreement dated 9.2.1982, the sellers sent a credit note of US $ 2,40,000 as compensation on account of the defective goods.
The amount remitted on account of the import made was only US $ 5,35,000 as against the earlier contracted amount of US $ 7,75,000.
In view of such reduction, the appellant filed a refund application before the Customs Department to the tune of Rs.9.95,892 65.
The Assistant Collector rejected the refund application as he was not satisfied to the extent of deterioration of the goods before clearance as provided by Section 22 of the .
The appeal preferred was rejected by the Collector of Customs on the reasoning that the damage wad discovered after the goods were out of customs control.
The further appeal to the Tribunal was rejected hold ing that the alleged inferior nature of goods was discovered after clearance.
514 Under Section 130E of the , present appeal was made to this Court, contending that the goods supplied were not in accordance with the contractual speci fication, the defects being inherent in nature resulted in diminution in the real value of the goods and what had been agreed upon by the foreign seller was reduction in price on account of the defects, and claimed that it would be enti tled to refund of customs duty under Section 22 of the Act.
On the question, whether the appellant was entitled to the refund of customs duty on account of the compensation given by the seller to the appellant on supply of goods, dismissing the appeal, this Court, HELD: 1.01.
When the value is assessed on the basis of the invoice and the goods are cleared, the implication is that no remission is allowed and no abatement has been occasioned.
There is no express provision which enables the proper officer to make a re assessment for the purpose of remission on the ground that the goods at the time of their importation or at the time of the clearance was sub standard or damaged and the invoice price does not represent the real value.
[520E F] 1.02.
Any error in the assessment of the value by itself does not enable the importer to claim re assessment or refund.
It has necessarily to be shown that on account of the damaged or deteriorated condition of the imported goods before or during the unloading of the goods in India, the duty to be charged on the goods was proportionate to the value of the damaged or deteriorated goods.
[520G 521A] 1.03.
The question of redetermining the value of the imported goods can arise only in a case where such damage or deterioration before the clearance is proved to the satis faction of the proper officer.
When there had been no indi cation of any such condition and the duty has been assessed on the basis of the invoice value and duty is paid, the assessment would be binding.
The importer on finding the goods cleared and distributed not to his entire satisfaction may have a claim in contract against the seller for provid ing sub standard, damaged or deteriorated goods for the value in the invoice, and it may be open to the buyer to realize from the seller such damages as he would in law be entitled to.
That claim for damages cannot have any bearing to the assessment at the time of the clearance.
The price at which the goods has been sold is represented by the invoice price and whatever amount is realized on subsequent agree ment is only by way of compensation as damages.
It cannot be said that the damages thus received represents the differ ence in price that had been paid and that ought to have been 515 paid.
When the seller had agreed to compensate the buyer for the quality of the goods imported, the buyer does not get the right to claim abatement of duty on the assumption that the real price was something less than what has been indi cated in the invoice.
[521A D] 1.04.
There is no material on record to show that there had been a re assessment of the value of the goods.
What had been estimated is only quantum of damages sustained by the buyers and to that extent they had been compensated.
That arrangement between the buyer and the seller cannot be linked with the assessment of duty and no claim for abate ment of duty under the provisions of Section 22 or a claim for refund under Section 27 could be legitimately enter tained.
[523A B] Biggin & Co. Ltd. vs Premanite, LD., Berry Wiggins & L.D., ; Cehave NV vs Bremer, ; Ford Motor Company of India vs Secretary ' of State for India, [1937 8] L.R. 659.
A. 32 and Vaccum Oil Co. vs Secretary of State for India, [1932] L.R. 59, IA 258, referred to.
Halsbury 's Laws of England, para 574 at page 121, Vol. 12; referred to.


judgement:
No. 917 of 1990.
(Under Article 32 of the Constitution of India).
(With I,A. Nos. 1 3/90 in Writ Petition (Civil) No: 9/88 and Contempt Petition No. 45/91 in Writ Petition (Civil) NO.
602/90).
S.K. Bhattacharya and R. Venkataramani for the Petitioners.
Altaf Ahmed, Additional Solicitor General, S.K. Mehta, A. 597 Mariarputham, Ashok Bhan, Ms. A. Subhashini, R. Ramachan dran, S.P. Kalra and Arun Madan for the Respondents.
The following Order of the Court was delivered: The main application is under Article 32 of the Consti tution while the Contempt Petition and the Interlocutory Applications in the connected Writ Petition are for orders and directions.
The common aspects in all the three proceed ings are that the petitioners before this Court are Research Scholars connected with Projects entrusted to different Institutions.
They are before the Court for security of emplOyment and improvement of conditions of service.
In Writ Petition 999 of 1988.
along with Writ Petition No. 1043 of 1989 we gave our judgment on March 22, 1990, We then indicated: "The Institute set up by Statute is intended to carry on research in a continuous way to improve the level of medical knowledge.
Under the Act the Institute is an autonomous body though the Chairman thereof is no other than the Union Minister of Health.
It is true that the Institute is entrusted from time to time.
with research projects by the World Health Organisation, the Indian Council of Medical Research and other government and semi govern ment bodies.
It is appropriate that a Scheme should be evolved 'by the Institute m coordi nation with the Health Ministry and the Indian Council of Medical Research so that a team of researchers is built up to meet the general requirements of research.
It is quite possible that certain projects would require specia lised hands ' and on such occasions a special team could be set up on casual basis by draw ing the competent hands from different insti tutions ,for a period but to keep up the tempo of research if a team of researchers is built up, it would be.
convenient for the Institute for purposes of discipline and control as also for efficiency.
The Health Ministry must also sponsor Continuous research projects in the field of medicine and health and for such purpose several projects should be listed out from time to time and entrusted to the re spondents Institute as also a similar Insti tute at Chandigarh and to institutes as and when 'set up elsewhere.
This would assist ill updating relevant medical 'information ' and knowledge, apart from building up a scientific tone and temper for general circulation.
598 We commend that the Institute initiates serious action in this regard.
without delay and we suggest that the Ministry of Health and the indian Council of Medical Research collab orate with the Institute to work out the same.
Pursuant to our observations the Ministry of Health appears to have taken some action and particulars relating thereto have been placed before us.
On that occasion we indicated that those who have put in 15 year.
s of research work should immediately be regularised and core a cadre could be built up.
The Health Ministry has no objection tO a core cadre of researchers being created.
The Indian Council of Medical Research ( 'ICMR ' for short) is actually the organisation set up for the research purposes and as we gather the Union of India in the relevant Ministry meets its expenditure on research by funding.
The Court does not have the adequate technical knowhow but we are of the view that if appropriate coordination is made and the Health Ministry, ICMR and the Institutes where research is carried on tie up their operations more useful work can be done and simultane ously the researchers would have better terms of employment.
All the Institutes where research is carried on may not be at the national capital.
What is necessary is the emergence of a small monitoring unit which would finalise the various research projects well in advance and receive offers of projects from organisations like World Health Organisation or other bodies.
No consideration has been given.
as to why the drug manufacturers in India who have engaged themselves in a very lucrative trade should also participate in research pro grammes.
Quality of work in research institutes specialised in their fields is bound to.
be better than research carried on by the manufacturers themselves.
A scheme could be evolved by which established drug manufacturers could be required to participate in such programmes by supporting particular research projects which the monitoring body Could allot.
Continuing research not only keeps up the level of knowledge but also helps the enhancement of efficiency of treatment of diseases and in the matter of providing relief to the patients.
Mr. Venkataramani seriously presses before us that the researchers should have some scheme where within two to three years they could as in other Government service be made permanent and given guarantees of service.
When we gave our final decision in Writ Petition No. 999/1988 ' we had no intention of creating a permanent cadre of the type Mr. Venkataramani argues about.
In fact 'project 599 wise research helps to generate better efficiency than caderised research organisation.
