Law:

Section:

SEPTEMBER 18, 1984 Section 80J of the Income-tax Act, 1961, read with rule 19A of the Income-tax Rules, 1962 - Deductions - Profits and gains from newly established industrial undertakings - Whether in case of a new industrial undertaking, relief under section 80J, read with rule 19A should be worked out by aggregating values of all assets as on first day of computation period irrespective of fact whether those assets were used during accounting period or not - Held, yes Section 32, read with section 33 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of - Whether accepted accountancy rule for determining actual cost of fixed assets is to include all expenditure necessary for bringing such assets into existence and to put them in working condition - Held, yes - Whether, therefore, assessee would be entitled to development rebate and depreciation on full amount made up of salaries, expenses of guest-house maintained for erection staff, travelling and vehicle expenses incurred in, and general expenses pertaining to, setting up of plant claimed by it as part of actual cost of distillery plant - Held, yes FACTS The assessee-company was established for manufacturing polystyrene products, involving three stages: (a) Manufacture of alcohol; (b) Manufacture of styrene by using alcohol; and (c) Manufacture of polystyrene by using styrene. Three different units of plant and machinery were thus required to be installed and during the year under consideration, the assessee company was able to install the alcohol manufacturing plant and start production. The third plant for manufacturing polystyrene went into production only on 1-1-1969, and for the purpose of the said plant, the company was using imported styrene. The second plant had not commenced manufacture. The assessee-company incurred certain common expenses in connection with such expenses, out of which certain amount was allocated to building, plant and machinery of the distillery plant and claimed as part of the cost. The amount was made up of several items like salaries, expenses of guest-house maintained for erection staff, travelling expenses incurred in setting up the plant, vehicle expenses…

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