1977 (4) TMI 28 - HC - Income Tax

Summary

Issues involved: Interpretation of relief under section 84 of the Income-tax Act, 1961 for the assessment year 1964-65.

Summary:
The case involved a dispute regarding the eligibility of the assessee for relief under section 84 of the Income-tax Act, 1961 for the assessment year 1964-65. The assessee, a new industrial undertaking, had entered into a contract with the Government of India to manufacture railway wagons. The Income-tax Officer denied the relief for 1964-65, stating that manufacturing had begun in 1958 and relief was only available until 1963-64. The Appellate Tribunal, however, ruled in favor of the assessee, allowing the relief for 1964-65 as well.

Key Points:
- The Tribunal found that the assessee began manufacturing railway wagons in 1959, not in 1958 when a proto-type wagon was produced for approval.
- The Bombay High Court's decision in a similar case emphasized that actual production of articles in a commercial sense is necessary to qualify for relief under section 84.
- Another case cited by the Madras High Court supported the view that the commencement of commercial production determines eligibility for relief under section 84.
- The Madras High Court concluded that the assessee qualified for relief under section 84 for the assessment year 1964-65 based on the commencement of commercial production in 1959.

This judgment clarifies the interpretation of the relief under section 84 of the Income-tax Act, 1961, emphasizing the importance of actual commercial production in determining eligibility for the relief.