Once service guarantees are provided and security of service is available, the flow of inspiration from within perhaps slows down.
We had, there fore, thought that those who had put in long period of research work should only be provided security so that in the later part of their service life, they may not be put to inconvenience.
We have no objection to a core cadre being built.
up and if the Health Ministry is of the view that there should be a core Cadre, perhaps, it can quickly be set up and such of the researchers who have put in a more or less continued period of work Could be brought into the Cadre at the first instance on regular basis.
The Committee which the Union of India has perhaps to set up may look into this matter more thoroughly and give shape to the idea we have conveyed by our judgment.
The Patel Chest Institute seems to ' be more or less a permanent feature and researchers therein may be continued.against the programmes available.
The funding of course has to be ultimately done by the Health Ministry and the manner of funding may be determined by it.
The research ers who have worked in the All India Institute of Medical Sciences should be continued upon availability of its pro grammes but those was have put in longer periods may be absorbed in available vacancies.
We are aware of the stand taken by Committee that researchers may be treated as in service candidates when regular vacancies occur for absorp tion.
This has our approval.
We adjourn these matters by two months to receive a comprehensive response.
from the Union Government in the Health Ministry so that we would have the opportunity of examining the comprehensive scheme and then make a final order.
Call on 4.10.1991.
G.N. Matters adjourned.

dataset_name: IN-Abs

summary:
In the present petitions filed before this court, the petitioners, Research Scholars connected with Projects entrusted to different institutions, prayed for security of employment and improvement of conditions of service.
In the earlier writ petitions this Court indicated that those who have put in 15 years of research work should be immediately regularised and that a core cadre be built up.
The Respond ents undertook to submit a comprehensive scheme and this court granted two month 's time to the Respondents to file the same.
Passing interim orders pending examination of a compre hensive scheme to be submitted by the Respondents, this Court, HELD: 1.
The Indian Council of Medical Research (I.C.M.R.)is actually the organisation set up for research purposes and the Union of India meets the expenditure on research by funding.
This Court does not have the adequate technical know how but is of the view that if appropriate coordination is made and the Health Ministry, ICMR and the Institutes where research is carried on tie up their opera tions, more useful work can be done and simultaneously the researchers would have better terms of employment.
All the Institutes where research is carried on may not be at the National Capital.
Hence a small monitoring unit requires to be set up which would finalise the various research projects well in advance and receive offers of projects from organi sations like World Health Organisation or other bodies.
[598B D] 596 2.
No consideration has been.
given as to why the drug manufacturers in India who have engaged themselves in a Very lucrative trade should also participate in research pro grammes.
Quality of work in research institutes specialised in their fields is bound to be better than research carried on by the manufacturers themselves.
A scheme could be evolved by which established drug manufacturers could be required to participate in such programmes by supporting particular research projects which the monitoring body 'could allot.
Continuing.
research not only keep up the level of knowledge but also helps the enhancement of effi ciency of treatment of diseases and in the matter of provid ing relief to the patients.
[598E G] 3.
Once service guarantees are provided and security of service is available, the flow of inspiration from within perhaps slows down.
However, there is no objection to a core cadre being built up and if the Health Ministry is of the view that there should be a core cadre, it can quickly set up the same and such of the researchers who have put in more or less continued period of work could he brought into the cadre at the first instance on regular basis.
The Committee which the Union of India has to set up my look into this totter more thoroughly and give shape to the idea.
[599A C] 4.
The Patel Chest Institute seem to be more or less a permanent future and researchers therein may be continued against the programmes available.
The funding of course has to be ultimately done by the Health Ministry and the manner of funding may be determined by it.
The researchers who have worked in the All India Institute of Medical Sciences should he continued upon availability of its programmes but those who have put in longer periods may be absorbed in available vacancies.
The stand taken by Committee that researchers may be treated as in service candidates when regular vacancies occur for absorption, is approved.
[599D, E]


judgement:
minal Appeal No. 203 of 1956.
Appeal by special leave from the judgment and order dated December 14, 1955, of the Assam High Court at Gauhati in Criminal Appeal No,.
54 of 1955, arising out of the judgment and order dated May 23, 2 1955, of the Court of the Special Judge, Lower Assam Districts at Dhubri in Special Case No. 2 of 1954.
Nur ud Din Ahmad and K. R. Chaudhury, for the appellant.
Naunit Lal, for the respondent.
January 13.
The Judgment of the Court was delivered by KAPUR, J.
This appeal by special leave is directed against the judgment and order of the High Court of Assam.
The appellant before us was tried for an offence under section 165A of the Indian Penal Code for having abetted one Khalilur Rahman in the conimission of an offence by the latter under section 161, Indian Penal Code.
Both the appellant and Khalilur Rahman were convicted of the offences with which they were charged and sentenced to one.
year 's rigorous imprisonment.
On appeal the High Court acquitted Khalilur Rahman but maintained the conviction and sentence of the appellant.
The facts of this appeal are that on May 9, 1952, the complainant Narendra Nath Brahma was taking two carts carrying 25 Mds.
of paddy for sale to Billashiparabazar along the path which runs by the side of the river Gauranga.
When he had gone only a short distance he was stopped by the paddy checking Inspector, Khalilur Rahman, who was accompanied by the appellant and three others.
Khalilur Rahman demanded Rs. 200 as bribe and threatened the com plainant that unless the amount demanded was paid his cart and paddy would be seized.
In this he was supported by the appellant and three others.
The complainant expressed his inability to give that much amount but ultimately he agreed to pay Rs. 150.
He borrowed Rs. 100 from one Surajmal Oswal out of which he offered Rs. 80 to Khalilur Rahman who asked him to hand them over to the appellant who counted the money and made it over to Khalilur Rahman.
The complainant was also forced to execute a promissory note for a sum of Rs. 70 in favour of the appellant and he promised that the money would be paid the following day after the paddy was sold.
The 3 complainant learnt in the bazar that another person Happa ram Rai had been similarly treated but he had only paid Rs. 15.
On May 11, 1952, the complainant approached the appellant for the refund of his money and the return of his pronote and although the appellant promised he did not do so.
The same day there was a meeting at Futkibari Middle English School where the Deputy Commissioner was present.
The complainant presented to him a written complaint describing how he was forced to pay Rs. 80 and made to execute a pronote for Rs. 70.
Thereupon both Khalilur Rahman and the appellant were prosecuted, the former under section 161, Indian Penal Code, read with section 5(2) of the Prevention of Corruption Act, 1947 (2 of 1947) and the latter under section 165A and they were convicted and sentenced by the Special Judge as already stated.
The evidence of the complainant was that before Rs. 200 was demanded from him, the appellant and Khalilur Rahman " went aside and had some talks and coming together accused Khalilur Rahman demanded Rs. 200 ".
He also stated " I told them that I managed to procure Rs. 80 somehow and I wanted to hand over to accused Khalilur Rahman who directed me to hand over to accused Faguna, saying he would take counting, accused Faguna counted the money and then made over the entire money to accused Khalilur Rahman saying that Rs. 80 would not do and I should execute a handnote for the balance of Rs. 70 promising to pay on the following Saturday ".
According to the complainant it was Khalilur Rahman who tore out a page from his note book and handed over the same to the complainant and also lent him his fountain pen and after the pronote was executed both the pen and the pronote were handed over to Khalilur Rahman.
The Special Judge found: "I am fully convinced that a sum of Rs. 80 was realised from the complainant for forbearing from seizing of the paddy by the accused Khalilur Rahman, being helped and abetted by the accused Faguna Kanta Nath.
" 4 He therefore convicted Khalilur Rahman under section 161, Indian Penal Code, but acquitted him of an offence under section 5(2) of the Prevention of Corruption Act, 1947, and convicted the appellant for abetment of that offence.
On appeal Deka, J., held that from the complaint made by the complainant it was not clear that any payment was made to Khalilur Rahman.
