B.D. PANDA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE are two reference applications under section 256(1) of the Income Tax Act, 1961. The assessment year to which the reference applications relate ended on March 31, 1962. The assessee is an engineer by profession. He obtained his degree in engineering from M. I. T., U. S. A. Thereafter, he engaged himself in professional activities in the United States of America and, while rendering such services, he conceived of a project to start an industry to manufacture ferro alloys including ferro silicon. For this purpose, he got in touch with some firms in Sweden and also with the Governments of India and Orissa. This was for the purpose of getting technical aid and for obtaining licence, land, power, finance, etc. . . The assessee got good response from all quarters. As the preparation for setting up of the project advanced, the assessee realised that it would be better to set up the plant under a company and applied for registering a company in the name of Messrs. Indian Metal and Ferro Alloys Limited. The company was incorporated on November 20, 1961. On January 22, 1962, the board of directors of the company met and passed a resolution stating, inter alia, as follows :

(2.) THE aforesaid payment of Rs. 8,07,448 was credited by the company in its cash book on November 22, 1961, as follows : <FRM>JUDGEMENT_41_LAWS(ORI)3_1991.htm</FRM>

(3.) WHILE the assessment was pending, the Voluntary Disclosure of Income and Wealth Ordinance, 1975, was promulgated. Under legal advice, the assessee made a declaration of his income at Rs. 6,22,300. This included a sum of Rs. 80,000 which could be treated as his professional receipt embedded in the aforesaid sum of Rs. 8,07,448.