P. Govindan Nair, C.J.
1. The question referred to us, in relation to the assessment year 1968-69 by the Income-tax Appellate Tribunal, Madras Bench, reads as follows :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the profit of Rs. 6,63,658 obtained by the assessee during the relevant previous year by the sale of chemicals imported by it on the strength of the licence issued to it based on its earlier export performance of leather goods processed by it was not attributable to the manufacturing activity carried on by it and, hence, the assessee could not be considered as an 'industrial company' as defined in Section 2(6)(d) of the Finance Act 1968?'
2. The assessee's main business, admittedly, is manufacturing activity as a result of which leather goods were processed. By virtue of the export of such goods in earlier years, the assessee obtained import entitlements and pursuant to the licence issued, the assessee had imported chemicals during the previous year in question and had sold them and earned a profit of Rs. 6,63,658. The question is whether this amount can be said to be income of an 'industrial company' as defined in Section 2(6)(d) of the Finance Act, 1968. Section 2 (6)(d) of the said Act is in these terms :
''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.
Explanation.--For the purposes of this clause, a company shall be deemed to be 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, if the income attributable to any one or more of the aforesaid activities included in its total income of the previous year (as computed before making any deduction under Chapter VI-A of the Income-tax Act) is not less than fifty-one per cent, of such total income.'
3. The total income of the assessee was Rs. 7,90,756 inclusive of the sum of Rs. 6,63,658 already mentioned. Clearly, the bulk of the income was from the sale of imported chemicals. This has nothing to do directly with the income from the manufacture of leather goods and the sale of such goods, in view of the Explanation to Section 2(6)(d).
4. Accordingly, we answer the questions referred to us in the affirmative, i.e., against the assessee and in favour of the Revenue. The assessee will pay the costs of the Revenue. Counsel's fee Rs. 500.
5. A copy of this judgment with the signature of the Registrar and the seal of this court will be sent to the Income-tax Appellate Tribunal, Madras Bench.