He said: It may be that Khalilur Rahman was a party to squeezing out some money from a dealer in paddy who tried to evade the law, but that falls far short of proving that he had accepted the money through Fagunakanta Nath as alleged now in Court ".
The learned Judge accepted the complainant 's story that money was paid to the appellant but he was of the opinion that the evidence was not strong enough to prove payment to Khalilur Rahman and therefore he was "prepared to give the benefit of doubt to Khalilur Rahman and direct that his conviction tinder section 161, Indian Penal Code be set aside ".
As to the appellant he was of the opinion that money was taken by him for payment to Khalilur Rahman as illegal gratification and whether he actually paid it to him or not the offence fell under section 165A and therefore he held the appellant guilty under that section.
Thus according to the learned Judge the case against Khalilur Rahman was not proved and as money had been paid to the appellant he was guilty of abetment under section 165A, Indian Penal Code.
The appellant has come to this Court by special leave.
The main argument raised on behalf of the appellant is that as Khalilur Rahman has been acquitted, on the facts and circumstances of this case the conviction of the appellant for abetment cannot be sustained.
The evidence of the complainant on which the conviction is based was that the money was demanded by Khalilur Rahman and at his instance it was made over to the appellant who counted the money and handed it over to Khalilur Rahman.
The pronote was also written at the instance of Khalilur Rahman and was handed over to him.
The part played by the appellant according to the story of the 5 complainant was that before the demand of bribe both Khalilur Rahman and the appellant "went aside" and held a conference and Khalilur Rahman then demanded Rs. 200.
Rs. 80 was brought by the complainant and paid to the appellant at the instance of Khalilur Rahman for the purpose of counting and he in turn gave it to Khalilur Rahman who put it in his trouser 's pocket.
About this portion of the evidence the trial Court said " it may not be fully true " and the finding of the High Court was that the money re mained with him and was not paid to Khalilur Rahman; the question is whether in these circumstances the offence of abetment can be held to have been made out.
Under the Indian law for an offence of abetment it is not necessary that the offence should have been committed.
A man may be guilty as an abettor whether the offence is committed or not.
Section 165A is as follows: section 165A " Whoever, abets any offence punishable under section 161 or section 165, whether or not that offence is committe in consequence of the abetment, shall be punished with imprisonment of either description for a term which may extend to three years or with fine or with both ".
Therefore for a person to be guilty of abetment of an offence under section 161, it is not necessary that the offence should have been committed.
Abetment is defined in section 107 arid a person abets the doing of a thing when (1)he instigates any person to do that thing or (2)engages with one or more other person or persons in any conspiracy for the doing of that thing. . or (3) intentionally aids, by any act or illegal omission the doing of that thing.
Explanation (2) to section 107 is as follows: " Whoever, either prior to or at the time of the commission of an act, does anything in order to facilitate the commission of that act, and thereby facilitates the commission thereof, is said to aid the doing of that act.
" It is not suggested that there was any instigation by the appellant for the commission of the offence.
6 Further the circumstances proved against the appellant did not bring the case under the second part of section 107 because it is not alleged that there was any conspiracy and a charge of conspiracy must necessarily fail if the other alleged conspirator is acquitted: See The King vs Plummer (1) which has received the approval of this Court in Topandas vs State of Bombay (2).
In either of these cases it is immaterial hether the person instigated commits the offence or not or the persons conspiring together actually carry out the object of conspiracy.
There then remains the third part of section 107 that is abetment by aid.
A person abets by aiding when by the commission of an act lie intends to facilitate and does facilitate the commission thereof By the acquittal of Khalilur Rahman the High Court must be deemed to have held that there was no offence under section 161.
But it was contended on behalf of the respondent that the acquittal of Khalilur Rahman was wrong and this Court should hold that a wrong acquittal does not prevent the conviction of the appellant for the offence of abetment.
Counsel for the respondent referred to Dalip Singh vs State of Punjab (3) where at p. 156 Bose, J., said: " We have taken into consideration the fact that the High Court considers that the portion of Mst.
Punnan 's story regarding the lambardars has been falsely introduced by the police, also that both courts have rejected the evidence about the dying declaration.
Despite that, we agree with the learned Sessions Judge that Mst.
Punnan and Mst.
Charni are to be believed regarding the main facts and that they correctly named all seven accused as the assailants.
On that finding the conviction under section 302 read with section 149 can be sustained.
We accordingly uphold these convictions.
The acquittals in the other three cases will of course stand but the mere fact that these persons have, in our opinion, been wrongly acquitted cannot affect the conviction in other cases ".
In that case although the High Court had acquitted three accused persons of an offence under section 302 read (1) (2) (3) ; 7 with section 149, Indian Penal Code, yet as in the opinion of this Court the acquittal was wrong section 149 was held applicable in the case of four others who had been convicted by the High Court of section 302 read with section 149.
The decision in that case must be circumscribed to the peculiar circumstances of that case.
In the present case the person who demanded the illegal gratification for allowing the carts to proceed was Khalilur Rahman who had the authority to do or not to do a particular act and all that the appellant is alleged to have done was to receive the money at the instance of Khalilur Rahman for counting and then paid the money to him.
It is not the prosecution case that the appellant abetted the offence by instigating Khalilur Rahman to demand the illegal ratification; nor has the prosecution set up or proved a case of conspiracy between the appellant and Khalilur Rahman for the commission of an offence under section 161.
On the findings of the Court the appellant received the money for and on behalf of Khalilur Rahman and the evidence of the complainant is that Khalilur Rahman had asked him to hand over the money to the appel lant.
If Khalilur Rahman is acquitted and therefore the offence under section 161 is held not to have been committed, then in this case no question of intentionally aiding by any act or omission the commission of the offence arises.
It may be as counsel for the respondent contended that the acquittal of Khalilur Rahman is wrong and it appears and we say so with respect that the findings of the High Court are inconsistent but as the matter of Khalilur Rahman is not before us by way of appeal against acquittal we do not express any opinion on that question.
We are of the opinion that on the facts found and circumstances established in this case and as Khalilur Rahman has been acquitted the appellant 's conviction cannot be upheld.
We therefore allow this appeal and set aside the order of conviction.
The bail bonds shall also stand discharged.
Appeal allowed.

summary:
The appellant was tried for an offence under section 165A of the Indian Penal Code for having abetted K, an Inspector in charge of checking paddy, in the commission of an offence by the latter under section 161 of the Code.
The prosecution case was that while the complainant was taking paddy for sale K demanded Rs. 200/as bribe and threatened him that unless the money was paid the paddy would be seized, that at the instance of K the complainant handed over the bribe money to the appellant for being counted and that the latter after checking the money paid it to K.
The Special judge who tried the case accepted the prosecution story and convicted K under section 161 of the Indian Penal Code and the appellant for abetment of the offence.
On appeal, the High Court was of the opinion that the evidence was not strong enough to prove payment to K, and set aside his conviction, but confirmed that of the appellant on the ground that money was taken by him for payment to K as illegal gratification and whether he actually paid it to him or not the offence fell under section 165A. Held, that the conviction of the appellant for abetment under section 165A of the Indian Penal Code must under the circumstances be set aside.
On the facts found, the appellant received the money in the presence of and for and on behalf of K and if K was acquitted on the ground that no offence under section 161 was committed, then no question of intentionally aiding by any act or omission the commission of the offence arose.
Consequently, the appellant 's conviction for the offence of abetment wag not maintainable.
Dalip Singh vs State of Punjab, ; , distinguished.


judgement:
vil Appeal No. 2 145 of 1988.
From the Judgment and Order dated 3.5.
1988 of the Allahabad High COurt in C.M.W.P. No. 13143 of 1985 Avadh Behari Rohatgi section Markandeya, G. Seshagiri Rao and Ms. C. Markandeya for the appellant.
Ms., Shobha Dikshit, Pankaj Kalra, Ejaz Maqbool, Dileep Tandon, J.M. Khanna and S.K. Jain for the Respondents.
