COMMISSIONER OF INCOME TAX Vs. NAGARJUNA STEELS LIMITED

JUDGEMENT

(1.) R.C. No. 315 of 1982. - Two questions are referred under section 256(1) of the Income-tax Act, 1961, in this case. They are :

(2.) The assessment year concerned is 1977-78. The assessee-company was incorporated on 19/07/1974. The main objects of the company were to own and acquire ferrous and non-ferrous metal melting furnaces, rolling mills and to carry on business as traders and manufacturers of ferrous and non-ferrous metal ingots, etc., and to do business of traders or manufacturers of steel products and hardware of all kinds, and also to act as stockists, commission agents, etc., for engineering and industrial requirements. In the return filed by the assessee for the assessment year 1977-78, it showed its total income as "nil" and gave the following computation of its income :

(3.) A few facts need to be stated to understand the above computation. In the words of the Tribunal, the following is the factual position :