ASHOK MOTORS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) MESSRS . Ashok Motors Ltd., Madras, is a public limited company which commenced its business as a dealer in Austin cars and trucks and spares. Early in 1949, it commenced to import parts from abroad and assembled cars at its factory. In respect of the asst. year 195I -52, for which the account year ended on 31st Dec., 1950, an amount of Rs. 2,48,483 was carried forward as depreciation allowance. It was claimed before the ITO that this allowance should be set off against the total income of Rs. 4,44,462 and that the balance should be wholly exempted from tax under S. 15C of the Act. In a similar manner, for the asstt. year 1953 -54, the claim was made by the assessee that out of the total business income of Rs. 6,91,549 exemption should be granted under S. 15C of the Act to the extent of six per cent of the capital employed in the industrial undertaking, though the above said income was not entirely derived from the industrial undertaking. It may be mentioned that the Department proceeded on the basis that the assessee did not derive the income solely from the industrial undertaking but that it was in part derived also from activities such as trade in purchase and sale of cars and spare parts and certain commission received from foreign companies who also supplied the goods to the assessee under the contract of agency. The assessee did not, however, maintain separate accounts for the industrial undertaking, and its non -industrial activity. But certain figures were furnished by the assessee which were accepted by the Department as correctly representing the profits under the two heads.

(2.) APPEALS to the Asstt. Commissioner and to the Tribunal failed. On the application of the assessee, the following questions have been referred to us:

(3.) THE principal ground that has been advanced before us is (which also appears to have been advanced before the Department though not with such clearness) that the industrial undertaking is the unit of assessment for the purpose of the Act and that being so, the section does not call for any distinction being made between the various parts of the business that might be carried on by the industrial undertaking or for the separation of that portion of the profits or gains referable to the industrial operations. In short, the learned counsel on behalf of the assessee contends that so long as there is an industrial undertaking which comes within the description contained in S. 15C(2) of the Act, it is not open to the Department to question the source of the profits or gains, whether such profits or gains are derived from the industrial part or from other parts the business carried on. On the question whether an industrial undertaking per se is the unit of assessment, there can hardly be any room for two opinions. It is not. Sec. 14 and the following sections of the Act deal with different classes of exemptions. Each one of these sections starts somewhat in this manner: