Madras High Court grants relief under Income-tax Act for 1964-65 assessment year

The Madras High Court ruled in favor of the assessee, allowing relief under section 84 of the Income-tax Act, 1961 for the assessment year 1964-65. The court determined that the assessee qualified for the relief based on the commencement of commercial production in 1959, emphasizing the necessity of actual commercial production to be eligible for relief under section 84.

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Issues involved: Interpretation of relief under section 84 of the Income-tax Act, 1961 for the assessment year 1964-65.

Summary:
The case involved a dispute regarding the eligibility of the assessee for relief under section 84 of the Income-tax Act, 1961 for the assessment year 1964-65. The assessee, a new industrial undertaking, had entered into a contract with the Government of India to manufacture railway wagons. The Income-tax Officer denied the relief for 1964-65, stating that manufacturing had begun in 1958 and relief was only available until 1963-64. The Appellate Tribunal, however, ruled in favor of the assessee, allowing the relief for 1964-65 as well.

Key Points:
- The Tribunal found that the assessee began manufacturing railway wagons in 1959, not in 1958 when a proto-type wagon was produced for approval.
- The Bombay High Court's decision in a similar case emphasized that actual production of articles in a commercial sense is necessary to qualify for relief under section 84.
- Another case cited by the Madras High Court supported the view that the commencement of commercial production determines eligibility for relief under section 84.
- The Madras High Court concluded that the assessee qualified for relief under section 84 for the assessment year 1964-65 based on the commencement of commercial production in 1959.

This judgment clarifies the interpretation of the relief under section 84 of the Income-tax Act, 1961, emphasizing the importance of actual commercial production in determining eligibility for the relief.

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