AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 481
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....cts of the case are that the assessee is in the business of manufacturing of machine tools. Assessee - company came to be incorporated in the year 1994 and it was registered as a small scale industry. At about the end of 1994, the appellant had manufactured three vertical Machining Centres. Appellant participated in an exhibition viz., IMTEX-95 conducted by the Indian Machine Tool Manufacturers Association held in New Delhi during January-1995 and the three machines were displayed at the exhibition. They were conferred "Best Design" and "Best Exhibit" awards at the exhibition. According to the appellant, the three machines so manufactured were prototype. According to the appellant, in order to have field trial being conducted, it sold said three machines to group companies in March-1995. Two of the machines were sold to Pragati Engineering Works and one was sold to Ace Designers. It is the case of the appellant that the purpose of sale to such group companies was only to conduct field trial and to get feed back in order to know the technical faults, if any in the machines and to set right such defects. Thus, according to the appellant, the manufacture of three machines was for a tr....
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....rther in appeal before Income Tax Appellate Tribunal and Tribunal by order dated 31.07.2009 dismissed the appeal filed by the assessee and affirmed the order passed by the CIT(A). Hence, this appeal under section 260A has been filed by the assessee contending interalia that the initial assessment year is to be construed as 1996-97 and not 1995-96 and has prayed for substantial question of law being answered in its favour. 7. The contention of the assessee is that the production of machines during the Financial Year 1994-95 relevant to the Assessment Year 1995-96 was only on a trial basis and not on commercial basis. In other words, the production of three (3) machines according to assessee, was for trial purposes and not for commercial purposes. According to the assessee, even though there was a demand from outside customers to buy the machines, it was decided to sell these three (3) machines produced in the year 1994-95 to its group companies only, to conduct field trials and also to get feedback on its performance. Accordingly, one machine of MCV-400 was sold to Ace Designers and one machine each of MCV-400 and MCV-320 were sold to M/s.Pragati Engineering Works. It is further ca....
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....anies; before selling the machines to group companies, the machines were exhibited in the exhibition held in Pragati Maidan, New Delhi in the month of January' 1995 and there was tremendous response and praise for the products manufactured by the assessee and as there was lot of appreciation by the participants in respect of compact product design and aesthetic view, the three (3) machines were sold to the group companies. He further draws the attention of the Court that at the time of exhibition itself, orders came to be placed for purchase of those machines by 12 intending purchasers and as such, assessee cannot contend that machines exhibited was not for sale. He further submits that instead of selling these three (3) machines to the group companies, the assessee would have as well sold to other intending buyers inasmuch as, there was tremendous response in the exhibition itself and for its subsidiary companies assessee sold those three (3) machines. Thus, according to him the production has started in the Financial Year 1994-95, relevant to the Assessment Year 1995-96. 12. It is not in dispute and as is clear from the Annual Report 1994-95 of the assessee that the producti....
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....wing judgments: (i) Additional Commissioner of Income-Tax, Madras-II v. Southern Structurals Ltd. - (1977) 110 ITR 164 (ii) Commissioner of Income-Tax, Poona v. Hindustan Antibiotics Ltd. - (1974) 93 ITR 548 (iii) Commissioner of Income-Tax v. Food Specialities Ltd. - (1958) 156 ITR 790 (iv) Commissioner of Income-Tax v. Nestor Pharmaceuticals Limited - (2010) 322 ITR 631 (v) Metropolitan Springs Pvt. Ltd. v. Commissioner of Income-Tax, (Central) Bombay - (1981) 132 ITR 893 (vi) Commissioner of Income-Tax v. Himalyan Magnesite Ltd. - (2005) 276 ITR 56 to contend that the year of commercial production is relevant and not the year wherein the products were manufactured on trial basis. There cannot be any dispute with regard to said proposition of law. A provision in a statue must be interpreted with regard being had to the object for which the section was enacted namely with a view to encouraging the establishment of new industrial undertakings by granting exemption from tax on profits derived from such undertakings during the first ten years. We are also clear in our mind that if the object is to give exemption of tax, that presupposes that the real object is that the profits....