Vidarbha Paper Mills Ltd. vs Commissioner of Income Tax

V.A. Mohta, J.—Following questions have been referred to this Court u/s 256(1) of the income tax Act, 1961 (''the Act'') at the instance of the assessee: 1. Whether, on the facts and in the circumstances of the case, there was any material for holding that the assessee was carrying on business during the period April 1964 to June 1964?

Whether, on the facts and in the circumstances of the case, the claim of the assessee in respect of development rebate has been rightly rejected for the assessment year 1966-67 on the ground that the assessee having produced 92 tonnes of paper and sold 51 tonnes therefrom in the assessment year 1965-66, failed to claim deduction in the assessment year 1965-66?

Whether, on the facts and in the circumstances of the case, the claim of the assessee in respect of development rebate for the assessment year 1966-67 is admissible?

The assessee-company was incorporated in 1961 for manufacturing paper of all varieties. Accounting year is 1st July to 30th June. The company installed machinery and plant in March 1964. Between 1 -4-1964 to 30-6-1964, 92 tonnes of paper was actually produced, out of 51 tonnes was sold in the market next year. The assessee claimed development rebate u/s 33 of the Act for the assessment year 1966-67 on the ground that though machinery and plant was installed during the previous year relevant for the assessment year 1965-66, it was actually put into commercial production on or after 1-7-1964, i.e., accounting year 1964-65, a previous year relevant for the assessment year 1966-67. The assessee''s claim that the production up to 30-6-1964 was only on trial basis was not accepted by the ITO, the AAC and the Tribunal. Considering the totality of all the circumstances, it was held that the assessee''s claim for the assessment year 1966-67 was not acceptable.

With the assistance of the learned counsel for the parties, we have gone through the record and the reasoning of the Tribunal in coming to the conclusion that the business was actually carried on during the period April 1964 to June 1964. This finding is based on appreciation of facts. Under the circumstances, question Nos. 1 and 2 are answered in the affirmative and in favour of the revenue and question No. 3 is answered in the negative and in favour of the revenue. No order as to costs.