The following Order of the COurt was delivered: This appeal by special leave is against the order of the Allahabad High Court.
The subject matter of dispUte is in regard to 11 lady teachers of Saghir Fatima Mohammadia Girls Inter College, Agra.
This is claimed to be a minority insti tution but fully financed from the State resources.
By interlocutory orders made from time to time the real litigative part of has already been attended to,.
We would refer to our order of 2nd May, 1991 where this court ob served "We are happy to find that pursuant to our order made earlier in this case Smt.
Kamla 561 Mehra, Smt.
Saran Kumari Gaur and Swaliha Begum have been given postings and they have already reported to duty.
So far as petitioners Km.
Asifa Rizvi, Km.
Sayyada Rizwani and Shafiqa Begum are concerned, Ms. Dikshit points out that though there is some possibility of adjusting them in other institutions it is a time taking process inasmuch as under the scheme government have no power to impose teachers from out side on the administration of the institutions.
We think it appropriate in the interest;of justice to require the Director of Secondary Education to require such of the colleges where appropriate vacancies are available to adjust these three teachers.
To so adjust them the institu tions shall take our present order as a direction to adjust them and as and when called by the Director of Secondary Education it shall be implemented.
Failure to comply shall be teated as violation of our direction.
So far as Smt.
Sudha Dixit is concerned, we gather from the representation made at the Bar ' that a vacancy in the spe ciality is about to arise in the coming month.
If that be so, Ms. Dikshit has agreed to see that she is so posted.
As far as two remaining teachers are concerned, they do not agree to go out of the institution and Ms. Dikshit points out that in their subjects there is no vacancy.
In these circumstances, they have choice to wait indefinitely till vacancy occurs without.claiming salary till employment.
If this is not acceptable to them the order of termination already made shall be taken as final and conclusive and their petition shall standdismissed.
" We are told that the vacancy which was contemplated in regard to Smt.
Sudha Dixit has not worked out for her.
She had been offered a posting in Mathura, away from.
the insti tution where she had been working and she did not choose to go there.
Mr. Markandeya appearing for her, however, does not agree with this statement made by others and says that she volunteered to go but was informed that the institution had not taken a decision to keep her and she was.
to be intimated as and when a decision was taken.
No intimation has been received by her as yet.
Out of the two remaining teachers referred to in our order dated 2nd May, 1991, it appears that one has already been absorbed in Aligarh and the.
remaining teacher, Khaliq Jahan, is holding a lower post for the time being and Ms. Dikshit has told us that she has already 562 suggested to the Government that as and when a vacancy arises she should be accommodated in a post according to her entitlement So far as Smt.
Sudha Dixit is concerned, we think 'a situation has now arisen where the Director must implement our order.
We had clothed him with adequate powers by our order of 2nd May, 199 1 and he must under that authority 'proceed to enforce his order.
The Director should provide employment to Smt.
Sudha Dixit in terms of the assignment made and the institution where she has been directed to join should accept the teacher.
Beyond that we do not intend to say anything at this stage.
This leaves the only, remaining question to be dealt.
with, i.e., as to how the period during which the seven of the teachers who have been absorbed in that very institution should be dealt with.
It is said that during this gap period of seven years another set of teachers had been working who are represented before us by Mr. Kalra in these proceedings, It is the submission of the appellants that the seven teach ers who are substituted did not possess the requisite quali fication and reliance is placed on Section 16(FF) of the Act to support the submission that they are not entitled to salary for the work done.
SimultaneouSly the seven ' teachers have contended through their counsel that they had been visiting the institution everyday and had been leaving their attendance with the appropriate authority, therefore, they should be entitled to salary.
This is not a proceeding in ,which we have to decide who has to be paid the salary.
But as things stand one set of teachers have actually worked while the other set for reasons which are germane to appropriate management has not, We are told that teachers had gone on strike and when they were called back to duty a group of teachers including the seven did not return within time and that led to appointment of alternate teachers.
We must point out that this again is not an appropriate matter to be decided by us.
We are, however, satisfied from the material placed before us that the 11 teachers who are represented by Mr. Kalra did work during the period.
It may not be appropriate, to hold that they are not entitled to remuneration for the work done.
The institution had admittedly not received any benefit.of service during the relevant period from the seven teachers on the appellants ' side.
On the principle that when work is not done remuneration is not to be paid, we dispose of the present appeal without giving any direction for payment to them.
If they are entitled to salary, it is open to them to take appropriate proceeding to claim the same, 563 We do not finally close their claim against the ' State of the institution.
But so far as teachers represented by Mr. Kalra are concerned, if they have not been paid, they should be disbursed the salary due to them.
There is some contest as to whether they are qualified or not.
On the basis of the facts on record we are of the view that they appear to be qualified and that question should not be reopened.
We draw support for our view for non payment to the appellants from our ' interim order of 7th February, 1990.
In regard to two teachers who were prepared to wait to take their chance, we indicated that they would not be paid any remuneration.
Seven teachers who have now been provided jobs under our orders and those who were waiting to take their chance should be equated for the common period of no work.
We, are, however, of the view that seven teachers who have got employment should be given their seniority for the period they were out of employment.
We accordingly require the Director of Public, Instruction to take our order into account and given them credit for seniority for the period they were out of employment on the deemed situation that they had worked, Our doing so, we again repeat, would not entitle them to salary unless they are otherwise entitled to.
This disposes of the appeal.
We are sorry that we entertained an appeal of this type by special leave and got dragged into a dispute which should not have been brought upto this court.
G.N. Appeal disposed of.

summary:
The appellants, teachers in a minority institution fully financed by State, went on a strike and when they were called hack to duty, they did not return within time, lead ing to appointment of alternate teachers.
They approached the High Court for their absorption.
The High Court having dismissed the matter, the aggrieved teachers have preferred the present appeal by special leave.
By interim orders, this Court has already directed the absorption of the teachers in different institutions.
Seven teachers have been absorbed in the very same institution.
It was contended on behalf of the seven teachers that they should be paid salary for the period of gap before their absorption and that their senior ity should be maintained.
The alternate teachers who worked in the interregunum contended that they should be paid salary for the period they worked.
Disposing the appeal, this Court, HELD 1.
One set of teachers have actually worked while the other set has not.
The teachers had gone on strike and when they were called hack to duty a group of teachers including the seven did not return within time and that.
led to appointment of alternate teachers.
It is clear from the material on record that the alternate teachers did work during the period.
It may not be appropriate to hold that they are not entitled to remuneration for the work done.
However, the institution has admittedly not received any benefit of service during the relevant period from the other set viz. the seven teachers who were absorbed later.
On the principle that.
when work is not done remuneration is not to be paid, no direction is given for payment.
If they are entitled to salary, it is open to them to take appropriate proceeding to claim the same.
It does not 560 finally close their clam against the State or the institu tion.
The alternate teachers who have worked and if they have not been paid, they should be disbursed the salary due to them.
Then iS some contest as to whether they are quali fied or not.
On the basis of the facts on record the teach ers appear to be qualified and that question should not be reopened.
In regard to two teachers Who were prepared to walt to take their chance, they would not be paid any remu neration.
Seven teachers who have now been provided jobs under the orders of this Court and those who were waiting to take their Chance should be equated for the common period of no Work [562F H, 563A C] 2.
However, the seven teachers who have got absorption should be given their seniority for the period they were out of employment.
The Director of Public Instruction is re quired to take this order into account and given them credit for seniority for the period they were out of employment on the deemed situation.
that they had worked.
This would not entitle them to salary unless they are otherwise entitled to the same.
[563D]


judgement:
vil Appeal No. 1106 (NT) of 1976.
From the Judgment and Order dated 22nd/23rd January 1976 of the Gujarat High Court in Income Tax Ref.
No. 122 of 1974.
Joseph Vellappilly, K.J. John and Ms. Deepa Dikshit for the Appellant.
