Judgment

P. N. BHAGWATI, J.:- These two appeals by special leave raise a short but (Contd. on Col. 2) interesting question of law relating to the interpretation of S. 15-C of the Indian Income Tax Act, 1922 and S. 84 of the Income-Tax Act, 1961. These two sections are in material respects in identical terms and the interpretation we place on Section 15-C is bound to apply equally to S. 84. We will, therefore, first deal with Civil Appeal 1989 of 1972 which involves the interpretation of S. 15-C and then turn to Civil Appeal 2418 of 1977 which deals with S. 84.

2. The assessee in Civil Appeal 1989 of 1972 is a public limited company carrying on business in manufacture and sale of yarn. During the financial year ending 31st March, 1959, being the accounting year relevant to the assessment year 1959-60, the assessee set up a new industrial undertaking which admittedly satisfied the requirement of S. 15-C (2) of the Indian Income-tax Act, 1922. The profit, depreciation and development rebate in respect of this new unit for the assessment years 1959-60 and 1960-61 were as follows:

Year Profit Depreciation and Development Rebate

1959-60 Rs. 33,118/- Rs. 1,44,361/-

Rs. 5,07,336/- (Developmen