COMMISSIONER OF INCOME TAX BOMBAY CITY Vs. TATA LOCOMOTIVE AND ENGINEERING CO LTD

JUDGEMENT

(1.) THE question of law referred for our decision is :

(2.) THE assessee is the Tata Locomotive and Engineering Co. Ltd. , Bombay, and the assessment year is 1955-56 corresponding to the accounting year ending March 31, 1955. The circumstances under which the reference came to be made are briefly as follows :

(3.) THE assessee is carrying on business in the manufacture of locomotives and other engineering products. On 28th November, 1953, the company applied for permission to manufacture bus/truck-chassis at their workshop at Jamshedpur in collaboration with the German firm of automobile manufacturers, Messrs. Daimler Benz A. G. of West Germany. In their application the assessee-company proposed that they would be undertaking "a realistic manufacturing scheme comprising a purely assembly stage followed by four progressive stages of manufacture scheme comprising a purely assembly stage followed by four progressive stages of manufacture, each of one year duration. . . . " With the proposal they set out in some detail the four gradual stages of the manufacturing process which they proposed to adopt during the period of four years. As part of the same proposal they also indicated that prior to the starting of the manufacturing process of the company would assemble 500 chassis within an initial period of 9 months. The scheme was approved by the Government of India by their letter date 1st May, 1954, D. O. No. Eng. Ind. 20 (89) /53.