COMMISSIONER OF INCOME TAX BOMBAY CITY I Vs. BAYER AGROCHEM LIMITED

JUDGEMENT

(1.) THIS is a reference made to the High Court under S. 66(1) of the Indian IT Act, 1922. The question of law referred to the High Court for its opinion thereon is as follows:

(2.) A few facts may be stated:

(3.) THE ITO whilst making the assessments for the two years in question, i.e., 1960 61 and 1961 62, granted rebate as provided under S. 15C of the Indian IT Act, 1922. For the year 1960 61, he held that out of the total income of Rs. 50,720 a sum of Rs. 26,867 was exempt under S. 15C. Similarly, for the year 1961 62, he held that out of the total income of Rs. 3,67,005 a sum of Rs. 43,348 was entitled to be exempted under S. 15C. Subsequently, the CIT by virtue of his powers under S. 33B of the said Act called upon the assessee company by his letter dt. 17th Dec., 1962, to show cause why the ITO's order granting relief under S. 15C should not be withdrawn and the assessments enhanced pro tanto. By its letter dt. 4th Jan., 1963, the assessee company objected to the CIT making the proposed revision and by the said letter the relevant facts pertaining to the incorporation, formation and the activities of the assessee company were set out. It was also pointed out that because of the difficulties in obtaining land and cement for the construction of new premises an ad hoc arrangement with " Progressive " had been entered into. In the said letter, it was contended that the assessee's undertaking was a completely new one, that the company had not purchased the premises of " Progressive " or its plant and machinery and that the arrangement contemplated was a leave and licence agreement. It was, accordingly, submitted that there was no transfer of the building, plant and machinery belonging to " Progressive " to the assessee company and, therefore, the assessee company was entitled to the benefit of the provisions of S. 15C. The CIT, after considering the submissions of the assessee, held by his order dt. 4th Feb., 1963, that the entire profits and gains of the assessee company for these two years were liable to be taxed and that no part thereof was entitled to exemption under S. 15C of the said Act. Being aggrieved by the aforesaid decision of the CIT, the assessee company went to the Tribunal by way of appeals for these two years and contended that the order of the CIT was erroneous. It is unnecessary to set out the various contentions of the assessee company. On behalf of the Revenue, the Departmental Representative, however, sought to uphold the order of the CIT and urged that in fact there had been a transfer of some assets of " Progressive " to the assessee company as contemplated by S. 15C and, therefore, the assessee company was not entitled to any exemption.