9911796707
TMI Blog1984 (11) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... that even though Pharmaceuticals and Allied (India) Company was taken over by agreement dated 11-6-1975, the actual manufacture of pharmaceutical products commenced only in the subsequent year, i.e., the previous year relevant to the assessment year 1977-78. The ITO did not accept the claim of the assessee-company that since this was the second year immediately succeeding the previous year in which the industrial undertaking was set up for the manufacture and production of pharmaceutical products, the assessee's case is governed by the provisions of section 37(3D) of the Income-tax Act, 1961 ('the Act'), and, therefore, the provisions of section 37(3A) will not be applicable. The ITO, therefore, made a disallowance of 15 per cent out of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture or production of articles and this implies that the industrial undertaking has been set up by the assessee and not acquired by the assessee from any person who had earlier set it up. In this connection, Shri Kumar submitted that the manufacturing activity under consideration here was the business of Pharmaceuticals and Allied (India) Company, which was taken over by the assessee as a going concern by agreement dated 11-6-1975. Summing up, Shri Kumar vehemently argued before us that the Commissioner (Appeals) wrongly held that the assessee's case was covered by the provisions of section 37(3D) and, therefore, there was no justification for any disallowance under section 37(3A). 4. On the other hand, the assessee's learned counsel, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 1-4-1979, till its omission by the Finance (No. 2) Act, 1980, with effect from 1-4-1981, stood as follows : " (3D) In a case where an assessee has set up an industrial undertaking for the manufacture or production of any articles, nothing in sub-section (3A) shall apply in respect of any expenditure on advertisement, publicity or sales promotion incurred by the assessee, for the purposes of the business of such undertaking, in the previous year in which such undertaking begins to manufacture or produce such articles and each of the two previous years immediately succeeding that previous year. " This speaks of an assessee, who has set up an industrial undertaking for the manufacture or production of any article and does not specify th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any other purpose, more expenses will be necessary for advertisement, publicity and sales promotion in the year in which the industrial undertaking begins manufacture or production and for the two succeeding years than in the case of other similar concerns or in the case of that concern itself after the third year. Considering all this and looking to the totality of the facts and circumstances, we have no hesitation in coming to the conclusion that the Commissioner (Appeals) rightly held that the industrial undertaking set up by the assessee for manufacture and production of pharmaceutical products will be governed by the provisions of section 37(3D) for the year of commencement of manufacture or production and the succeeding two years an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
