Civil Appeal No 3164 NT or 1991
From the Judgment and Order dated 1941984 of the Delhi High Court in I Tax Ref
No 250 of 1975
HN 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 27c 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 2C7c 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 27c 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 StorageP Ltd 126 ITR 66
Sabyasachi Mukharji J as he then was spoke for the Court in thiscase
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 F2 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 itsnormal 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 wasmade 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 83b and Rule 13
It isno 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 27c 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 isnot sufficient for holding that the stored articles have undergone a process within the meaning of section 27c 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
NPV Apppeal dis missed


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