- (1.) "Whether the exemption from tax for the assessment years 1957-58, 1958-59 and 1959-60 was not rightly granted."
(2.) The High Court held that the exemption from tax granted to the assessee under S. 45 (d) of the Act for the assessment years 1957-58. 1958-59 and 1959-60 was not rightly granted , and answered the question against the assessee. The relevant facts are as follows: The appellant, Travancore Cochin Chemicals (P) Ltd., hereinafter called the assessee, was formed and registered under the Indian Companies Act on November 8, 1951. The prior history of the Company is given in the statement of the case as follows:- "On 22-7-1949, a partnership was formed between two public limited companies, viz., Fertilisers and Chemical Travancore Ltd., Alwaye, and the Mettur Chemical and Industrial Corporation Ltd., Mettur for establishing a Caustic Soda Factory with an estimated capital of Rs. one crore. The firm could not function due to lack of finance. The Government of Travancore was approached for necessary finance to complete the purchase of plants and machinery which had been started in August 1949, and that Government entered the Company and subscribed a large share capital and new private limited company was formed and registered under the Indian Companies Act on 8-11-1951." Further facts given in the statement of the case are as follows: "This new company took over the plant machinery, buildings, construction stores, materials etc at different stages of erection and also book debts and liabilities. The erection and construction of the factory was completed in December 1953, and production commenced from 1-1-1954. The Trading accounts were closed for the first time on 31-3-1954. There was a loss of Rs. 16,04,212/- incurred"
(3.) For the assessment year 1957-58 (the relevant date of valuation being March 31, 1957) the assessee claimed before the Wealth-tax Officer that it was not liable to pay wealth tax during the year of account as it was exempted from wealth-tax under S.45(d) of the Act. The Wealth-tax Officer rejected the claim on the ground that the assessee was established within the meaning of S. 45 (d) and the proviso thereto in November 1951, and consequently the period of five years' exemption was over with the assessment year 1956-57.;