9911796707
TMI Blog1995 (11) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 day. In order to increase the capacity, the appellant gradually replaced the billiter cells with hooker cells. Thirty hooker cells were, installed by March 31, 1957, and thirty more were installed in February, 1958. The installation of the hooker cells required a change over in the power system and the installation of a rectifier was completed only in the year ended March 31, 1959. However, the hooker cells were utilised for the production as and when they were installed by a sui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... talled 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 Assistant Commissioner. The Income-tax Tribunal, on further appeal, rejected the claim of the appellant by holding that though the industrial unit ultimately consisted of sixty hooker cells and the rectifier but it had commenced commercial production in the year ended March 31, 1957, and, therefore, the five years had to be reckoned from the year 1957-58 and not 1958-59. Another contention which was raised before the Revenue authorities and the Tribunal was with regard to the deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57-58 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 whether it is entitled to relief in respect of the thirty hooker cells completed during the previous year for 1958-59 ? (3) Whether development rebate in respect of the new industrial undertaking established during the previous year for 1962-63 should be deducted in computing the profits and gains for the purpose of section 84 and whether the assessee is entitled to any relief under that section in respect of this undertaking ?" The High Court agreeing with the Tribunal answere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 society, for the six assessment years immediately succeeding, and where the assessee is any other person for the four assessment years immediately succeeding. " It is found as a fact that the appellant had begun to manufacture or produce articles in the previous year ended on March 31, 1957, with the help of thirty hooker cells. It is true that the rectifier had not been installed in the year 1957-58 but it is not in dispute that with suitable adjustment being made to the power syst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking 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 could function with thirty hooker cells in the year 1957-58 and further numbers were added in the subsequent year. The undertaking having, thus, started commercial manufacture in the year 1957-58, could not claim the benefit of the provisions of section 84 of the Act because the unit as such had commenced in the year 1957-58 notwithstanding the fact that there had been an expansion thereto in the subsequent year. There was no scope for allowing partial relief or splitting up the relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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, development rebate is deducted from the total income of an assessee and it is not a component or an ingredient for determining profits and gains. In other words, in computing the profits and gains under section 84(5) of the Act, there must first be a deduction under section 84(1) of the Act of six per cent. per annum on the capital employed on the caustic soda plant No. 2 and it is only thereafter the development rebate should be deducted from the total income. In support thereof, reliance w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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