WESTERN INDIA VEGETABLE PRODUCTS LIMITED Vs. COMMISSIONER OF INCOME TAX
LAWS(BOM)-1954-3-2
HIGH COURT OF BOMBAY
Decided on March 24,1954

WESTERN INDIA VEGETABLE PRODUCTS LTD. Appellant
VERSUS
COMMISSIONER OF INCOME-TAX, BOMBAY CITY Respondents


Cited Judgements :-

COMMISSIONER OF INCOME TAX VS. HUGHES ESCORTS COMMUNICATIONS LIMITED [LAWS(DLH)-2007-9-101] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. COROMANDEL FERTILIZERS LTD [LAWS(APH)-2003-2-56] [REFERRED TO]
ASSOCIATED MINING INDUSTRIES LTD VS. COMMISSIONER OF INCOME TAX [LAWS(CAL)-1954-8-14] [REFERRED TO]
RAMARAJU SURGICAL COTTON MILLS LIMITED VS. COMMISSIONER OF WEALTH TAX [LAWS(MAD)-1962-3-31] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. INCHECK TYRES LTD [LAWS(CAL)-1982-7-41] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. KANORIA GENERAL DEALERS P LTD [LAWS(CAL)-1986-1-29] [REFERRED TO]
ASSISTANT COMMISSIONER OF INCOME TAX VS. ASHIMA SYNTEX LIMITED [LAWS(GJH)-2000-8-12] [REFERRED TO]
MINING MACHINERY AND EXPLOSIVES P LTD VS. COMMISSIONER OF INCOME-TAX [LAWS(CAL)-1991-5-34] [REFERRED TO]
CRYSTAL TOWERS VS. COMMISSIONER OF COMMERCIAL TAXES ORISSA [LAWS(ORI)-1997-11-2] [REFERRED TO]
MACHINERY MANUFACTURERS CORPORATION LTD VS. COMMISSIONER OF INCOME TAX BOMBAY CITY 1 BOMBAY [LAWS(BOM)-1956-9-6] [REFERRED TO]
BHODILAL MENGHRAJ AND COMPANY PRIVATE LIMITED VS. COMMISSIONER OF INCOME TAX [LAWS(BOM)-1979-1-66] [REFERRED TO]
STATE INDUSTRIES PROMOTION CORPORATION OF TAMIL NADU VS. THIRU AROORAN SUGARS LIMITED CHENNAI [LAWS(MAD)-2000-12-111] [REFERRED TO]
TAMIL NADU ELECTRICITY BOARD VS. K S V COTTON MILLS PRIVATE LTD [LAWS(MAD)-2005-7-93] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. BHARAT AGRICO COMPANY [LAWS(PAT)-1997-1-56] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. SARABHAI SONS PRIVATE LIMITED [LAWS(GJH)-1972-7-3] [REFERRED TO]
KHIMJI VISRAM AND SONS GUJARAT PRIVATE LIMITED VS. COMMISSIONER OF INCOME TAX [LAWS(GJH)-1993-10-54] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. INDUSTRIAL SOLVENTS AND CHEMICALS PVT LIMITED [LAWS(BOM)-1978-6-42] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. FORGING AND STAMPING PVT LIMITED [LAWS(BOM)-1979-1-44] [REFERRED TO]
RENUKA SUGARS LIMITED VS. UNION OF INDIA [LAWS(KAR)-2011-3-9] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. L AND T MCNEIL LIMITED [LAWS(BOM)-1993-2-100] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. ARCANE DEVELOPERS PVT. LTD [LAWS(DLH)-2013-10-188] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. DHOOMKETU BUILDERS & DEVELOPMENT PVT. LTD [LAWS(DLH)-2013-4-295] [REFERRED TO]
INSPECTING ASSISTANT COMMISSIONER VS. PIEM HOTELS LIMITED [LAWS(BOM)-1991-11-49] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. SARDAR SAROVAR NARMADA NIGAM LTD. [LAWS(GJH)-2013-4-427] [REFERRED TO]
CIT VS. GUJARAT PORTS INFRASTRUCTURE AND DEVELOPMENT CO. LTD. [LAWS(GJH)-2012-1-194] [REFERRED TO]
JCDECAUX ADVERTISING INDIA PVT. LTD. VS. DCIT [LAWS(IT)-2014-9-25] [REFERRED TO]
CROWN RE-ROLLERS PVT. LTD. VS. STATE OF ORISSA AND ORS. [LAWS(ORI)-1990-5-41] [REFERRED TO]
COMMISSIONER OF INCOME TAX-5 VS. JCDECAUX ADVERTISING INDIA (P) LTD. [LAWS(DLH)-2015-4-203] [REFERRED TO]
THE COMMISSIONER OF INCOME TAX-3 VS. M/S. AXIS PVT. EQUITY LTD. [LAWS(BOM)-2017-1-231] [REFERRED TO]
ALD AUTOMOTIVE (P ) LTD VS. DEPUTY COMMISSIONER OF INCOME TAX-15(1) [LAWS(BOM)-2018-3-377] [REFERRED TO]
DAIMLER INDIA COMMERCIAL VEHICLES (P) LTD VS. DEPUTY COMMISSIONER OF INCOME TAX [LAWS(MAD)-2019-7-75] [REFERRED TO]
MARUTI INSURANCE BROKING PVT. LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX [LAWS(DLH)-2021-4-117] [REFERRED TO]


