NDLI: Rajapalayam Mills Ltd. Vs. Commissioner of Income Tax, Madras

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Income Tax Act 1922
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Income Tax Act, 1961 (43 of 1961) Indian Income-tax Act, 1922 (11 of 1922)
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Income Tax Act, 1922, Sec. 15C and Sec. 84 of Income Tax Act, 1961, interpretation of. The appellant assessee, a public limited company carrying on business in manufacture and sale of yarn, set up a new industrial undertaking during the financial year ending 31st March, 1959 being the accounting year relevant to the assessment year 1959-60. The entire amount of depreciation and development rebate in respect of this new unit for the assessment years 1959-60 and 1960-61 were set off against the total profit of the assessee arising out of all units old and new, and therefore nothing remained unabsorbed to be carried forward to the next assessment year 1961-62. In the assessment year 1961-62, the assessee earned a net business income of Rs. 12,69,403 /- which included a sum of Rs. 1,36,822/- representing the income from the new unit. The assessee in its assessment to tax for this assessment year claimed exemption of the income from the new unit to the extent of 6% of the average capital employed in it under section 15C of the Income Tax Act 1922. Taking the view that the benefit of Sec. 15 ( c) sub-section (1) could be claimed by the assessee only if there was any profit derived from the new unit and since the profit was, by reason of sub-section (3) of Sec. 15C required to be computed in accordance with the trading result of the new unit without reference to any other activity carried on by the assessee and if that was done, the result would clearly show that there was a loss in the working of the new unit in the assessment year 1961-62, the Income Tax Officer held that the benefit of exemption under Sec. 15C, sub-section (1) was not available to the assessee and thus the claim of the assessee for exemption was rejected. In appeal, the Appellate Assistant Commissioner set aside the order of the Income Tax Officer but on further appeal by the Revenue to the Tribunal the order of the Income Tax Officer was restored. The same view was taken by the Tribunal in regard to the assessment in the year 1962-63. The High Court, on a reference, agreed with the view taken by the Tribunal. Hence the appeals by special leave in respect of the assessment years 1961-62 and 1962-63.
Judge	Honble Mr. Justice P.N. Bhagwati
Neutral Citation	1978 INSC 201
Petitioner	Rajapalayam Mills Ltd.
Respondent	Commissioner Of Income Tax, Madras
SCR	[1979] 1 S.C.R. 1138
Judgement Date	1978-10-06
Case Number	1989

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