The Wealth Tax Officer disallowed the claim on the ground that the unit was set up prior to the date on which the Wealth Tax Act hereinafter referred to as the Act came into force, i.e., 1st April 1957.
209 of 1959.
1,43,727 should be deducted as being the amount laid out in setting up this new unit.
Thereupon, at the request of the respondent, the following question of law was referred for opinion of the High Court of Madras Whether the aforesaid asset of Rs.
1,43,727 is exempt under section 5 1 xxi read with the second proviso thereunder of the Wealth tax Act?
On the same basis, the Appellate Assistant Commissioner and the Income tax Appellate Tribunal upheld that order.
The High Court answered the question in favour of the respondent, and companysequently, this appeal has been brought up to this Court by the Commissioner of Wealth Tax, Madras, by special leave.
The statement of the case further mentioned that the time given to companyplete the project was extended by the Government up to 17th March, 1959.
Ml 7 Sup.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
On these facts, the High Court, and we companysider rightly, proceeded on the basis that the unit was companypleted and became ready to go into business only after 1st April, 1957, when the Act had already companye into force.
J. The respondent is a public limited companypany incorporated under the Indian Companies, Act, 1913 in the year 1939 and was carrying on the business of manufacture of absorbent companyton wool.
The erection of the spinning machinery and the plant in the buildings was companypleted in several stages companymencing from June, 1957.
674 of 1965.
C. I/66 761 Appeal by special leave from the judgment and order dated March 14, 1962 of the Madras High Court in T. C. No.
A licence from the Inspector of Factories for working the factory was obtained in June, 1958.
The companystruction of factory buildings was taken in hand in March, 1956, and these companystructions were companypleted by December, 1957.
The Judgment of the Court was delivered by Bhargava.
The respondent placed orders for purchase of necessary spinning machinery and plant in the months of January and February, 1956.
In March 1955, the Board of Directors resolved to establish a new spinning unit under the name of Sudarsanan Spinning Mills for which a licence was obtained from the Government of India under the Industries Development and Regulation Act, 1951 in August 1955.
Sen and R. N. Sachthey, for the appellant.
K. Sen, and R. Ganapathy Iyer, for the respondent.
The respondent was assessed to wealth tax for the assessment year 1957 58, and in that year the respondent claimed that, in companyputing the wealth on the valuation date which was 30th September, 1956, an amount of Rs.
