9911796707
|
Home
Issues:
1. Entitlement to claim development rebate on factory compound wall expenditure. 2. Entitlement to claim deduction under section 80J for building rented out to outsiders. 3. Computation of capital employed for deduction under section 80J considering debts and liabilities. Analysis: Issue 1: The court addressed the entitlement to claim development rebate on the expenditure incurred on the factory compound wall. The counsel for both parties agreed that this issue was covered by previous decisions, thus not requiring further analysis. Issue 2: Regarding the entitlement to claim deduction under section 80J for a building rented out to outsiders, the court focused on whether residential accommodation provided to shopkeepers could be treated as "capital employed" for the deduction. The Department argued that such rental income did not qualify for deduction under section 80J as it did not align with rule 19A. Additionally, they contended that there was no direct nexus between the accommodation and the industrial or business activities of the assessee. The Department cited relevant case law to support their position. The assessee's counsel argued that the residential accommodation was essential for the township's functioning and should be considered "capital employed" for the deduction. They emphasized the necessity of the accommodation for the industrial or business activities of the assessee. Drawing on precedents and the objective of promoting industrial growth, the assessee's counsel asserted that the accommodation should qualify for the deduction. The court, after considering the arguments and relevant provisions, held that the residential accommodation provided to shopkeepers could be deemed "capital employed" and thus qualified for the deduction under section 80J. They emphasized a liberal interpretation of the provision to promote industrial growth and economic objectives. Therefore, the court ruled in favor of the assessee on this issue. Issue 3: The court also examined the computation of capital employed for deduction under section 80J, specifically considering debts and liabilities. They analyzed the relevant sections and rules to determine the inclusion of debts and liabilities in the computation. Based on the interpretation of the provisions and the objective of encouraging industrial growth, the court concluded that the residential accommodation provided to shopkeepers qualified as "capital employed" for the deduction. In conclusion, the court answered the second question in favor of the assessee and against the Revenue, disposing of the reference with no order as to costs.
|
