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TMI Blog1967 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ption from tax for the assessment years 1957-58, 1958-59 and 1959-60 was not rightly granted ? " The High Court held that the exemption from tax granted to the assessee under section 45(d) of the Act for the assessment years 1957-58, 1958-59 and 1959-60 was not rightly granted and answered the question against the assessee. The relevant facts are as follows : The appellant, Travancore-Cochin Chemicals (P.) Ltd., hereinafter called the assessee, was formed and registered under the Indian Companies Act on November 8, 1951. The prior history of the company is given in the statement of the case as follows : " On July 22, 1949, a partnership was formed between two public limited companies, viz., Fertilisers & Chemicals Travancore Ltd., Alway ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of five years' exemption was over with the assessment years 1956-57. The relevant portion of section 45 of the Act reads as follows : " 45. The provisions of this Act shall not apply to --- ... (c) any company established with the object of financing, whether by way of making loans or advances to, or subscribing to the capital of, private industrial enterprises in India, in any case where the Central Government has made or agreed to make to the company a special advance for the purpose or has guaranteed or agreed to guarantee the payment of moneys borrowed by the company from any institution outside India ; (d) any company established with the object of carrying on an industrial undertaking in India in any case where the company i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2(d). In this case, the assessment has commenced for the first time in 1954-55 and having regard to Part II of the Schedule to the Wealth-tax Act, the first year 1954-55 having ended in a loss, the assessment year can be said to commence only from 1955-56. For five years from then, the assessee would be entitled to the exemption." As mentioned above, the Appellate Tribunal referred the question at the instance of the Commissioner, and the High Court answered the question against the assessee. The assessee having obtained leave from the High Court, the appeal is now before us. The learned counsel for the assessee contends that the word " established " in section 45(d) has the same meaning as it has in section 5(1)(xxi) of the Act, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the word 'established', but operations for establishment cannot be equated with the establishment of the unit itself or its setting up. The applicability of the proviso has, therefore, to be decided by finding out when the company commenced operations for establishment of the unit, which operations must be antecedent to the actual date on which the company is held to have been set up for purposes of the principal clause. This is also the meaning that the Bombay High Court derived in the case in Western India Vegetable Products Ltd. where that court was concerned with the interpretation of the expression 'set up' as used in section 2(11) of the Income-tax Act. That court held : " It seems to us that the expression 'setting up' means, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on." Ordinarily the date of incorporation of a company has nothing to do with the transfer of a machinery or plant to it. The case of Thomas J. Davidson v. W. L. Lanier also lends support to the interpretation which we have placed on the word " established ". Chase C.J. observed : " What is meant by putting in operation or establishing a banking company ? We think that this language has a much wider import than mere commencement of business. To establish a company for any business means complete and permanent provision for carrying on that business, and putting a company in operation may well include its continued as well as its first or original operation." We may mention that no other point was debated before us. In the result w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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