BHARAT ELECTRONICS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference relates to the asst. yr. 1963 -64. The assessee is a Government of India undertaking engaged in the manufacture of electronic equipments. It has four divisions : (a) equipment, (b) valves, (c) transistors and (d) capacitors. Of these, the last three are "newly established industrial undertakings" entitled to the benefit of tax exemption under s. 84 of the IT Act, 1961 (hereinafter called "the Act") as it stood before the section was deleted by the Finance Act, 1967. The original assessment was taken up in appeal by the assessee before the AAC who modified the ITO's order and as a consequence of the order on appeal, the ITO passed an order under s. 155 in which the total income was determined at Rs. 2,07,466 as shown below : Six per cent of the capital employed in the valves division amounted to Rs. 4,19,040. Since the income was less than six per cent of the capital employed in the valves division, the ITO determined the tax payable at "Nil".

(2.) THE assessee by letter dated October 15, 1965, claimed that there was a loss of Rs. 2,11,574 and the same should be carried forward and required the ITO to amend his order passed under s. 155. The assessee's claim was based on the following figures :

(3.) ON the application of the assessee under s. 256(1) of the Act, the Tribunal has referred the following question to this Court :