Law:

Section:

Section 80-J of the Income-tax Act, 1961 [Corresponding to section 15-C of Indian Income-tax Act, 1922] – Deductions - Profits and gains from new industrial undertakings, ships or hotels, etc. – Assessment year 1960-61 – Assessee company had started business of manufacturing pharmaceutical goods - In preceding accounting year assessee-company had purchased certain new as well as old machinery - Old machinery consisted of three parts – Of first part, assessee sold away mixing machine and electric motor and remaining machinery remained idle and was not used in business; second part, a rotary tablet making machine, was purchased three months after commencement of production, and third part, was a reconditioned tablet making machine, which was earlier not used in any business – Whether on facts, it could not be said that new industrial undertaking was formed by transfer of machinery which was used in any other business – Held, yes – Whether, therefore, exemption under section 15-C of 1922 Act could be availed by assessee – Held, yes FACTS By an agreement, the assessee purchased stock-in-trade and raw materials of ‘KCC', from its proprietor, ‘R'. ‘KCC' was manufacturing tooth-paste only. The assessee-company sold away stocks of tooth-paste taken over by it. The assessee did not manufacture tooth-paste but started the business of manufacturing pharmaceutical goods. In the accounting year ending 31-3-1959, the assessee-company purchased machinery of the value of Rs. 58,003 out of which the value of the new machinery was Rs. 28,455 and of the old machinery, Rs. 29,588. The old machinery was acquired by the assessee-company by purchase from the following three parties : (1) Of the value of Rs. 7,000 from ‘R', (2) Re-conditioned tablet making machine of the value of Rs. 2,987 from ‘K', (3) Rotary tablet machine of the value of Rs. 19,601 from another firm. Out of the machinery of the value of Rs. 7,000 purchased from ‘KCC', the assessee-company sold away mixing machine and electric motor of the value of Rs. 2,500 and the remaining machinery of the value of Rs. 4,500 remained idle and was not used by the assessee-company in its business of manufacture of pharmaceutical…

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