COMMISSIONER OF INCOME TAX Vs. ELECTRON INDIA

JUDGEMENT

(1.) AT the instance of the Revenue, the following question has been referred :

(2.) THE assessment year is 1973-74. THE business in which the assessee is engaged is the manufacture of cadmium sulphide photo cells based on a process developed by the Central Electro Chemical Research Institute, Karaikudi. It acquired plant and machinery and installed the same in the previous year relevant to the assessment year. It had also commenced production and prepared the cadmium sulphide salt, but the cadmium sulphide salt produced not being of the required purity, there was no sale of the final product in that year. Nevertheless, the assessee had incurred expenditure in that activity of manufacturing though what was manufactured could not be sold. THE assessee had, therefore, claimed loss for that year. THE assessee's claim was rejected by the Income-tax Officer on the ground that the assessee had not done any business whatsoever in the year of account. THE Assessing Officer was apparently of the view that it is only when the product is marketed that business can be regarded as having commenced.