COMMISSIONER OF INCOME TAX Vs. SAINTHIA RICE AND OIL MILLS

JUDGEMENT

(1.) THIS reference arises out of the assessment for the asst. yr. 1960-61. The assessee is a registered firm owning rice and oil mills at Sainthia in the district of Birbhum of the State of West Bengal. The corresponding previous year relevant for the present assessment is 2015-16 Diwali Samvat. In the course of assessment proceeding for this year the assessee had claimed exemption from tax under s. 15C of the Indian IT Act, 1922, which is allowable to a newly established industrial undertaking. The same claim had also been made by the assessee in respect of the assessment of the immediately precding year, 1959-60, and such claim had been refused originally by the ITO on the ground that rice milling is not an industrial undertaking within the meaning of s. 15C of the said Act. The assessee had preferred an appeal against the said order to the AAC in respect of the said assessment for 1959-60. The AAC had directed that the ITO should allow the benefit under s. 15C to the assessee provide the requisite conditions as laid down in that section were fulfilled. In the revised assessment as made under the directions of the AAC's order passed under s. 31 for the year 1959-60, the ITO again disallowed the claim under s. 15C of the said Act on the ground that some of the machinery utilised for the newly started mill were old and second-hand. The ITO had observed :

(2.) FOR the asst. yr. 1960-61, the ITO apparently disallowed the claim of the assessee on the same grounds mentioned herein- before, although the assessment order itself does not mention either any claim under s. 15C or the grounds of rejection of such claim.

(3.) IN the case of Webbing and Belting Factory (P) Ltd. vs. CIT (1961) 43 ITR 234 (Punj) the Punjab High Court held that, even though part of the machinery was used before 1st of April, 1948, for experimental and training purpose, that did not disentitle an assessee from enjoying the benefit of s. 15C of the INdian IT Act, 1922. The Punjab High Court, however, was considering sub- cl. (ii) of sub-s. (2) of s. 15C of the said Act. The said decision of the Punjab High Court went up in appeal to the Supreme Court. The Supreme Court judgment is CIT vs. Webbing and Belting Factory Ltd. (1968) 68 ITR 186 (SC) The Supreme Court felt that there was no clear evidence of the user of the machinery in he pilot project before 1st April, 1948, and as such the High Court had no jurisdiction to answer the question in the manner done, and as such the Supreme Court directed a supplementary statement of case to be called for.