TMI Blog1986 (3) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... nufactured. This unit is engaged in the manufacture of calcium carbide, caustic soda and polyvinyl chloride articles. The assessee has plants or units for production of the following items: 1 . Calcium carbide, 2 . Polyvinyl chloride resin, 3 . Polyvinyl chloride compound, 4. Polyvinyl acetate, and 5 . Polyvinyl chloride. Calcium carbide is not a petrochemical product. The plants or units at serial Nos. 2 and 4 produce PVC resin and PV acetate. Plants or units at serial No. 3 produce PVC compound by mixing PVC resin with chalk powder. PVC resin used in plant at serial No. 3 was supplied by plant at serial No. 2. Plant at serial No. 5 manufactures plastic articles using PVC resin and PVC compound. It would thus appear that the ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of this section, a deduction from such profits and gains of an amount equal to eight per cent. thereof, in computing the total income of the company. (2) This section applies to a domestic company, save in a case where such company is a company which is referred to in section 108 and has gross total income of fifty thousand rupees or less. (3) Where a company to which this section applies is entitled also to the deduction under section 80H, the deduction under sub-section (1) of this section shall be allowed with reference to the amount of the profits and gains attributable to the priority industry or industries as reduced by the deduction under section 80H in relation to such profits and gains. " It may be mentioned here tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer to give appropriate relief for the years under consideration to the assessee under section 80-I of the Act after verifying the correctness of the calculation placed before the Tribunal by the assessee. The Revenue being dissatisfied with the decision of the Tribunal, at its instance, the following question has been referred to us for our opinion under section 256(1) of the Act : " Whether the assessee is entitled to deduction of 8% of the profits on PVC plant on the sale of PVC resins at Rs. 1,01,97,688 to the other units, namely, PVC compound, under section 80-I of the Act ? " Now, it appears that this figure of Rs. 1,01,96,688 mentioned in the question relates only to one year. Since the Tribunal has not referred to the figures re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of section 15C, the profits of a new undertaking would have to be computed on ordinary commercial principles. The Revenue would be entitled to enquire and ascertain the real profits by acting on commercial principles, that is, on the basis of the realistic value of the business assets transferred from one activity to another. Hence, the starch produced by the old undertaking and used as a raw material in the new industrial undertaking should betaken at market price for the purpose of computing profits and gains of the new undertaking under section 15C. In our opinion, the above view taken by this court in the context of section 15C will govern the instant case also. For the reasons stated in the aforesaid judgment, it must be h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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