Law:

Section:

Section 80J of the Income-tax Act, 1961 [Corresponding to section 15C of the Indian Income-tax Act, 1922] - Deductions - Profits and gains from newly established industrial undertakings - Assessment years 1951-52 and 1953-54 - Whether exemption under section 15C of 1922 Act cannot operate in respect of profits derived from any trade or business other than industrial undertaking ; even in case of composite business carried on by assessee, it is only profits of industrial undertaking that would be eligible for exemption under said section - Held, yes FACTS The assessee-company started its business as a dealer in cars and trucks and spares. Subsequently it commenced to import parts from abroad and assembled cars at its factory. In respect of the assessment year 1951-52, certain amount was carried forward as depreciation allowance. It was claimed before the ITO that this allowance should be set off against the total income and that the balance should be wholly exempted from tax under section 15C. In a similar manner, for the assessment year 1953-54, the assessee claimed that out of the total business income exemption should be granted under section 15C to the extent of six per cent of the capital employed in the industrial undertaking. The Department proceeded on the basis that the assessee did not derive the income solely from the industrial undertaking but that, it was, in part derived also from activities such as trade in purchase and sale of cars and spare parts and certain commission received from foreign companies who also supplied the goods to the assessee under the contract of agency. The assessee did not, however, maintain separate accounts for the industrial undertaking, and its non-industrial activity. Finally, the Income-tax authorities as well as the Tribunal disallowed the assessee's claim. On reference : HELD The scope of the exemption under section 15C appears to be perfectly clear; section 15C states that where any profits or gains are derived from any industrial undertaking, that portion of it to the extent of six per cent on the capital employed in the undertaking shall be exempt from tax. Firstly, the profit in question must be derived from the…

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