It entered into an agreement with foreign companylaborator, who agreed to grant the licensee the know how rights for the manufacture, in India of tempo companymercial three wheeler vehicles, against payment of German marks.
After take over the licence was endorsed by the appropriate authority of the Government of India in favour of the companypa ny In assessment proceedings the assessee claimed benefit of partial exemption from payment of tax as the companypany was a new undertaking.
The Income Tax Officer rejected the claim as even though the undertaking was new it was number entitled to the benefit as it was formed by splitting up of business already in existence and also it was formed by transfer to the new business of the building and machinery previously used in other business.
Ltd. v. Commissioner of Income Tax, Bombay, 91 1973 ITR 566.
Tools and implements, valued at Rs.3,500 of the Corporation, were also transferred to the companypany.
Clause 10 of the agreement provided that the transfer ee, that is, the companypany shall be in possession of the prem ises of the factory and the buildings on payment of monthly rent as a lessee.
The finding of the tribunal, thus, that the assessee companypany cannot be said to have been formed by the reconstruction of promoter companypany as, the business of the new industrial undertaking established by the assessee companypany did number exit prior to its incorporation and was neither carried on by the promoter companypany number by any other companypany has become final.
From the Judgment and order dated 25.8.1981 of the Bombay High Court in Income Reference No.
But while rejecting the claim the Income Tax officer observed that on facts furnished it was difficult to hold that it was a case of reconstruction of the business already in existence.
Accordingly the assessee companypany M s Bajaj Tempo Ltd., Bombay inshort Company was, formed, for exploiting the manufacturing licence issued by the Government 32 of the shares capital of which was subscribed by the foreign companylaborators and remaining 68 share capital was issued to the shareholders of the Corporation.
1257 NT of 1982 H. Parekh for the Appellant Ramamurthy, P. Parameswaran for the Respondents.
1258 to 1260 NT of 1982 AND Civil Appeal No.
1211 NT Of 1982.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
He did number find much merit even in transfer of tools and implements worth Rs.3,500.
It had two aspects one taking of building on lease and other transfer of tools and implements valued at Rs.3,500.
WITH Civil Appeal No.
154 of 1971.
The assessee companypany entered into an agreement with the Corporation, which was the promoter companypany, to secure and take over from the promoter companypany the rights under the licence to manufacture tempo vehicles and to take over the factory registered under the name of Auto Rickshaw Engineering Factory as a going companycern with its assets liabilities machinery, power, quotas etc.
carried on business of import export in various items.
The Judgment of the Court was delivered by M. SAHAI, J. The question of law that arises for companysideration in these appeals directed against order of the Bombay High Court, in an Income Tax reference relating to assessment year 1960 61, is if the assesse was entitled do claim partial exemption from payment of tax under section 15C of Income Tax Act of 1922 on Profits and gains derived from an industrial undertaking established in building taken on lease used previously for other business.
M s Bechhraj Trading Corporaion in brief Corporation , incorporated on 29th September 1945.
In 1957 it was granted licence for manufacturing tempo 400cc three wheeled transporters.
