COMMISSIONER OF INCOME TAX Vs. SIMMONDS MARSHALL LIMITED

JUDGEMENT

(1.) THIS is a reference at the instance of the Revenue under section 256(1) of the Income -tax Act, 1961. The question to be considered reads thus :

(2.) WE are concerned with the assessment year 1971 -72. The assessee had been carrying on business in the manufacture and sale of self -locking nylocnuts for vehicles. For the purposes of such manufacture, it imported or purchased from local sources nylocinserts. In the accounting year relevant to the assessment year here concerned, the assessee set up a plant for the manufacture of nylocinserts and commenced that manufacture. For setting up the plant, it raised fresh capital to the extent of Rs. 2,50,000. It housed the plant in an extension of its existing premises. The entire production of nylocinserts was used in the main factory as components for self -locking nylocnuts.

(3.) THE argument on behalf of the Revenue, advanced by Mr. Jetly, its learned counsel, is based on sub -section (4)(i) of section 80J of the Income -tax Act, 1961. Sub -section (1) provides for relief to be given where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking to which the section applies. Sub -section (4) provides that the section shall apply to any industrial undertaking which fulfils all the four conditions therein stated. The first of those conditions is :