S.C. Manchanda, Ranvir Chandra and Ms. A. Subhashini for the Respondent.
J. The appellant/Company, hereinafter referred to as the assessee, carries on.
the business of manufacture and sale of art silk cloth.
In the year 1957, it purchased machinery worth Rs.2,81,741 and gave it on hire to M/s. Jasmine Mills Pvt. Ltd., Bombay at an annual rent of Rs.33,900.
On August 11, 1966, a fire broke out in the premises of M/s. Jasmine Mills causing extensive damage tO the machinery installed in their premises including the machinery hired by them from the assessee.
The machinery belonging to the assessee became useless for any, further use on account of the damage.
M/s. Jasmine Mills had insured along with its own machinery, the assessee 's machinery as well, and on a settlement of the insurance claim, M/s. Jasmine Mills received a certain amount out of which it paid a sum of Rs.6,32,533 to the assessee on account of the destruction of its machinery.
The difference between the actual cost of the machinery and its written down value worked out to Rs.2,62,781.
The assessee in its income tax return for the assessment year 1967 68 (relevant accounting year being 'the year ending on 31st August, 1966) showed the said amount as profit chargeable to tax under Section 41(2) of the Income Tax Act (hereinafter referred to as the "Act") The IncomeTax Officer, however, subjected to tax also the additional amount of Rs.3,50,792 being the difference be tween the amount of Rs.6,32,533 received on account of the insurance claim and the original 'cost of the machinery, i.e., Rs.2,81,741, treating the same as capital gains chargeable under Section 45 of the Act.
The contention ad vanced by the assessee that the capital gains tax was not attracted to the amount received on account of the insurance claim since there was no transfer.
582 of capital asset as was contemplated by Section 45 read with Section 2(47) of the Act, was negatived by the Income Tax Officer.
The assessee appealed against the order to the Appellate Assistant Commissioner who also negatived the said conten tion of the appellant and" dismissed the appeal.
The asses see 's contention was, however; upheld in the appeal before the Income Tax Appellate Tribunal, the Tribunal holding that: the amount was not received on account of a transfer of the capital asset but on account of the damage to it and that.
Section 45 was attracted only when there was a trans fer of the capital asset.
Being aggrieved, the Revenue applied for reference of the case to the High Court on the,following two questions: (i) whether on the facts and in the circum stances of the case the transfer was justified in law in holding that there Was no transfer of capital asset by the assessee within the meaning Of Section 2(47) of the Act? (ii) whether on the facts and in the circum stances of the case the sum of Rs.3,50,792 being the excess of the cost of the machinery received from M/s. Jasmine Mills Pvt. Ltd. was chargeable to tax as Capital gains under Section 45 of the Act? The High Court answered the first question in the negative, and consequently the second question in the affirmative.
i.e., both questions in favour of the Revenue and against the assessee.
This appeal has been filed by the assessee on a certifi cate granted by the.
High Court.
The short question that falls for our 'consideration is whether the money received towards the insurance claim on account of the damage to or destruction of the capital asset is so received on account of the transfer of the asset within the meaning of Section 45 of the Act and is.
, there fore, chargeable to the capital gains tax under the 'said section.
It would be convenient to reproduce here the provisions of Section 45 of the Act as they stood at the relevant time: "45.
Capital gains Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 53 and 54, be chargeable to income tax under the head 'capital gains ', and shall 583 be deemed to be the income of the previous year in which the transfer took place".
Emphasis supplied, Section 2(47) of the Act which defined transfer at the relevant time read ' as fol lows: "2.
Definitions In this Act, unless the context otherwise requires,. . . . . (47) 'transfer ', in relation to a capital asset, includes the, sale, exchange or relin quishment of the asset or the extinguishment of any rights therein or the compulsory acqui sition thereof under any law.
" A reading of the two sections makes it abundantly clear that the profits or gains which are amenable to Section 45 must arise from the transfer of the capital asset which is effected in the previous year.
The transfer may be brought about by any of the modes of transfer which include ,sale, exchange, relinquishment of the asset or the extinguishment of 'the rights therein, or the compulsory acquisition of the asset under any law.
It may be 'of the asset itself or of any rights in it.
It may further be the result of a volun tary act or a compulsory operation.
Whatever the mode by which it is brought about, the existence of the asset during the process of transfer is a pre condition.
Unless the asset exists in fact, there cannot be a transfer of it.
When an asset is destroyed there is no question of transferring it to others The destruction or loss of the asset, no doubt, brings about the destruction of the right of the owner or possessor of the asset, in it.
But it is nOt On account of transfer.
It is on account of the disappear ance of the asset.
The extinguishment of right in the asset on account of extinguishment of the asset.
itself is not a transfer of the right but its destruction.
By no stretch of imagination, the destruction of the right on account of the destruction of the asset can be equated with ' the extin guishment of right on account of its transfer.
Section 45 speaks about capital, gains arising out of "transfer" of asset and not on account of "extinguishment of right".
by itself.
The capital gains is attracted by transfer and not merely by extinguishment of right howsoever brought about.
The transfer may be effected by various modes and one of the modes is the extinguishment of right on transfer of the asset itself for on account of the transfer of the right or rights in 584 The extinguishment of right or rights must in any case be on account of its or their transfer in order to attract the provisions of Section 45.
If is not, and is on ' account of the destruction or loss of the asset, as in the present case, it is not a transfer and does not attract the provi sions of Section 45 which relate to.
transfer and not1 to mere extinguishment of right but to one by transfer.
Hence an extinguishment of right not brought about by transfer is outside the purview of Section 45.
The High Court erred in ignoring the basic postulate that Section 45 does not relate to extinguishment of right but to transfer.
Having concentrated its attention on the words "extinguishment of right" rather than on "transfer", the High Court, with respect, misdirected itself and proceeded on the basis that every extinguishment of right whether by way of transfer or not, is attracted by Section 45. 5.
Transfer presumes both the existence of the asset and of the transferee to whom it is transferred.
In the case of the damage, partial or complete, or destruction or loss of the property, there is no transfer of it in favour of a third party.
The money received under the insurance policy in such cases is by way of indemnity or compensation for the damage, loss or destruction of the property.
It is not in consideration of the transfer of the property or the trans fer of any right in it in favour of the insurance company.
It is by virtue of the contract of insurance or of indemni ty, and in terms of the conditions of the contract.
Under an insurance contract,, the assured cannot claim more amount than the sum insured.
The sum insured is the maximum liabil ity of the insurer and the assured secures it by paying his premium which is accordingly fixed. 'Even within ' the. maximum limit, the insured cannot recover more than What he establishes to be his actual loss, whatever may be his estimates of the loss that he was likely to bear and whatev er the premium he may have paid calculated on the basis of the said estimate.
The fact that while paying for the total loss of or damage to the property, the insurance company takes over such property or whatever is left of it, does not change the nature of the insurance claim which is indemnity or compen sation for the loss.
The payment of insurance claim is not in consideration of the property taken over by the insurance company, for one is not consideration for the other.
It is incOrrect ' to argue that the insurance claim is the value of the damaged property The claim is assessed on the basis of the damage sustained by the property or the amount necessary to restore it to its original condition.
It is not a consid eration for the damaged property.
In the present case, the insurance was on reinstatement.
basis which meant that the 585 property was to be restored to the Condition in which it was, before the fire.
The insurance company paid the amount for the restoration of the 'machinery which had to be on the basis of its value at the time of the fire.
The machinery in question was purchased in the year 1957 and the fire broke out.
on August 11, 1966.
Although nothing has come On record on the point, taking into consideration the 'ordinary course of events, it is legitimate to presume that the cost of machinery had gone up during the intervening period and the assured and, therefore, the assessee, was entitled to recov er on the basis of the increased value of the machinery (refer to Halsbury 's Laws of England, Fourth edition, Vol. 25 under the heading insurance, in para 654). ' 6.
