1. The question referred to us in this reference reads as follows :
'Whether, on the facts and in the circumstances of the case, it was rightly held that the assessee was entitled to relief u/s 84 of the Income-tax Act, 1961 ?'
2. It is the admitted position that the view taken by the Tribunal that there was no transfer of any building to the assessee by the assessee taking the factory building on lease, is contrary to the decision of this Court in Capsulation Services Private Limited v. CIT Bombay.
Mr. Munim on behalf of the assessee points out that the assessee would not be disentitled to relief u/s 84 merely because of the transfer if the building which is transferred does not exceed 20% of the total value of the building machinery or plant used in the business of the new undertaking established by the assessee. In other words, the contention in that the assessee is entitled to relief u/s 84 if it can established that it is protected by the Explanation to sub-s. (3) despite the facts of such transfer. The Tribunal has not gone into this aspects of the matter in the view that it took, which we have to declare to be erroneous.
3. In the result, we answer the question in the following manner :
The Tribunal was in error in holding the assessee entitled to relief u/s 84 of the Income-tax Act, 1961, on the footing that there was no transfer of the building to the assessee, and the Tribunal would be required to reconsider the question on the footing that there was a transfer. But at the stage of considering the assessee's entitlement to such relief' the Tribunal will have to bear in mind the provisions of the Explanation earlier referred to and it will have to hold the assessee entitled to such relief if the total value of the building 20% of the total value of the building machinery or plant used in the business of the new undertaking.
4. Each party is directed to bear its own costs of this reference.