Prior use and lease as transfer under section 15C(2)(i) are enough to trigger the exemption bar.

Section 15C(2)(i) does not require that the building transferred to a newly started industrial undertaking must have been previously used by the assessee himself; prior use by any other business is sufficient if the building is later transferred to the new undertaking. The term "transfer" is given its ordinary broad meaning and is not limited to a transfer of full ownership rights. A lease of premises used earlier in another business can therefore amount to a transfer within the provision, bringing the undertaking within the statutory bar to exemption.

---

---

Issues: (i) Whether, for the purpose of section 15C(2)(i), the building transferred to the newly started industrial undertaking must have been previously used by the assessee himself and not by a stranger. (ii) Whether a lease taken by the assessee of premises previously used in another business amounts to a transfer within section 15C(2)(i).

Issue (i): Whether, for the purpose of section 15C(2)(i), the building transferred to the newly started industrial undertaking must have been previously used by the assessee himself and not by a stranger.

Analysis: The provision contains no requirement that the building, machinery or plant previously used in another business must have belonged to or been used by the assessee. The controlling words are that the undertaking should not be formed by transfer to a new business of building previously used in any other business. The source of prior use is immaterial if the building was earlier used in some business and is then transferred to the new undertaking.

Conclusion: The requirement that the building must have been previously used by the assessee himself is not part of section 15C(2)(i); a building earlier used by a stranger is included.

Issue (ii): Whether a lease taken by the assessee of premises previously used in another business amounts to a transfer within section 15C(2)(i).

Analysis: The expression "transfer" is to be understood in its normal and broad sense and is not confined to a transfer of full ownership rights. A lease creating an interest in the premises in favour of the new business falls within the statutory language of transfer to a new business of building previously used in any other business.

Conclusion: A lease of the premises amounted to a transfer within section 15C(2)(i), in favour of the Revenue.

Final Conclusion: The reference was answered by holding that prior user by the assessee was unnecessary, while a lease could constitute a transfer for the purposes of the exemption provision.

Ratio Decidendi: For section 15C(2)(i), the statutory bar is attracted by transfer of a building previously used in any other business regardless of who previously used it, and the term "transfer" includes a lease creating rights in favour of the new undertaking.

---