It is true that the definition of "transfer" in Section 2(47) of the Act is inclusive, and therefore, ex tends to events and transactions which may not otherwise be "transfer" according to its ordinary, popular and natural sense.
It is this aspect of the definition which has weighed with the High Court and, therefore '; the 'High Court has argued that if the ' words "extinguishment of any rights therein" are substituted for the 'word "transfer" in Section 45, the claim or compensation received from the insurance company would be attracted by the said section.
The High Court has, however, missed the fact that the definition also mentions such transactions as sale, exchange etc.
to which the word "transfer" would properly apply ' in its popular and natural import.
Since those associated ' words and expres sions imply the existence of the asset and of the transfer ee, according to the rule of noscitur a sociis, the expres sion ' 'extinguishment of any rights therein" would take colour from the said associated words and expressions, and will have to be restricted t6 the sense analogous to them.
If the legislature intended to extend the definition to any extinguishment of right, it would not have included the obvious instances of transfer, viz., sale, exchange etc.
, Hence the expression "extinguishment of any rights therein".
will have to be confined to the 'extinguishment of rights on account of transfer and cannot be extended 'to mean any extinguishment of right independent of or otherwise than on account of transfer.
The High Court, as stated earlier, read the expres sion "extinguishment of any rights" in the assets as any extinguishment of right whether it resulted in or was on account of transfer.
For the reasons which we have discussed earlier we find that approach is not correct.
For the same reasons, we are unable to accept the reasoning of the High Court that for "transfer" within the meaning of Section 45 the asset need not exist.
We are afraid that the High Court 's reliance on Commissioner of Income Tax vs R.M. Amin, 586 Gujarat to hold that for the. transfer contemplated by Section 45, the asset need not exist is not well merited.
There, the High Court was concerned with a chose in action, viz., the shares, and the amount received by the assessee shareholder on liquidation of the company representing his share in the assets of the company.
The Court there had pointed out that the extinguishment of right of the asses seeshareholder in his share which was an incorporeal proper ty had come about on account of receipt by ' him of the amount representing the value of the shares.
The amount received by the assessee shareholder does not represent any consideration received by him as a result of the extinguishment of his rights in 'the shares.
The share merely represents the right to receive money on distribution of the net assets of the company in liquidation and it is by satisfaction of that right, that the right is extinguished when such monies are received by the shareholder.
The con sideration presumes quid pro quo and, therefore, transfer of the property or.
of the rights in the property, whether the property is corporeal or incorporeal.
When the assets, themselves are being distributed, it is correct,to say that to the extent of distribution, they are wiped out.
It is in that sense that the assets do not exist to the extent that they are distributed.
When the company 's assets are thus distributed, is a sense the assets which are converted into money and which, therefore, exist in the form of money are transferred from the liquidator to the share holder.
His rights in the assets come to an end when he receives his liquidated share of the asset.
In such a case the assets do exist though in the converted form, viz., cash and what is transferred is also the converted form of the asset.
With respect, therefore,"it is not correct to say that in such cases the capital asset does not exist and does not change hand as capital asset.
That the receipt of his share in the asset brings about automatically the extin guishment of the shareholder 's rights in the asset cannot, however, be gainsaid.
The decision of the Gujarat High Court in R.M. Amin 's case (supra) was appealed against and this Court while approving ' the ratio of the said decision fur ther explained the nature of the 'money received by a share holder on the ' liquidation of a company.
This Court reiter ating its earlier view in the case of Commissioner Of In come tax vs Madurai Mills Co. Ltd., , held that the act of the liquidator in distributing the assets of the company does not result in the creation of new rights.
It merely recognises the legal rights which were in exist ence prior to the distribution.
The shareholder receives money in recognition and satisfaction of his 587 right and not by operation of any transaction which amounts to sale, exchange, relinquishment of asset or extinguishment of any of his rights in such asset.
So also when a partner retires from the partnership what he receives is his share in the partnership which is worked out and realised.
It does not represent consideration received ' by 'him as a result of the extinguishment of his interest in the partnership assets.
He has no share in any particular asset of the firm.
Therefore, there is no trans fer of interest in any particular asset of the firm on account of the receipt of his share by a retired partner.
As held in Commissioner of Income tax vs Mohanbhai Pamabhai, no part of the amount received by the assessee as a retired partner is assessable to capi tal gains tax under Section 45. 9.
The High Court has explained these two decisions by giving.
reasons which do not appeal to us.
The COurt has tried to distinguish them from the facts of the present Case pointing out, firstly, t, hat there was no foundation either in law or in fact to believe that the amount which the assessee received from M/s. Jasmine 'Mills was paid to it in satisfaction or in working out of its right, if any, to recover damages under law or contract for the loss or dam age ' caused ' to the machinery.
We do not see any difficulty in holding that it was an amount received by the assessee as damages on account of the loss of its machinery.
It is difficult to describe it otherwise.
The second reason given by the High Court is, with 'respect, equally fragile.
It is held that the alleged right, if any, of the assessee t9 recover damages was not an absolute statutory right but one which was subject to a contract to the contrary and even if there was no such contract, it was merely an inchoate or contingent right in respect of which some investigation or legal proceeding and settlement or adjudication would be necessary for its ' satisfaction or fulfilment.
We do not agree with this reasoning as well.
The facts clearly show that M/s. Jasmine Mills as a bailee had insured the machin ery hired from the assessee, since it was liable to make good the loss of the machinery to the assessee.
This is implied under a contract of bailment unless it is provided to the contrary.
M/s. jasmine Mills further admittedly paid the insurance amount pro rata to the assessee.
In the cir cumstances, we are unable to appreciate the distinction sought to be made by the High Court.
We are also unable to see how it would make any difference to the point involved in the present case whether the Jasmine Mills had insured the assessee 's machinery as bailees or as agents of the assessee.
588 There is further no dispute that the insurance policy con tained the reinstatement clause requiring the in surer to pay the cost of the machinery as on the date of the fire.
As we have pointed out earlier, in an insurance policy with the reinstatement clause, the insurer is bound to pay the cost of the insured property as on the date of the destruction or loss, and it matters very little if the amount so paid by the insurance company is invested for purchasing the de stroyed asset or for any other purpose.
In the circumstances, for the purposes of answering the question in hand, it was not necessary to inquire whether the amount received by the assessee was spent in replacement of the machinery or not.
For the reasons given above, the decision of,the Allahabad High Court in Commissioner of Income tax vs J.K. Cotton Spinning& Weaving Mills Co. Ltd., which proceeds on the same reasoning as the impugned judg ment is also not a good law.
InStead, we approve of the conclusion reached by the Madras High Court in C. Leo Macho do vs Commissioner of Income tax, for the reasons given by us above; 12.
In the result, the ' appeal succeeds and the impugned decision is set aside.
In the circumstances of the case, however, there will be no order as to costs.
R.P, Appeal al lowed.

summary:
The appellant company purchased machinery worth Rs.2,81,741 in the year 1957 and gave it on hire to another company which insured the machinery.
In the year 1966, a fire broke out in the lendee company causing extensive damage to the machinery of the appellant.
On a settlement of the insurance claim the lendee company paid to the appellant a sum of Rs.6,32,533 on account of the destruction of its machinery.
The difference between the actual cost of the machinery and its written down value worked out to Rs.2,62,781 which the appellant (the asses I see) showed in its income tax return for the relevant year as profit chargeable to tax under section 41(2) of the Income Tax Act.
The lncomeTax Officer subjected to tax also the additional amount of Rs.3,50,792 the difference between the amount of insurance claim and the original cost of the machinery treating the same as capital gains chargeable under section 45 of the Act, and rejected the case of the appellant that the capital gains tax was not attracted to the amount received on account of the insurance claim since there was no transfer of capital asset as was contemplated by section 45 read with section 2(47) of the Act.
