ORISSA CEMENT LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a consolidated reference under S. 66(1) of the Indian IT Act, 1922, relating to three asst. yrs. 1953 -54, 1955 -56 and 1956 -57 corresponding to previous years ending December 31, 1952, December 31, 1954 and December 31, 1955, respectively. The questions of law, though worded slightly differently in respect of each year of assessment, involve the same common point, namely, the construction of S. 15C of the IT Act, hereafter called "the Act". The questions read as under :

(2.) THE assessee is a public limited company incorporated on October 11, 1949. It owns a cement factory at Rajgangpur, District Sundergarh, Orissa, which started production from December 22, 1951. The asst. year 1952 -53 (the relevant accounting period being January 1, 1951, to December 31, 1951) was thus the first year in which production was commenced for the first time, although the first assessment of the company was made in the asst. year 1951 - 52, when its income from interest alone was taxed.

(3.) IT is common ground that the cement factory is an industrial undertaking as contemplated under s. 15C of the Act. The assessee claimed exemption up to 6per cent of the capital employed in the said industrial undertaking. It will be seen that up to the asst. year 1954 -55 there was no profit. On the other hand there was a resulting loss. In the asst. year 1955 -56, however, the total income of the assessee was finally determined by the Tribunal at Rs. 8,66,921 (sic Rs. 8,69,645) and the quantum of exempted income at Rs. 11,44,427. The figure of exempted income being more than the figure of total assessed income, there was obviously no question of actual taxation. The assessee, however, claimed that the exemption granted under S. 15C was cumulative, i.e., if there was a balance of unabsorbed exemption either due to losses or due to insufficiency of profits, then the assessee was entitled to carry over the balance to be set off against future profits. The Tribunal appreciated the assessee's contention and even sympathized with its view point, but felt bound to give effect to the plain language of the section and held against the assessee.