Law: Income Tax Act, 1922

Section: 15C

Law: Income Tax Act, 1922

Section: 15C

Section 80J of the Income-tax Act, 1961 [Corresponding to section 15C of the Indian Income-tax Act, 1922] - Deduction - Profits and gains from new industrial undertaking etc. - Assessment year 1960-61 - Assessee-company which was engaged in manufacturing and sale of industrial starch, set up another plant for producing dextrose, a pharmaceutical product of which starch was raw material - For assessment year 1960-61, assessee claimed exemption under section 15C(1) of 1922 Act while computing profits or gains made by new industrial undertaking established for producing dextrose - Whether starch produced by old industrial undertaking and used as raw material in production of dextrose in new industrial undertaking should be taken at market price for purpose of computing profits and gains of new industrial undertaking for purpose of section 15C of 1922 Act - Held, yes FACTS The assessee was a public limited company originally formed for manufacturing and sale of industrial starch. In the year 1956, the assessee-company set up another plant for producing dextrose, a pharmaceutical product, of which starch was the raw material. During the assessment for the assessment year 1960-61, the assessee claimed exemption under section 15C(1) of the 1922 Act on the profits or gains made by the new industrial undertakings established for producing dextrose. The ITO held that the new industrial undertaking did not conform to the requirements of section 15C and that both the undertakings formed one and the same business carried on by the assessee-company for producing starch in the first instance and by extending the activities of that business to producing dextrose as ultimate product. The ITO further held that, in any event, if the cost of the raw material, i.e., starch debitable to the new industrial undertaking were to be taken at market value, even on the contention of the assessee that the new industrial undertaking was independent of the old industrial undertaking there would be no profits made by the new industrial undertaking which could be exempted under the provisions of section 15C. The assessee carried the matter in appeal before the AAC. The AAC accepted the…

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