The appeal of the assessee was dismissed by the Appel late Assistant Commissioner, but its claim was accepted by the Income Tax Appellate Tribunal which held that the amount was not received on account of transfer of the capital asset but on account of damage to it and that section 45 was attracted only when there was a transfer of the capital asset.
The reference at the instance of the revenue was an swered by the High Court against the assessee.
Aggrieved the assessee filed the appeal before this Court on a certificate granted by the High Court.
On the question: whether the money received towards the insurance claim on account of the damage to. or destruction of the capital 578 asset was so received on account of the transfer of the asset within the meaning of section 45 of the Act and was, there fore, chargeable to the capital gains tax under the said section, Allowing the appeal, this Court, HELD: 1.1 The money received under the insurance policy is by way of indemnity or compensation for the damage, loss or destruction of the property.
It is not in consideration of the transfer of the property for the transfer of any right in it in favour of the insurance company.
It as by virtue of the contract of insurance or of indemnity, and in terms of the conditions of the contract.
[584C D] 1.2 In the case of damage, partial or complete, or destruction for loss of property there is no transfer of it in favour of a third party.
The fact that while paying for the total loss of or damage to the property, the insurance company takes over such property or whatever is left of it, does not change the nature of the insurance claim which is indemnity or compensation for the loss.
The payment of insurance claim is not in consideration of the property taken over by the insurance company, for.
one is not consid eration for the other.
The insurance claim is not the value of the damaged property.
The claim is assessed on the basis of the damage sustained by the property or the amount neces sary to restore it to its original conditions.
It is not a consideration for the damaged property.
[584C, F G] 1.3 In the instant case, the amount received by the assessee was the one received by it as damages on account of the loss of its machinery.
The lendee company, as a bailee, had insured the machinery hired from the assessee, since it was liable to make good the loss of the machinery to the assessee.
This was implied under a contract of bailment unless it was provided to the contrary.
The lendee company paid the insurance amount pro rata to the assessee.
[587D G] 1.4 The insurance was on reinstatement basis which meant that the property was to be restored to the condition in which it was, before the fire.
The insurance company paid the amount for the restoration of the machinery which had to be on the basis of its value at the time of the fire.
The machinery in question was purchased in the year 1957 and the fire broke ' out on.
August 11, 1966.
Taking into considera tion the ordinary course of events, it was legitimate to presume that the cast of machinery had gone up during the intervening period and the assured and, therefore, the assessee, was entitled to recover on the basis of the 579 increased value of the machinery.
[584H; 585A B] Halsbury 's Laws,of England, Fourth Edition, Vol.
25, re ferred to.
2.1 The capital gains is attracted by transfer and not merely by extinguishment of right howsoever brought about.
The transfer may be effected by various modes and one of the modes is the extinguishment of right on transfer of the asset itself or on account of the transfer of the right or rights in it.
The extinguishment of right or rights must in any case be on account of its or their transfer in order to attract the provisions of Section 45 which speaks about capital gains arising out of "transfer" of asset and not on account of "extinguishment of right" by itself.
[583G H; 584A] If extinguishment of right or rights is not due to transfer and is on account of the destruction or loss of the asset, it is not a transfer and does not attract the provi sions of section 45 which relate to transfer and not to mere extinguishment of right but to one by transfer.
Hence an extinguishment of right not brought about by transfer is outside the purview ors.
[584A B] Whatever the mode by which a transfer is brought about, the existence of the asset during the process of transfer is a pre condition.
Unless the asset exists in fact, there cannot be a transfer of it.
[583E] Transfer presumes both the existence of the asset and of the transferee to whom it is transferred.
[584C] 2.2 When an asset is destroyed there is no question of transferring it to others.
The destruction or loss of the asset, no doubt, brings.
about the destruction of the right of the owner or possessor of the asset, in it.
But it is not on account of transfer.
It is on account of the disappear ance of the asset.
The extinguishment of right in the asset on account of extinguishment of asset itself is not a trans fer of the right but its destruction.
By no stretch of imagination, the destruction of the right on account of the destruction of the asset can be equated with the extinguish ment of right on account of its transfer.
[583E G] 3.1 Although the definition of "transfer" in Section 2(47) of the Act is inclusive, and, therefore, extends to events and transactions which may not otherwise be "trans fer" according to its ordinary, popular and natural sense, yet it also mentions such transactions as 580 sale, exchange etc.
to which the word "transfer" would properly apply in its popular and natural import.
Since those associated words and expressions imply the existence of the asset and of the transferee, according to the rule of noscitur a sociis, the expression "extinguishment of any rights therein" would take colour from the said associated words and expressions, and will have to be restricted to the sense analogous to them.
[585C E] If the legislature intended to extend the definition to any extinguishment of right, it would not have included the obvious instances of transfer, viz. sale, exchange etc.
Hence the expression "extinguishment of any rights therein" will have to be confined to the extinguishment of rights on account of transfer and cannot be extended to mean any extinguishment of right independent of or otherwise than on account of transfer.
[585E F] 3.2 The High Court, was not correct in reading the expression " 'extinguishment of any rights" in the assets as any extinguishment of right whether it resulted in or was on account of transfer nor was it right in assuming that for "transfer" within the meaning of Section 45 the asset need not exist.
It erred in ignoring the basic postulate that Section 45 does not relate to extinguishment of right but to transfer.
Having concentrated its attention on the words "extinguishment of right" rather than on "transfer", the High Court, misdirected itself and proceeded on the basis that every extinguishment of right whether by way of trans fer or not, is attracted by Section 45.
[585F G; 584B] Commissioner of Income Tax vs Madurai Mills Co. Ltd., and Commissioner of Income Tax vs Mohanbhai Pamabhai, , referred to.
Whether the lendee company had insured assessee 's machinery as bailees or as agents of the assessee would make no difference.
The insurance policy contained the ' rein statement clause requiring the insurer to pay the cost of the machinery as on the date of the fire.
[587G H; 588A] 5.
In an insurance policy with the reinstatement clause, the insurer is bound to pay the cost of the insured property as on the date of destruction of loss, and it matters very little if the amount so paid by the insurance company is invested for purchasing the destroyed asset or for any other purpose.
[588A B] C. Leo Macho do vs Commissioner of Income Tax, , approved.
581 Income tax Commissioner vs
J.K. Cotton Spinning & Weaving Mills Co. Ltd., , disapproved.


judgement:
Civil Appeal No. 3164 (NT) or 1991.
From the Judgment and Order dated 19.4.1984 of the Delhi High Court in I. Tax Ref.
No. 250 of 1975.
H.N. Salve and Pramod Dayal for the Appellant.
J. Ramamurthy, Vijay.
K. Verma and Ms. A. Subhashini for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, CJ.
Special leave granted.
The judgment of the High Court of Delhi is challenged by the assessee in this appeal.
Assessee is a private ' limited company running a cold storage.
The year of assessment is 1973 74.
An 'industrial company ', as defined in sectiOn 2(7)(c) of Finance Act, 1973 for ,the purposes of the First Schedule of that Act was entitled to certain concessions in the matter of taxation.
The appellant laid claim to such benefits by contending that it came within the meaning of 'industrial company '.
The question that was referred by the Income tax Appel late Tribunal to the High Court was: "Whether on the facts and in the circumstanCeS of the case the assessee company running a cold storage could be held to be an industrial company for purposes of section 2C7)(c) of the Finance Act, ' 1973 and the First Schedule thereto?" 591 The Income tax Officer had not accepted the claim of.
the appellant but the Appellate Assistant Commissioner conceded the claim and directed remission of the proceedings to the Income tax Officer for re computation of the tax by treating the appellant as an 'industrial company ', The Tribunal accepted the appeal of the Revenue and held that the appellant was not an 'industrial company '.
The High Court has approved the conclusions reached by the Tribunal. 'Industrial compnay ' has been defined in section 2(7)(c) of the Finance Act., 1973 thus: "Industrial company means a company which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining.
