JUDGMENT

S. M. FAZL ALI J:—These are appeals by the Revenue by special leave against the order of the High Court of Punjab and Haryana dated January 20,1970 answering the questions referred to the High Court by the Tribunal in favour of the assessees/respondents and against the Revenue. The appeal arises in the following circumstances.

2. M/s. Panipat Woollen and General Mills Co. Ltd hereafter referred to as the assessee-Company had two Department -(1) for spinning of yarn from raw and waste wool and (2) for spinning of yarn from imported wool tops. The second Department which carried on the operations of spinning of yarn from imported wool tops was started some time in the year 1952. Weaving operations were however, carried on in both these Departments. One of the Departments was known as M/s Panipat Woollen Mills,Kharar while the other one was known as M/s Navin Woollen Mills. It is said that the assessee-company was running at & constant loss as a result of which in 1952 the assessee -Company decided to instal a plant for manufacture of worsted yarn from imported wool tops by raising a loan of Rs.7 Lakhs from the Industrial Finance Corporation. The plant went into production i