Sen, J. - (1.) Pursuant to the directions of this court under Section 66(2) of the Indian I.T. Act, 1922, the Tribunal in these references has drawn up a consolidated statement of case and referred the following questions : 1955-56 : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the cement unit, the new power house, the chemical factory and the paper plants Nos. 2 and 3 all constituted new industrial undertakings within the meaning of Section 15C of the Indian Income-tax Act, 1922, in respect of which the assessee was entitled to exemption from tax to the extent indicated in the Tribunal's order ?" 1956-57: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the cement unit, the new power house, the chemical factory and the paper plants Nos. 2 and 3 all constituted new industrial undertakings within the meaning of Section 15C of the Indian Income-tax Act, 1922, in respect of which the assessee wag entitled to exemption from tax to the extent indicated in the Tribunal's order ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in law in holding that the sum of Rs. 10,47,422 was allowable as a bad debt under Section 10(2)(xi) of the Indian Income-tax Act, 1922?"
(2.) The facts admitted and/or found in the proceedings are that Rohtas Industries Ltd., Dalmianagar, the assessee, is a public limited company. It carries on the manufacture of paper, cement, sugar, chemicals, etc. In its assessment for income-tax for the assessment year 1955-56, it claimed relief under Section 15C of the Indian I.T. Act, 1922, by way of rebate in respect of two new undertakings, namely, paper machine No. 2 and a cement factory. The assessee also claimed to have written off a bad debt of Rs. 10,47,398 due from one Rohtas Quarries Ltd.
(3.) The ITO disallowed the claim under Section 15C on the ground that past depreciation in respect of the said new undertakings would have been carried forward had the same not been set off against the profit of other units to which the provisions of Section 15C did not apply. It was held that no profit was derived from these new undertakings in this year as depreciation relating to these units had to be set of against such profits.;