(Underlining is ours) The appellant had taken the stand that the activity carried on by it came within the words 'processing of goods '.
The short question for examination, therefore, is whether the cold storage of the appellant can be held to have been engaged in the processing of goods.
This question directly arose for consideration of a Division Bench of the Calcutta High Court in Commissioner of Income tax vs Radha Nagar Cold Storage(P) Ltd., 126 I.T.R. 66.
Sabyasachi Mukharji, J., (as he then was) spoke for the Court in this.case.
Certain English cases were taken into consideration to find out the difference between manufactur ing and processing and to find the true meaning of the word "processing".
The word 'processing ' has not been defined in the Income tax Act.
The word 'process ' has various meanings, some wider than others.
Lord Guthrie in Kilmarnock Equita ble Co operative Society Ltd. vs IRC [19661 at page 681 observed that the word "does not have the widest significance of 'anything done to the goods or materials '.
The Division Bench of the Calcutta High Court ' looked 'for the meaning in the Oxford DictiOnarY, Webster 's New Interna tional Dictionary, Words and Phrases Legally Defined ' Vol. 4 and in Encyclopaedia Britannica Vol. 9.
The High Court was impressed by the statement in Encyclopaedia Britannica, vol. 9 where it was said ' "The only method by which fresh foods may be preserved for a considerable period in the raw state is by subjecting 592 them to as low a temperature as possible without causing damage by freezing.
Storage at temperature above freezing, in the neigh bourhood of 35 F/2 C is known as cold storage.
Storage at such temperature makes possible the holding in good condition of many fresh foods for considerable periods and their shipment to distant markets to consumers.
" The High Court proceeded to state: "The act of cold storage appears to us to bean act whereby foods or ' products stored in the cold storage are prevented from their. natural decay.
The potatoes which are kept in the cold storage are preserved in the original state and their normal decay is prevented.
That, in our opinion, would be processing the goods, that is to say, preser vation applying a method to 'the goods, where by the. goods.
are prevented from taking its/normal course.
There fore, looking from a broad point of view, in the light of the definition provided in the several diction aries to which we have referred, is appears to us, that in the context of the present stat ute, ,which has used the expression "process ing" in contradistinction or differently from the expression "manufacture", the assessee company was engaged in the act of processing the goods in terms of the Finance Act at the relevant time. " The Court referred with approval to a decision of the 'Allahabad High Court in Addl.
Commissioner of Income tax, Kanpur vs Farrukhabad Cold ' Storage (P) Ltd., 16.
The Calcutta High Court 's view directly supports the appel lant 's stand.
In the impugned judgment reported in , after dealing with the cases of the Calcutta and Allahabad High Court,.
reference was.made to the decision of this Court in Chowgule & Co. Pvt. Ltd. and Ant.
vs Union of.
India and Ors., [1981] 1 SCC653 to find out the true meaning of the two words 'manufacture ' and 'processing '.
After discussing some precedents this Court observed thus: "What is necessary in Order to characterise an operation as "processing" is that the 'commodity must., as a result of the operation, experience some change.
, Here, in the present case, diverse quantities of ore possessing different chemi cal and 593 physical compositions are blended together to produce ore of the requisite chemical and physical composition demanded by the foreign purchaser and obviously as a result of this blending, the quantities of ore mixed together in the course of loading through the mechanical ore handling plant experi ence change in their respective chemical and physical compo sitions, because what is produced by such blending is ore of a different chemical and physical composi tion.
When the chemical and physical composi tion of each kind of ore which goes into the blending is changed; there can be no doubt that the operation of blending would amount to "processing" of ore within the meaning of section 8(3)(b) and Rule 13.
It is.no doubt true that the blending of ore of diverse physical and chemical compositions is carried out by the simple act of physically mixing diifferent quantities of such ore on the conveyor belt of the mechanical ore handling ' 'plant.
But to our mind it is immaterial as to how the blending is done and what process is utilised for the purpose of blending.
What is material to consider is whether the different quantities of ore which are.
blended together in the course of loading through the Mechani cal ore handing plant undergo any change in their.
physical and chemical composition as a result of blending and so far as this aspect of the question is concerned, it is.
impossi ble to argue that they do not suffer any change in their respective chemical and physi cal compositions ".
The meaning given to the word 'processing ' and the test laid down to find out whether the operation amounts to processing by the three Judge Bench of 'this Court runs counter to the conclusions.
reached by the Allahabad and Calcutta High Courts.
As we have already pointed out, the two direct decisions on the point are the cases from Allaha bad and Calcutta.
The other cases that have been cited in the Calcutta judgment or at the Bar are cases not relating to the meaning or ambit of the relevant expression in the definition of section 2(7)(c) of the Finance Act, 1973.
We have already noted that processing is a term of wide amplitude and has various aspects and meanings.
In common parlance 'processing ' is understood as an action which brings forth some change or alteration of the goods or material which is subjected to the act Of process ing The dictionary meaning of 594 the term is not Very different from this meaning.
in one sense while various other meanings of wider amplitude are also available.
The view taken by Allahabad and Calcutta High Courts did not find favour with the three Judge Bench of this Court and in clear terms the judgment indicates that processing involves bringing into existence a different substance from what the material was at the commencement of the process.
In a cold storage, vegetables, fruits and several other articles which require preservation by referigeration are stored.
While 'as a result of long storage, scientific examination might indicate loss of moisture content that is,not sufficient for holding that the stored articles have undergone a process within the meaning of section 2(7)(c) of the Finance Act, 1973.
The three Judge Bench decision must be taken to have overruled the view of the Allahabad High Court in Addl.
Commissioner of Income tax, ' Kanpur vs Far rukhabad Cold Storage (P) Ltd., (supra) and that of the Calcutta High Court in Commissioner of Income tax vs Radha Nagar Cold Storage (P) Ltd., (supra).
The appeal has, therefore, to be dismissed and the opinion of the Delhi High Court has to be affirmed.
Parties are directed to bear their own costs.
N.P.V. Apppeal 'dis missed.

summary:
An 'industrial Company ', as defined in Section 2(7)(c) of Finance Act, 1973 was entitled to certain concessions in the matter of taxation.
The appellant, a private limited company running a cold storage, laid claim to such benefits contending that it came within the meaning of 'industrial company ' since the activity carried on by it came within the words 'processing of goods '.
The income Tax Officer, rejected the assessee 's claim but the Appellate Assistant Commissioner conceded the claim, and directed remission of the proceedings to the income Tax Officer for re computation of the tax by treating the appel lant as an 'industrial company '.
The Tribunal accepted the appeal of the Revenue and held that the appellant was not an 'industrial company '.
This was upheld by the High Court.
Dismissing the appeal preferred by the assessee, this Court, HELD: 1.1 The term 'processing ' is of a wider amplitude and has various aspects and meanings.
in common parlance 'processing, is understood as an action which brings forth some change or alteration of the goods or material which is subjected to the act of processing.
The dictionary meaning of the term is not very different from this meaning in one sense while various other meanings of Wider amplitude are also available.
[593G H, 594A] 1.2 In a cold storage, vegetables, fruits and several other articles, which require preservation by re frigeration are stored.
While as a result of long storage, scientific examination might indicate loss of moisture content, that is not sufficient for holding that the stored articles have 590 undergone a process within the meaning of Sec.2(7)(c) of the Finance Act, 1973.
[594C] Chowgule, & Co. Pvt. Ltd. and Anr.
vs Union of India & Ors.
, ; , relied on.
Commissioner of Income tax vs Radha.
Nagar Chid Storage (P) Ltd., and Addl.
Commissioner of Income tax, Kanpur vs Farrukhabad Cold Storage (P) Ltd., 107 I.T.R. 816, referred to.
Kilmarnock Equitable Co operative Society Ltd. vs IRC., [1966] 42TC 675 at Page 681, referred to.