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Issues:
1. Interpretation of section 15C of the Indian Income-tax Act, 1922 regarding entitlement to concession for a new industrial undertaking. 2. Claim of exemption under section 15C by an assessee for old and second-hand assets used in the undertaking. 3. Application of section 15C(2)(i) to a case where a new industrial undertaking is formed by the transfer of machinery previously used in any other business. 4. Determining if the machinery used in setting up a new industrial undertaking was previously used in any other business. 5. Analysis of the case law Steelsworth Ltd. v. Commissioner of Income-tax in relation to section 15C(1) and 15C(2)(i) of the Act. Analysis: The judgment by the High Court of Punjab and Haryana dealt with a reference made by the Income-tax Appellate Tribunal regarding the entitlement of an assessee to the concession contained in section 15C of the Indian Income-tax Act, 1922. The assessee, a firm, had opened a new branch under the name of Ashok Dyeing and Printing Works and claimed exemption under section 15C for the new industrial undertaking. The dispute arose when the Income-tax Officer denied the claim, stating that the main business of the assessee did not satisfy the conditions of section 15C. The Appellate Assistant Commissioner allowed the claim, but the Income-tax Appellate Tribunal reversed this decision, leading to the reference to the High Court. The primary issue revolved around the interpretation of section 15C(2)(i) of the Act, which applies to industrial undertakings not formed by the transfer of machinery previously used in any other business. The Tribunal concluded that if old assets were transferred to a new business, the exemption would be lost. The Court analyzed the arguments presented by both parties, emphasizing that the machinery used in the new industrial undertaking included a substantial part of old machinery purchased from various persons. This led to the conclusion that the machinery was previously used in the business of the sellers, aligning with the provisions of section 15C(2)(i). Furthermore, the Court referenced the case law of Steelsworth Ltd. v. Commissioner of Income-tax, which highlighted a similar scenario where the exemption under section 15C was not available due to the use of old machinery in a new industrial undertaking. The Court rejected the assessee's arguments that the transfer referred to in section 15C(2)(i) was limited to the transferor's own assets, clarifying that it also encompassed cases where a transferee purchased old machinery for a new business. In conclusion, the Court ruled against the assessee, stating that the exemption claimed under section 15C was not available due to the substantial use of old machinery in the new industrial undertaking. The judgment highlighted the importance of the provisions of section 15C and their application in cases involving the transfer of assets to new businesses.
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