Case: Rajapalayam Mills Ltd Vs. Commissioner Of Income Tax, Madras

In the assessment year 1959-60, the total profit of the assessee in respect of its old 10 tabindex = 1>100 tabindex = 1>104 tabindex = 1>106 tabindex = 1>109 tabindex = 1>and" (1) Save as otherwise hereinafter provided, the tax shall not be payable by an assessee on so much of the profits or gains derived from any industrial undertaking (or hotel) to which this section applies as do not exceed six per cent. per annum on the capital employed in the undertaking (or hotel), computed in accordance with such rules as may be made in this behalf by the Central Board of Revenue    (3) The profits or gains of an industrial undertaking (or a hotel) to which this section applies shall be computed in accordance with the provisions of section 10    (4) The tax shall not be payable by a shareholder in respect of so much of any dividend paid or deemed to be paid to him by an industrial undertaking (or a hotel) as is attributable to that part of the profits or gains on which the tax is not payable under this section    (Explanation.--The amount of dividend in respect of which the tax is not payable under this sub-section shall be computed in accordance with, such rules as may be made in this behalf by the Central Board of Revenue.)    (6) The provisions of this section shall, (in relation to an industrial undertaking, ) apply to the assessment for the financial year next following the previous year in which the assessee begins to manufacture or produce articles 10 tabindex = 1>100 tabindex = 1>104 tabindex = 1>106 tabindex = 1>109 tabindex = 1>andThe ITO took the view that the benefit of s. 15C, sub-s. (1), could be claimed by the assessee only if there was any profit derived from the new unit 10 tabindex = 1>100 tabindex = 1>104 tabindex = 1>106 tabindex = 1>109 tabindex = 1>andThe revenue being aggrieved by the decision of the AAC preferred an appeal before the Tribunal. The appeal was successful 10 tabindex = 1>100 tabindex = 1>104 tabindex = 1>106 tabindex = 1>109 tabindex = 1>and" Whether, on the facts 10 tabindex = 1>100 tabindex = 1>104 tabindex = 1>106 tabindex = 1>109 tabindex = 1>andThe profit, depreciation 10 tabindex = 1>100 tabindex = 1>104 tabindex = 1>106 tabindex = 1>109 tabindex = 1>and0 10 tabindex = 1>100 tabindex = 1>104 tabindex = 1>106 tabindex = 1>109 tabindex = 1>and1 were as followsYear Profit Depreciation 10 tabindex = 1>100 tabindex = 1>104 tabindex = 1>106 tabindex = 1>109 tabindex = 1>and

Court's reasoning:
The law of income-tax in a modern society is intended to achieve various social 10 tabindex = 1>100 tabindex = 1>104 tabindex = 1>106 tabindex = 1>109 tabindex = 1>andNow, sub-s. (3) of s. 15C says that the profits or gains of a new industrial undertaking shall be computed in accordance with the provisions of s.1010 tabindex = 1>100 tabindex = 1>104 tabindex = 1>106 tabindex = 1>109 tabindex = 1>andsince, under the income-tax law, every assessment year is a self-contained period, the profits10 tabindex = 1>100 tabindex = 1>104 tabindex = 1>106 tabindex = 1>109 tabindex = 1>andgains of the new industrial undertaking must be computed for the particular assessment year in respect of which the claim for exemption is made, by applying the provisions of s.. Sub-s. (2) of that section provides for various allowances to be made in computing profits