9911796707
TMI Blog1995 (11) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... . KIRPAL. JUDGMENT The judgment of the court was delivered by B. N. KIRPAL J.---This is an appeal by way of special leave having been granted against the judgment of the Madras High Court (see [1977] 107 ITR 352) which had answered the three questions of law referred to it by the Income-tax Tribunal under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), in favour of the respondent. The facts as found by the Tribunal are that the appellant was manufacturing caustic soda utilising billiter cells and up to the year 1956, its production capacity was 13.5 tons per day. The appellant felt the need to expand its capacity and had obtained a licence which permitted it to manufacture 20 tons of caustic soda per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not claimed any relief in respect of the assessment year 1957-58, when thirty of the sixty hooker cells had been installed and, therefore, the period of five years should commence only with effect from the year 1958-59 by which time the installation of the sixty hooker cells, as well as the rectifier, had been completed. In the alternative, it was also contended that the appellant was entitled to relief at least in relation to production of the thirty hooker cells which were installed for the first time in the assessment year 1958-59, as the fifth year for these hooker cells from the commencement of the production is the assessment year 1962-63. The claim had been disallowed by the Income-tax Officer and in appeal by the Appellate Assis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpretation of section 84 of the Act, the relief-under the said provision was allowable only in a case where there was a positive income of the industrial undertaking after the allowance of development rebate. On an application being filed by the appellant, the Tribunal referred the following three questions of law to the High Court : " (1) Whether the first year in which the assessee was entitled to relief in respect of the new industrial undertaking was the assessment year 1957-58 or 1958-59 and whether the assessee was entitled to relief in respect of the assessment for 1962-63 under section 84 ? (2) Even if the assessee is not entitled to the full relief in respect of 60 hooker cells claimed in respect of the assessment for 1962-63 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the capital employed in such undertaking. Sub-section (2) of section 84 provides the conditions which should be satisfied so as to enable the assessee to enjoy the benefit of the said provision. It is not in dispute that these conditions are satisfied but what we are concerned in this case is with regard to the applicability of sub-section (7) of section 84 of the Act which reads as follows : " The provisions of this section shall, in relation to an industrial undertaking, apply to the assessment--- (i) for the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or, as the case may be, operate the cold storage plant or plants, and (ii) where the assessee is a co-operative so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e thirty hooker cells and the rectifier were installed in the year 1958-59 and, therefore, the benefit under section 84 of the Act with regard to these thirty hooker cells should be available in the year 1962-63. This is a case where the manufacturing capacity of the appellant was increased on a licence being granted from 13.5 tons per day to 20 tons per day. In other words, these hooker cells were installed and the billiter cells were gradually replaced. The new industrial undertaking came into existence when the initial lot of thirty hooker cells were installed in the year 1957-58 which had resulted in enhanced commercial production. The Tribunal and the High Court, in our opinion, rightly came to the conclusion that the undertaking coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84, this question is no longer res integra. Dealing with a similar provision, i.e., section 80E of the Act prior to its amendment by the Finance (No. 2) Act, 1967, this court came to the conclusion that in computing the profits of the assessee for the purpose of the special deduction provided under section 80E, items of unabsorbed depreciation and unabsorbed development rebate, carried forward from earlier years, will have to be deducted before arriving at the figure from which the eight per cent. contemplated by section 80E is to be deducted. In an effort to distinguish the aforesaid decision, it was submitted by Mr. Ramachandran that under section 33(2) of the Act, developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
