1. This income-tax reference raises the question whether the assessed-company is entitled to the concessional rate of tax provided to an industrial company by the Finance Act of 1968. Section 2(6)(d) of the above Act defines as industrial company as follows :
''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 of processing of goods or in mining.'
2. The question has been answered in favor of the assessed by the Tribunal and the reference has been made at the instance of the Commissioner.
3. The assessed is a private limited company carrying on the business of retreading tyres. Its claim that it was an industrial company within the meaning of the definition contained in the relevant Finance Act was being rejected by the department. But when the assessed appealed to the AAC for the assessment year 1968-69, he took a different view. He observed :
'The appellant says that the company should be charged to tax at the rate applicable to industrial company. This point was raised by the assessed in earlier years but it was decided against it because sufficient evidence had not been made available. This year, the assessed has filed photostat copies of certain certificates received from the foreign manufacturers who supplied the machinery used by the appellant-company. He has also furnished a copy of extract from certain magazines. The manufacturers of the machines have certified that the machinery used by the appellant is the same as used for manufacture of new tyres. The extract from the magazine shows that the retreading of tyres is a remanufacturing process. Another commercial magazine was also shown to me which speaks of retreading of tyres as a manufacturing process. In view of this evidence, it is held that the assessed is also an industrial company and the rates applicable to such a company should be applied for calculation of tax.'
4. The ITO filed an appeal to the Income-tax Appellate Tribunal. The grounds of appeal barely stated that the AAC had erred in holding that the assessed was an industrial company. No facts or other material or specific points were raised objecting to the findings given by the AAC. The Tribunal considered the meanings of the words 'manufacture' and 'processing'. Relying on the definitions contained in Webster's Dictionary in respect of the word 'process', the Tribunal came to the conclusion that the assessed was engaged in the processing of tyres. It pointed out that a continuous and regular action or succession actions taking place one after another had been adopted in this case with a definite purpose and leading to the accomplishment of a definite result, namely, the production of a different commercial article.
5. We are of opinion that the view taken by the Tribunal is the correct one. There may be some doubt as to whether the process of retreading of tyres is manufacturing process or not, because it could be said that both before and after the process is applied, the commodity remains the same in substance. However, in our opinion, the words 'processing of goods' used in the definition refer to a much wider category of activities. As pointed out by the Tribunal, the dictionary defines the expression as referring to the subjection of the goods to some special process of treatment. it may be for the purpose of manufacture, for the purpose of development, for a preparation for the market or for conversion into marketable form such as livestock by slaughtering, grain by milling, cotton by spinning, milk by pasteurizing and fruits and vegetables by sorting and repacking. The definition contained in Webster's Third new International Dictionary, at p. 1808, is also to a similar effect and is as follows :
'To subject to a particular method, system, or technique or preparation handling, or other treatment designed to effect a particular result, put through a special process.....'
6. The Oxford Dictionary defines the word as indicating 'a continuous and regular action or succession of actions taking place or carried on in a definite manner and leading to the accomplishment of some result'. This definition has received judicial approval in two decisions of the Calcutta High Court. In Om Prakash Gupta v. CCT  16 STC 935, the above definition was adopted and it was pointed out that it was not one of the requisites of a processing activity that it should involve some operation on some material in order to affect its conversion to some other stuff. It was accordingly held that by converting camphor powder into camphor cubes the petitioner could be said to have processed champhor powder into camphor cubes and fell within the definition of 'dealer' contained in the West Bengal Sales Tax Act, 1954. The same test was applied in Mahabir Prasad Birhiwala v. State of West Bengal  31 STC 628 , where it was held that a transformation into a powdered form of 'whole' black pepper and turmeric purchased from the market on payment of tax, though not amounting to manufacture, certainly involved an act of processing within the meaning of s. 2(b) of the same West Bengal Act. If the above definitions and decisions are applied, it will be quite clear that the assessed in the present case is engaged in the processing of goods within the meaning of the Finance Act, 1968. In this connection, we may point out that on the facts before them the AAc and the Tribunal have found that the machinery employed by the assessed was the same as that used for the manufacture of new tyres; that the assessed-company applied various processes for the purpose of retreading of tyres such as inspection, buffing, cementing, building and retreading; and that commercial circles spoke even of retreading of tyres as a manufacturing process.
7. Mr. Madan Lokur, learned counsel appearing for the department, raised two contentions. The first contention was that under s. 2(6)(d) the assessed was entitled to the concessional rate of tax only if it was mainly engaged in the business of manufacture or processing of goods but that there was no finding by the Tribunal as to whether this was the main activity of the company. We cannot allow the learned counsel to raise this point which was not an objection raised by anybody at an earlier stage nor has any such question been referred to us. We, thereforee, decline to go into this aspect of the matter.
8. The second contention urged by the learned counsel was that though, generally speaking, the expression 'processing' may be capable of a very wide meaning, its connotation should be restricted in the context where it is used in connection with the business such as generation or distribution of power, construction of ships and mining. He referred us to the decision of the Kerala High Court in the case of CIT v. Casino (P.) Ltd. : 91ITR289(Ker) . In that case, the question was whether a hotel could claim to be an industrial company within the meaning of the same Finance Act. The learned judges indicated that the term 'manufacturing or processing of goods' was wide enough to cover the activities of the company in question. They also pointed out that activities of a nature which might not amount to manufacture but which would result in the doing of something to the goods to change or alter their form might be taken in by the term 'processing'. But they did not for the purposes of the case before them consider the scope of the term in full, because they were of opinion that having regard to the four categories of companies which are referred to in the definition, there was clearly a contrast intended between manufacturing concerns on the one hand and trading concerns on the other. They were of opinion that a hotel was mainly intended for trading and not for production or manufacture.
9. While we agree that a very wide connotation of the word 'processing' may not be appropriate in the context of s. 2(6)(d), we are of opinion that the above decision does not assist the case of the revenue here. There is no contrast in the present case, as there was in the Kerala case, between a manufacturing concern and a trading concern. In the present case, the assessed applies certain industrial processes to a worn out tyre and gives it a new lease of life; the process, though not equivalent to the manufacture of a new tyre, stops very little short of it. The nature of the activity in the present case, which is clearly an activity of processing in the sense earlier discussed, is also akin in nature to an industrial or manufacturing activity. They only reason why it cannot be called manufacture is that the old article has not completely lost its identity or got converted into a new type of goods. But, as pointed out by the Tribunal, for all practical purposes and in the commercial sense of the term, the retreated tyre is almost a new article and indeed it is well known that retreaded tyres are also separately sold in the market in the same way as newly manufactured tyres.
10. For the above reasons, we are of opinion that the question referred to us has to be answered in the affirmative and in favor of the assessed and we do so. As the Commissioner has failed, he will pay the costs of this reference; counsel's fee Rs. 200.