Section 15C relief depends on separate profits of the industrial undertaking; absorbed losses can eliminate exemption.

Section 15C relief for a new industrial undertaking is confined to profits and gains derived from that undertaking, computed separately under section 10 as a distinct fiscal unit. Composite business income cannot be used to enlarge the concession, and where brought-forward unabsorbed depreciation and development rebate attributable to the unit exceed its income, the undertaking has no taxable profits for the year. In such a case, no exemption under section 15C is available, and equitable hardship cannot expand the statutory relief.

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Issues: Whether the assessee-company was entitled to relief under section 15C of the Indian Income-tax Act, 1922 in respect of the new industrial undertaking for the assessment year 1961-62.

Analysis: Section 15C grants exemption only on the profits and gains derived from the industrial undertaking itself and requires those profits to be computed in accordance with section 10. The undertaking must be treated as a separate fiscal unit for the purpose of the concession, and the assessee's composite business income cannot be telescoped into the computation of the undertaking's profits. Where unabsorbed depreciation and development rebate attributable to the new unit exceed its income, the unit has no taxable profits for the relevant year. Exemption under section 15C cannot arise in the absence of profits of the undertaking, and equitable hardship cannot enlarge the statutory concession.

Conclusion: The assessee was not entitled to relief under section 15C; the question was answered in the negative, against the assessee and in favour of the Revenue.

Ratio Decidendi: Relief under section 15C is available only when the industrial undertaking, computed separately under section 10, has profits or gains of its own; if brought-forward unabsorbed depreciation and development rebate eliminate such profits, no exemption can be claimed.

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