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Interpretation of section 15C of the Indian Income-tax Act regarding concession availability for an industrial undertaking. Detailed Analysis: The case involved a reference under section 66(1) of the Income-tax Act regarding the availability of the concession contained in section 15C for an industrial undertaking. The assessee, a company, had started as a partnership business for manufacturing tapes, works, webbing, etc., during the war. Subsequently, the company transitioned to manufacturing handloom furnishing fabrics. The dispute arose regarding the eligibility of the company for the concession under section 15C for the factory at Ghaziabad, which commenced operations after March 31, 1948. The Income-tax Officer contended that since handloom manufacture had begun at the Bela Road factory before the specified date, the concession was not applicable. The Appellate Assistant Commissioner and the Appellate Tribunal upheld the Income-tax Officer's decision, emphasizing that the transfer of machinery and plant used in a pre-existing business to the new factory disqualified the company from the concession under section 15C. The Tribunal's decision was based on the premise that the new undertaking was partly formed by the transfer of machinery used in a business carried on before April 1, 1948. The key contention revolved around whether the transfer of any machinery or plant to a new business automatically negated the concession under section 15C. Additionally, the debate focused on whether the initial manufacture of cloth at the Bela Road factory was experimental and served as training for the new business of handloom furnishing fabrics. The Commissioner's counsel argued against questioning the Appellate Assistant Commissioner's finding that the production in 1947 was not purely experimental due to significant sales. However, the judgment highlighted that the production before April 1, 1948, was experimental, and the pilot plant at Bela Road laid the foundation for the new enterprise. The court emphasized that the concession under section 15C should be construed liberally to encourage new industrial ventures. It was noted that the sales figures escalating to over &8377; 15,00,000 in the fourth year of the new factory's operation supported the experimental nature of the initial production. Consequently, the court opined that the factory at Ghaziabad qualified for the concession, despite the transfer of a portion of machinery used before April 1, 1948. In conclusion, the court answered the question in the affirmative, allowing the assessee company to benefit from the concession under section 15C and awarded costs against the Commissioner of Income-tax. The Chief Justice concurred with the judgment, affirming the entitlement of the company to the concession.
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