Law:

Section:

section 15c of the indian income-tax act, 1922 [section 80j of the income-tax act, 1961]-deductions-profits or gains of newly established industrial undertakings-assessee started its own industrial undertaking on a land taken on lease with superstructure thereon from another concern who used it earlier-assessee made alterations in superstructure before use-whether assessee could claim exemption from tax under section 15c-held, no, since lease of land with superstructure amounted to transfer Facts The assessee started manufacturing flush cisterns and sanitary wares in 1959. For this purpose, it obtained land with superstructure thereon on lease from Stewart Laboratories which had previously used the superstructure. Before using it, the assessee removed the tin-roofing of the structure, extended the height of the walls and covered it with a new roof. For the assessment years 1960-61 and 1961-62, the assessee claimed relief under section 15C and the 1TO allowed the claims. Subsequently, the assessments were reopened and the relief granted earlier under section 15C was withdrawn on the ground that the lease of the land and the superstructure thereon amounted to transfer of assets and that the assessee substantially used the superstructure which was previously in use by another concern. The AAC confirmed the ITO's order. The Tribunal, however, felt that the assessee constructed a substantially new structure retaining only the old walls and that in any case, taking the structure on lease would not constitute a transfer within the meaning of section 15C. On reference, the assessee urged that it might be permitted to agitate before the Tribunal that even if the lease of the structure might amount to transfer, the portion of previously existing superstructure used by the assessee constituted a very small portion of the undertaking and as such, would not amount to forming a new undertaking by the assessee by utilisation of the old structure. Held The structure used by the assessee was not a totally new structure. The word "transfer" should be ascribed its normal meaning and lease of a structure would constitute a transfer. However, the Tribunal was directed to consider…

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