TMI Blog1961 (2) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... s available to the assessee? The question arises out of the assessment of 1952-53 covering the financial year 1951-52. The assessee is a company, Webbing Belting Factory Private Ltd., which had started as a partnership business run by two partners. They were running two factories at Delhi, one situated at Nicholson Road and the other at Bela Road, the business being the manufacture of tapes, works, webbing etc. for supply to the Government Departments during the war. After the war was over, in 1946 one of the partners conceived the idea of manufacturing handloom furnishing fabrics on the lines of manufacturers carried on in South India by a company called the Commonwealth Trust Ltd. He accordingly entered into negotiations with this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory were transferred to the factory at Ghaziabad the assessee was not entitled to claim the said concession. On appeal by the assessee the case was remanded to the Income- tax Officer by the Appellate Assistant Commissioner. The Appellate Assistant Commissioner directed the Income-tax Officer to consider all the points raised on behalf of the assessee and to visit the factory at Ghaziabad in order to appreciate the situation properly. The relevant portion of the report of the Income-tax Officer after the remand reads: As far as power-looms are concerned enough evidence has been produced before me to show that these have never worked at Ghaziabad...........As far as cloth handlooms are concerned it has been contended that these wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erived from any industrial undertaking to which this section applies as do not exceed six per cent. per annum on the capital employed in the undertaking, computed in accordance with such rules as may be made in this behalf by the Central Board of Revenue. (2) This section applied to any industrial undertaking which-- (i) is not formed by the splitting up, or the reconstruction of, business already in existence or by the transfer to a new business of building, machinery or plant used in a business which was being carried on behalf the April 1, 1948; (ii) has begun or begins to manufacture or produce articles in any part of the taxable territories at any time within a period of thirteen years from the 1st day of April, 1948, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jacquard for manufacturing cloth of widths from 48 to 90 costing about ₹ 22,000 were also installed. Cloth valued at ₹ 67,000 manufactured at the Bela Road factory was sold in 1947 but by the account year 1951-52 sales of cloth had risen to over ₹ 15,00,000. The ground on which the concession under section 15C, which was evidently introduced to encourage the starting of new industrial enterprises, has been refused to the assessee is that machinery or plant used in a business which was carried on before April 1, 1948, had been transferred to a new business. In deciding whether the decision is correct it is obvious that the transfer of power-looms which had not been brought into use and had merely been stored must be ig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales amounted to ₹ 67,000 in 1947 in no way rebutted the contention of the assessee that the production at the Bela Road factory of one simple kind of cloth was by way of experiment and training, and this opinion is supported by the fact that in the fourth year of production of the new factory sales had risen to ₹ 15,00,000. In my opinion a provision of this kind which is intended to encourage the setting up of new industrial enterprises must be construed liberally and on this view of the matter I consider that the opening of factory at Ghaziabad was a new enterprise encouraged by the successful experiment, and that the fact that what apparently amounts to about 35% of the machinery or plant used in the factory had been used ..... X X X X Extracts X X X X X X X X Extracts X X X X
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