Law:

Section:

JUDGMENT Falshaw, J.-This is a reference under section 66(1) of the Income-tax Act in which the following question has been referred by the Appellate Tribunal to this court: "Whether on the facts and in the circumstances of this case the concession contained in section 15C of the Indian Income-tax Act in respect of the industrial undertaking for the manufacture of handloom fabrics at Ghaziabad is available to the assessee?" The question arises out of the assessment of 1952-53 covering the financial year 1951-52. The assessee is a company, Webbing & Belting Factory Private Ltd., which had started as a partnership business run by two partners. They were running two factories at Delhi, one situated at Nicholson Road and the other at Bela Road, the business being the manufacture of tapes, wicks, webbing etc. for supply to the Government Departments during the war. After the war was over, in 1946 one of the partners conceived the idea of manufacturing handloom furnishing fabrics on the lines of manufactures carried on in South India by a company called the Commonwealth Trust Ltd. He accordingly entered into negotiations with this company which agreed to supply technicians and technical advice and organise sales for the assessee under the label of Commonwealth Trust Ltd. Accordingly in February, 1947, the partnership concern was sold to the assessee limited company which was formed for the purpose of acquiring the partnership business and also for the purpose of establishing a factory at Ghaziabad for manufacturing handloom furnishing fabrics. The company was formed on January 22, 1947. For experimental and training purposes a number of handlooms were set up in the factory at Bela Road and workmen were then trained by employees of the Commonwealth Trust Ltd. It is admitted that between February and December, 1947, the total sales of grey (or unbleached) cloth so manufactured amounted to Rs. 67,085. This cloth was sold through the selling organization of the Commonwealth Trust Ltd. but without the latter's label since the goods were not considered to be of the requisite quality. Thereafter the factory at Bela Road was dismantled and sold and the looms were…

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