Section 84 relief is not denied merely because a new unit operates from rented premises previously used by others.

Section 84 relief was available for a new industrial undertaking that was not formed by splitting up or reconstructing an existing business and was not created by transferring previously used building, machinery or plant from the assessee's earlier business. The use of rented premises, even if earlier occupied by others, did not by itself breach the statutory negative condition where the undertaking was otherwise a separate and distinct unit established with fresh capital. The statutory object of encouraging new industrial undertakings supported this construction, and the assessee was entitled to the relief.

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Issues: Whether the assessee was entitled to relief under section 84 of the Income-tax Act, 1961, where the industrial undertaking was set up in rented premises earlier used by others.

Analysis: Relief under section 84 was available to a new industrial undertaking that was not formed by splitting up or reconstruction of an existing business of the assessee and was not formed by transfer to a new business of a building, machinery or plant previously used in the assessee's earlier business. The statutory object was to encourage new industrial undertakings by granting tax relief on fresh capital employed in a separate and distinct unit. The mere fact that the assessee had taken office space and factory premises on rent, and that those premises had been used earlier by others, did not by itself establish contravention of the negative condition. The later legislative amendments reinforcing the rented-premises position supported this construction.

Conclusion: The assessee was entitled to relief under section 84, and the answer to the referred question was in the affirmative, in favour of the assessee and against the revenue.

Ratio Decidendi: For section 84 relief, the negative conditions must be read in light of the statutory object of encouraging new industrial undertakings, and the use of rented premises previously occupied by others does not by itself defeat the claim where the undertaking is otherwise a new and distinct business set up with fresh capital.

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