Decided on March 07,1979



T.U. Mehta, C.J. - (1.) AT the instance of the Commissioner of Income-tax, New Delhi, the Income-tax Appellate Tribunal, Chandigarh Bench, has referred the following two questions for our opinion with regard to the assessment of the respondent-company's income for the assessment year 1963-64, These questions are as under : "(1) Whether, on the facts and in the circumstances of the case, the following assets have been correctly included by the Tribunal in the assets of the Central Unit for the purposes of computing the average capital employed in the undertaking under Sections 84 and 101 of the Income-tax Act, 1961: (2) Whether, on the, facts and in the circumstances of the case, the Tribunal was justified in allowing deduction by way of development rebate to the extent of Rs. 7,731 in respect of a telephone exchange installed in the factory area, under the provisions of Section 33 of the Income-tax Act ?"
(2.) WHILE referring these two questions to this court the Tribunal has unfortunately not given out the proper data relevant to these two questions in the statement of facts submitted by it. The facts and the reasoning on which the Tribunal has taken a particular view on these two questions are not clear even by reference to the Tribunal's judgment in the appeal before it, found at annex. C. We have, therefore, gathered the necessary data on admitted facts from the record before us. These facts can be stated as under. The respondent-assessee is a public limited company and is one of the leading manufacturers of alcoholic products. It has branches at various places. One of such branches is known as Mohan Nagar Branch. This branch is a complex of seven distinct units as under : (i) Cold storage. (ii) Ice factory. (iii) Food products. (iv) Malt extract. (v) Malt house. (vi) Brewery. (vii) Distillery. Apart from these seven separate units of production, the assessee-company also maintains the 8th unit, which is called Central unit for Mohan Nagar, in which accounts relating to common expenses, common assets and purchases, etc., for all the above-referred seven units are being maintained. It appears from the record of the case that the function of this Central unit is to distribute goods, articles and raw materials to different units and to co-ordinate their activities.
(3.) IT is found that during the course of assessment the respondent-assessee claimed benefit of tax exemption under Section 84 and rebate on super-tax under Section 101 of the I.T. Act, 1961, as those sections then existed in the scheme of the Act. IT should be noted here that previous to the introduction of Section 84 the exemption contemplated by it was given by Section 15C of the earlier Act of 1922. IT need not be emphasised that this exemption is intended to encourage the setting up of new industrial enterprises and, therefore, Section 84 contemplates that the profits of the new industrial undertakings which fulfil the conditions prescribed by this section would be entitled to exemption from income-tax to the extent of 6% per annum on the capital employed in the undertaking in question. Section 101 contemplates rebate on the super-tax which such a concern is liable to pay. This rebate is to be computed with reference to the income-tax which is not payable on profits or gains under Section 84. Sub-section (1) of Section 84 provides as under : "Save as otherwise hereinafter provided, income-tax shall not be payable by an assessee on so much of the profits or gains derived from any industrial undertaking or hotel to which this section applies as do not exceed six per cent. per annum on the capital employed in the undertaking or hotel, computed in the prescribed manner." ;

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