9911796707
|
Home
Issues:
Interpretation of section 84 of the Income-tax Act, 1961 for partial exemption from tax for a new industrial undertaking formed by transfer of buildings previously used for other businesses. Analysis: The judgment dealt with three references arising from a common order of the Income-tax Appellate Tribunal regarding the assessee, a limited company setting up a factory for manufacturing textile machinery parts. The assessee claimed partial exemption under section 84 of the Income-tax Act, 1961, for the assessment years 1963-64, 1964-65, and 1965-66. The Income-tax Officer initially rejected the claim, but the Appellate Assistant Commissioner allowed it. The Tribunal, under clause (ii) of sub-section (2) of section 84, concluded that the assessee could claim the partial exemption unless the new industrial undertaking was formed by transferring a building previously used for other purposes. The Tribunal allowed the claim, leading to the reference question on the entitlement of the assessee to relief under section 84. The court referred to a Division Bench decision in CIT v. Suessin Textiles, Ball Bearing & Products (P.) Ltd., which held that a building previously used for business by a stranger also falls under the clause for transfer to a new business. The court noted a conflicting view by the Gujarat High Court but chose to follow its own precedent. However, the court found no utility in answering the reference question and sending the matter back to the Tribunal. Upon the Tribunal's reevaluation post the court's decision, it found the value of the leasehold premises utilized by the assessee to be insignificant compared to other assets. The Tribunal emphasized that the value was not even reflected in the balance sheet, leading to the assessee's entitlement to relief under section 15C(1) of the Indian Income-tax Act, 1922. The court rejected the Revenue's plea to answer the reference question against the assessee, emphasizing that the Tribunal's consideration should focus on the situation at the time of forming the new industrial undertaking. The court highlighted an Explanation under section 84, stating that if the total value of transferred assets does not exceed 20% of the total business assets, the partial exemption cannot be denied. As the Revenue did not appeal the Tribunal's decision, the court deemed the reference question as purely academic and declined to answer it, citing the principle that academic questions need not be addressed. In conclusion, considering all facts and circumstances, the court made no order as to the costs of the references, thereby concluding the judgment.
|
