The processing of goods for the purpose of Section 2 (7) (c) of the Finance Act, 1973 requires that the commodity must, as a result of the operation, experience some change.

( 1 ) BY this Reference the following question of law has been referred for the opinion of this Court by the Income-tax Appellate Tribunal, Delhi Bench "b" (hereinafter called as the Tribunal) :

"whether on the facts and in the circumstances of the case the assessee company running a cold storage could be held to be an Indastrial Company. for purposes of Section 2 (7) (c) of the Finance Act, 1973 and the First Schedule thereto ?"

THE assessee is a company incorporated under the Indian Companies Act. The assessment year is 1973-74. The assessee earned income by running a cold storage. In the course of earlier proceedings before the Income-tax Officer it was claimed that it was an Industrial Company as defined in S. 2 (7) (c) of the Finance Act, 1973 for purposes of the First schedule thereto. Section 2 (7) (c) of the Finance Act, 1973 defines the expression industrial company as under:

"industrial company means a; company which is mainly engaged in the business of generation or distribution of electrity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining. "

( 2 ) THE Income-tax Officer for the reasons given in the assessment order did not accept the said contention of the assessee. In the appeal taken b^ the assessee to the Appellate Assistant Commissioner it was contended on behalf of the assessee that the cold storage plant of the assesses is used for the preservation of commodities of the. customers stored therein and the act of preservation of the goods stored and the method employed therefor amounts to processing of those goods and that included treatment of the goods to help their preservation. This contention of the assessee was accepted by the Appellate Assistant Commissioner.

( 3 ) THE Revenue took the matter in appeal to the Tribunal. The question revolved on the words "processing of goods" as appearing in the relevant provision. The Single Bench of the Tribunal after examining the case law cited on behalf of the two sides came to the conclusion that the company which is engaged in the running of a cold storage cannot be said to be a company mainly engaged in the processing of goods. It was observed that the assessee by running the cold stoarge only keeps the goods of his customers in almost the same condition in which the goods are brought to it for being kept in the cold storage and that no new product comes into being by the keeping of the goods by the assessee in his cold storage. The Tribunal accordingly accepted the departmental appeal, thereby dis-allowing the relief to the assessee by treating the assessee company as an industrial company.

( 4 ) WE have heard Mr. M. L. Varma, learned counsel for the assessee and Mr. K. K. Wadhera, learned counsel for the Revenue. The question for consideration is as to whether the activity carried on in a cold storage is the one of manufacture or processing of goods. It cannot be urged nor was sought to be urged on behalf of the assessee that the running of a cold storage involves the manufacture of goods. However, it has been contended that the process involved in the preservation of goods stored in a cold storage amounts to process of the goods stored therein. It was pointed out that when articles like potatoes and fresh fruits are kept under refrigeration, their decay is prevented. The temperature in the cold storage is regulated by the use of the machinery. Preservation under refrigeration is a well known kind of process for keeping edible things in good condition for a temporary period in order to preserve them and to keep them marketable. The goods are thus prevented from any decay or deterioration. The contention of the assessee is that the subjection of the goods stored in a cold storage to a certain temperature regulated mechanically amounts to subjecting those goods to a process.

( 5 ) THE contention of Mr. Wadhera on the other hand has been that the goods must be subjected to a certain operat