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TMI Blog1966 (10) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ghtly allowed exemption in respect of the amount that had been invested by them up to the relevant valuation date. The answer returned by the High Court was, therefore, correct. Appeal dismissed. - - - - - Dated:- 5-10-1966 - Judge(s) : V. RAMASWAMY., J. C. SHAH., V. BHARGAVA JUDGMENT The judgment of the court was delivered by BHARGAVA J.--The respondent is a public limited company incorporated under the Indian Companies Act, 1913, in the year 1939 and was carrying on the business of manufacture of absorbent cotton wool. In March, 1955, the board of directors resolved to establish a new spinning unit under the name of Sudarsanan Spinning Mills for which a licence was obtained from the Government of India under the Industries (Development and Regulation) Act, 1951, in August, 1955. The respondent placed orders for purchase of necessary spinning machinery and plant in the months of January and February, 1956. The construction of factory buildings was taken in hand in March, 1956, and these constructions were completed by December, 1957. The erection of the spinning machinery and the plant in the buildings was completed in several stages commencing from June, 1957. A licenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Relying on this principle, he urged that we should hold that a new and separate unit is set up only when the company commences operations for the establishment of such unit. He relied on the principle stated by Maxwell in his book on The Interpretation of Statutes, 11th edition, at page 155, that there is no rule that the first or enacting part is to be construed without reference to the proviso. " The proper course is to apply the broad general rule of construction, which is that a section or enactment must be construed as a whole, each portion throwing light, if need be, on the rest. " " The true principle undoubtedly is, that the sound interpretation and meaning of the statute, on a view of the enacting clause, saving clause, and proviso, taken and construed together is to prevail. " The view taken by the High Court was challenged on the ground that the High Court had interpreted the principal clause without giving full effect to the language of the proviso. The High Court held that unless a factory is erected and plants and machinery installed therein, it cannot be said to have been set up. The resolution of the board of directors, the orders placed for purchasing machiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in section 2(11) of the Income-tax Act. That court held : " It seems to us that the expression 'setting up' means, as is defined in the Oxford English. Dictionary, 'to place on foot' or 'to establish', and in contradistinction to 'commence '. The distinction is this that when a business is established and is ready to commence business, then it can be said of that business that it is set up. But before it is ready to commence business it is not set up. " This view was expressed when that court was considering the difference between the meaning of the expression " setting up a business " and " commencing of a business ". In the case before us, the proviso does not even refer to commencement of the unit. The criterion for determining the period of exemption is based on the commencement of the operations for the establishment of the unit. These operations for establishment of the unit cannot be simultaneous with the setting up of the unit, as urged on behalf of the Commissioner, but must precede the actual setting up of the unit. In fact, it is the operations for establishment of a unit which ultimately culminate in the setting up of the unit. On this interpretation, it is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the unit were commenced at a subsequent stage. In fact, it was only for the purpose of urging that the principal clause was not applicable to the case of the respondent that the position was taken up on behalf of the Commissioner that the operations for establishment of the unit had been commenced before 1st April, 1957, and the unit must be held to have been set up at the same time when those operations were commenced. That submission, as we have indicated above, has no force. In any case, the judgments passed by all the wealth-tax authorities show that it was at no stage in dispute that the operations for establishment of the unit had been commenced by the respondent prior to 1st April, 1957. Paragraph 5 of the statement of the case mentions that the Wealth-tax Officer disallowed the claim on the ground that the unit was set up prior to 1st April, 1957. The Appellate Assistant Commissioner also in his judgment said : " In this view of the matter, the appellant set up the undertaking even prior to 1st April, 1957, as operations were carried out prior to that date for the establishment of the undertaking. The operations consisted of the seeking of permission from the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X
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