2006 (7) TMI 153 - HC - Income Tax

Deduction under section 80J - assessee-firm was running a cold storage - it claimed relief under section 80J, as a new industrial undertaking - Whether Tribunal was justified in holding that the assessee was entitled to the deduction under section 80J on the capital employed in the two chambers added to the existing cold storage? - We find that under section 80J(2), deduction in respect of profits and gains is also available to the existing cold storage. In the present case the Tribunal held that the assessee was entitled to the deduction under section 80J on the two chambers added to the existing cold storage. In this view of the matter the Tribunal was right in giving the deduction under section 80J.

Summary

Issues:
Interpretation of section 80J for deduction on capital employed in additional chambers in existing cold storage facility.

Analysis:
The case involved a dispute regarding the entitlement of the assessee to a deduction under section 80J on the capital employed in two chambers added to the existing cold storage facility. The Income-tax Officer initially disallowed the claim, citing reasons such as not employing 10 or more workers and lack of a separate viable unit. However, the Commissioner of Income-tax (Appeals) overturned this decision based on previous tribunal rulings and allowed the deduction for the assessment years in question.

The Revenue challenged the Commissioner's decision before the Appellate Tribunal, arguing that the earlier tribunal orders had not been accepted by the Department. The Appellate Tribunal considered the previous decisions and found that the dispute was covered by its earlier ruling for a different assessment year. Consequently, the Appellate Tribunal dismissed the Revenue's appeals, upholding the deduction under section 80J for the assessee.

Upon review, the High Court examined the provisions of section 80J(2) of the Income-tax Act, which allows deductions for existing cold storage facilities. The Court concurred with the Tribunal's decision that the assessee was entitled to the deduction on the additional chambers in the cold storage. Consequently, the High Court answered the question in favor of the assessee and against the Revenue, allowing the deduction under section 80J. However, the Court directed that each party would bear their own costs in this matter.