Krishnamoorthy Iyer, J.
1. This reference raises the question of interpretation of Section 84 of the Income-tax Act, 1961, which was deleted by the Finance (No. 2) Act, 1967, with effect from the 1st April, 1968,
2. At the instance of the assessee, Chembra Peak Estates Ltd., Coimbatore, the Income-tax Appellate Tribunal, Cochin Bench,, referred under Section 256(1) of the Income-tax Act, 1961, the following question:
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not entitled to relief under Section 84 of the Income-tax Act, 1961 ?'
3. The assessee is a public limited company owning tea and coffee plantations in Wynad District. During the previous year ending March 31, 1964, relevant to the assessment year 1964-65, the assessee claimed rebate under Section 84(1) of the Income-tax Act, 1961, on a sum of Rs. 48,044 being the profits from the manufacture of tea in his newly established factory in Elstone division. The plea of the assessee is that it was, therefore, eligible for rebate on the profits from the tea manufactured in that new factory.
4. The Income-tax Officer disallowed the claim of the assessee on the ground that the new factory in the Elstone division was formed by the splitting up or reconstruction of a business already in existence within the meaning of Section 84(1), read with Section 84(2)(i) of the Income-tax Act. The Appellate Assistant Commissioner took the view that the setting up of a factory in Elstone division was merely an extension of the existing business of the assessee without any new business having come into existence and the assessee is, therefore, not entitled to concession under Section 84(1) of the Income-tax Act. The Tribunal held thus :
'The entire leaves from both the divisions which were being manufactured from one factory, viz., Chembra Peak factory, are now distributed between the two factories and the quantum of work that is being done and the quantum of out-turn has not increased. In other words, what one factory was originally doing is now being done by two factories, one of them, perhaps, adopting a more modern method of manufacture. The new factory, therefore, clearly comes within the mischief of Section 84(2)(i) inasmuch as it is formed by the splitting up of a business already in existence.'
5. As our answer to the reference depends on the interpretation of Section 84 of the Income-tax Act, 1961, it will be appropriate to extract the relevant portions of the provision. It reads :
'Income of newly established industrial undertakings or hotels.--(1) Save as otherwise hereinafter provided, income-tax shall not be payable by an assessee on so much of the profits and gains derived from any industrial undertaking or business of a hotel or from any ship, to which this section applies, as does not exceed six per cent. per annum on the capital employed in such undertaking or business or ship, computed in the prescribed manner.
(2) This section applies to any industrial undertaking which fulfils all the following conditions, namely :
(i) it is not formed by the splitting up, or the reconstruction, of a business already in existence;
(ii) it is not formed by the transfer to a new business of a building, machinery or plant previously used for any purpose ;
(iii) it manufactures or produces articles or operates one or more cold storage plants, in any part of India, and has begun or begins to manufacture or produce articles or to operate such plant or plants, at any time within the period of twenty-three years next following the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking;
(iv) in a case where the industrial undertaking manufactures or produces articles it employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power :
Provided that the condition in Clause (i) shall not apply in respect of any industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in Section 33B, in the circumstances and within the period specified in that section ;
Provided further that the condition in Clause (ii) shall be deemed not to have been contravened if the industrial undertaking is set up in rented premises.'
6. The remaining parts of Section 84 are not relevant for our discussion and they are not extracted.
7. The controversy between the parties is about the meaning to be given to the expression 'industrial undertaking' in the above section. According to the department, in the circumstances of this case, the establishment of a new factory at Elstone division cannot be considered to be a new industrial undertaking within the meaning of Section 84(1) of the Income-tax Act, 1961. Prior to the accounting year ending with 31st March, 1964, the assessee was having the factory for the manufacture of tea only in the Chembra Peak division. During the previous year ending with 31st March, 1964, the assessee established a new factory in Elstone division employing a new process known as C.T.C. process (crushing, tearing and curling) to manufacture a new type of tea. Before the establishment of the factory in the Elstone division all the tea leaves from the tea estates in Elstone division were being taken to the factory in the Chembra Peak division for the manufacture of tea. After the establishment of the factory in Elstone division it is the common case that the factory in Chembra Peak division continued to manufacture tea from the green leaves brought from divisions other than Elstone division and the factory in the Elstone division wasbeing fed only by the tea estates in that division On these admitted facts the question is whether the new factory in Elstone division is an industrial undertaking within the meaning of Section 84(1) of the Income-tax Act, 1961. On a fair reading of the section it is clear that apart from profits and gains derived from a ship or the business of a hotel the benefit under the section is confined only to profits and gaiins derived from an industrial undertaking and does not extend to the profits of any other business activity. The exemption cannot operate in respect of profits and income derived by an assessee from any trade or business other than from an industrial undertaking. The object of the Section is to encourage new industrial undertakings, by providing a concession to the assessee in computing his total income. Section 84, Sub-section (7), prescribes the period of time during which the concession will operate.
8. Sub-section (2) of Section 84 defines the nature of an industrial undertaking for which the concession can be claimed. An assessee to get the benefit has to clearly establish that the income sought to be taxed in his hands has its source from an industrial undertaking. It was ruled in Commissioner of Income-tax v. Standard Motor Products of India Ltd.,  46 I.T.R. 814 (Mad.) a case dealing with Section 15C of the Indian Income-tax Act, 1922, that the exemption under the said provision will have to be strictly construed.
9. The marginal note or title of Section 84(1) reads :
'Income of newly established industrial undertakings or hotels.'
10. The words 'newly established' are not in the section, but in our view, that cannot in any way affect the interpretation to be placed on the said provision.
11. Counsel for the revenue relying upon Commissioner of Income-tax v. Textile Machinery Corporation,  80 I.T R. 428 (Cal.)contended that to attract Section 84(1) the newly established industrial undertaking should be for a purpose different and separate from the nature of the business which the assessee has been carrying on till then. If the assessee in the case before us has acquired more tea estates and established factories therein for the manufacture of tea they cannot be considered newly established industrial undertakings if the contention of the revenue is accepted. In our view, it is not necessary for the purpose of this case to express an opinion on the extreme proposition advanced by counsel for the revenue. It is enough for the purpose of this case to hold that in view of the facts admitted the new factory in the Elstone division was formed by the splitting up of the business which was already in existence. If so, the assessee will not be entitled to the exemption under Section 84(1) read with Section 84(2)(i) of the Act. We, therefore, answer the question in the affirmative, that is, against the assessee and in favour of the department. We make no order as to costs.
12. A copy of this judgment will be forwarded to the Income-tax Appellate Tribunal, Cochin. Bench, under the seal of this court and the signature of the Registrar.