MADRAS FERTILIZERS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) UNDER section 256(1) of the Income-tax Act, 1961, both at the instance of the assessee as well as the Department, the Tribunal referred the following questions for our opinion :

(2.) THE assessee, Messrs. Madras Fertilisers Limited, is a Government company established for setting up a fertilizer plant. It entered into an agreement with Chemical Construction Corporation of New York for the construction of a complete fertilizer plant on a turnkey basis. THE assessee follows the financial year as its accounting year. THE construction of the plant was completed and the same was handed over to the assessee on June 7, 1971, in the previous year relevant to the assessment year 1972-73, which is under consideration. THEreafter, trial runs were conducted. Ammonia was produced first on September 9, 1971. Urea was produced on October 19, 1971. NPK was produced on October 16, 1971. Thus production on commercial scale was commenced from November 1, 1971.

(3.) QUESTION No. (ii) referred at the instance of the Department also relates to relief claimed under section 80J of the Act. The Tribunal held the capital computation should be done by taking the value of the assets not merely on the first or the last day of the accounting year, but by taking it on every day throughout the year as is done for the purpose of interest computation on a daily basis.