Industrial undertaking exemption cannot be denied merely because profit and capital relief must be reasonably apportioned.

Relief under sections 84 and 101 of the Income-tax Act, 1961 is available where a newly established industrial undertaking satisfies the statutory conditions and earns assessable profits. The right to exemption is distinct from the subsequent computation of its quantum, so the tax authority cannot deny relief altogether merely because the assessee uses an apportionment method for capital and profit allocation. Composite accounts and turnover-based allocation may require verification or correction, but they do not by themselves defeat eligibility for exemption. The computation issue affects quantification, not entitlement, where the statutory requirements are otherwise met.

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Issues: Whether the assessee was entitled to relief under sections 84 and 101 of the Income-tax Act, 1961, in respect of the profits of its Ambattur unit.

Analysis: Relief under section 84 depends on the industrial undertaking satisfying the statutory conditions and earning profits from the undertaking; the section then grants exemption up to 6% per annum on the capital employed, with capital to be computed in the prescribed manner and profits to be computed under Chapter IV-D. The Court held that the existence of the right to relief is distinct from the quantification of the relief, and the Income-tax Officer cannot refuse exemption altogether merely because the assessee adopted an apportionment method for computing capital and profits. Since the Ambattur unit was a newly established undertaking, had made assessable profits, and satisfied the statutory conditions, the difficulty in exact computation could not defeat the claim. The apportionment based on turnover and the composite accounts did not justify denial of exemption; at most, the computation could be examined and corrected.

Conclusion: The assessee was entitled to relief under sections 84 and 101, and the answer to the reference was in favour of the assessee and against the revenue.

Ratio Decidendi: Where a newly established industrial undertaking satisfies the statutory conditions and earns profits, exemption under section 84 cannot be denied merely because the exact quantum of relief requires computation or apportionment on a reasonable accounting basis.

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