JUDGEMENT

Chagla - (1.)THE assessee company was incorporated on the 29th of December, 1945, and it obtained a certificate of commencement of business on the 20th of April, 1946. THE business of the assessee company was that of running an oil mill.
(2.)THE assessee company was assessed to tax on its business profits for the assessment year 1947-48 and it claimed various expenses as allowable deductions aggregating to Rs. 27,884-11-9. THE view taken by the Income-tax Officer was that the assessee company had only commenced business when it purchased the groundnut mill on the 1st of November, 1946, and therefore he disallowed all the expenses which were incurred prior to the 1st of November, 1946. THE assessee company went in appeal to the Appellate Assistant Commissioner and substantially the view taken by the Appellate Assistant Commissioner was that the expenses incurred after getting the certificate of commencement of the business should be treated as expenses incurred for the purpose of carrying on the business in the year of account, and therefore barring the sum of Rs. 3,616 in respect of which the assessee had not appealed, the Appellate assistant Commissioner allowed the balance of Rs. 24,269. THE department appealed to the Tribunal and the Tribunal took the view that the first purchase of raw material for the purposes of being crushed in the mill which was to be erected was made at the end of September, 1946. THEy also took the view that some time must have been taken in making arrangements for the purchases and therefore the material date they fixed was the 1st of September, 1946, and they disallowed the expenses previous to the 1st of September, 1946, and allowed expenses subsequent to that date. THErefore it is to be noticed that the three Income-tax authorities had fixed three different dates as the relevant dates. THE Income-tax Officer fixed the date as the 1st of November, 1946, on the basis of the purchase of the ground-nut oil mill, the Appellate Assistant Commissioner fixed the 20th of April, 1946, as the date on which the certificate of commencement of business was granted to the company and the Tribunal fixed the 1st of September, 1946, as the date on the basis that some time should be allowed to the assessee company prior to the actual purchase of raw materials. THE assessee company asked the Tribunal to make a reference to this Court. THE Tribunal having declined, we directed the assessee company to make a reference and to refer to us the following question :
"Whether the mere fact that the first transaction of purchase of raw material took place in September, 1946, is by itself a justification for holding that expenses made from April, 1946, were not for purpose of business of the company ?"

Now, having perused the statement of the case, we are inclined to agree with the Tribunal that the appropriate question which should have been referred to us was :

"Whether there was evidence before the Tribunal to hold that the assessee company commenced its business as from 1st of September, 1946 ?"

The question that we asked the Tribunal to refer carried in it an implication that the only fact that the Tribunal took into consideration was that the first transaction of purchase of raw materials took place at the end of September, 1946. That underlying assumption seems to be incorrect because in the statement of the case of Tribunal points out that there were many other facts taken into account in fixing the date of the commencement of the business like certificate of commencement of business, the date of the purchase of the mills, the details of the expenses given in the order of the Appellate Assistant Commissioner and so on.

(3.)MR.Palkhiwalla has placed strong reliance on the judgment of the Appellate Assistant Commissioner and also on the various items of expenses which have been allowed by the Appellate Assistant Commissioner, and the whole gravamen of MR. Palkhiwalla's charge against the Tribunal is that the Tribunal has overlooked the nature of these expenses and has not applied its mind to them, and MR. Palkhiwalla says that the order of the Tribunal makes it clear that they did not take into consideration these expenses. Now, when we took at the order of the Tribunal, in para. 1 the Tribunal says this :
"Business can only be said to have commenced when some activity in relation to carrying on the business is done. It may be the purchase of raw material, placing an order for raw material, sales and so on."

Therefore they are giving illustrations of what a business activity may be. When we asked them to submit a statement of the case they have amplified and elaborated this statement which appeared in para. 1 of the statement and have elaborated the statement. They have told us that they have taken into consideration the details of the expenses given in the order of the Appellate Assistant Commissioner. Now, we are not prepared to reject the statement of a responsible body like the Income-tax Tribunal when it informs us that in arriving at its decision the details of the expenses were taken into consideration. Therefore the question that we have ultimately to answer and which is the real question that arises on the order of the Tribunal is : "whether there was evidence before the Tribunal for holding that the assessee company commenced its business as from the 1st of September, 1946 ?"



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