JUDGMENT - Chagla, C.J.

1. The assessee company was incorporated on the 29th of December, 1945, and it obtained a certificate of commencement of business on the 20th of April, 1946. The business of the assessee company was that of running an oil mill.

2. The assessee company was assessed to tax on its business profits for the assessment year 1947-48 and it claimed various expenses as allowable deductions aggregating to Rs. 27,884-11-9. The view taken by the Income-tax Officer was that the assessee company had only commenced business when it purchased the groundnut mill on the 1st of November, 1946, and therefore he disallowed all the expenses which were incurred prior to the 1st of November, 1946. The assessee company went in appeal to the Appellate Assistant Commissioner and substantially the view taken by the Appellate Assistant Commissioner was that the expenses incurred after getting the certificate of commencement of the business should be treated as expenses incurred for the purpose of carrying on the business in the year of account, and therefore barring the sum of Rs. 3,616 in respect of which the assessee had not appealed, the Appellate assistant Commissioner allowed the balance of Rs. 24,269. The department appealed to the Tribunal and the Tribunal took the view that the first purchase of raw material for the purposes of being crushed in the mill which was to be erected was made at the end of September, 1946. They also took the view that some time must have been taken in making arrangements for the purchases and therefore the material date they fixed was the 1st of September, 1946, and they disallowed the expenses previous to the 1st of September, 1946, and allowed expenses subsequent to that date. Therefore it is to be noticed that the three Income-tax authorities had fixed three different dates as the relevant dates. The Income-tax Officer fixed the date as the 1st of November, 1946, on the basis of the purchase of the ground-nut oil mill, the Appellate Assistant Commissioner fixed the 20th of April, 1946, as the date on which the certificate of commencement of business was granted to the company and the Tribunal fixed the 1st of September, 1946, as the date on the basis that some time should be allowed to the assessee company prior to the actual purchase of raw materials. The assessee company asked the Tribunal to make a reference to this Court. The Tribunal having declined, we directed the assessee company to make a reference and to refer to us the following question :

"Whether the mere fact that the first transaction of purchase of raw material took place in September, 1946, is by itself a justification for holding that expenses made from April, 1946, were not for purpose of business of the company ?"

3. Now, having perused the statement of the case, we are inclined to agree with the Tribunal that the appropriate question which should have been referred to us was :

"Whether there was evidence before the Tribunal to hold that the assessee company commenced its business as from 1st of September, 1946 ?"

4. The question that we asked the Tribunal to refer carried in it an implication that the only fact that the Tribunal took into consideration was that the first transaction of purchase of raw materials took place at the end of September, 1946. That underlying assumption seems to be incorrect because in the statement of the case of Tribunal points out that there were many other facts taken into account in fixing the date of the commencement of the business like certificate of commencement of business, the date of the purchase of the mills, the details of the expenses given in the order of the Appellate Assistant Commissioner and so on.

5. Mr. Palkhiwalla has placed strong reliance on the judgment of the Appellate Assistant Commissioner and also on the various items of expenses which have been allowed by the Appellate Assistant Commissioner, and the whole gravamen of Mr. Palkhiwallas charge against the Tribunal is tha

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