1996 (6) TMI 23 - HC - Income Tax

Summary

Issues:
1. Treatment of payments made beyond December 15, 1977, as advance tax for the purpose of levy of interest under section 139(8) of the Income-tax Act, 1961.
2. Eligibility of relief under section 80J of the Income-tax Act, 1961, for a new unit engaged in processing work only.
3. Determination of whether a new unit engaged in processing work qualifies as engaged in the manufacture or production of articles for the purpose of granting relief under section 80J of the Income-tax Act, 1961.
4. Allowance of extra shift allowance on plant and machinery based on the working of the concern as a whole versus restricting the claim to the actual number of days each item of plant and machinery worked.

Analysis:
1. The Court addressed the issue of whether payments made beyond December 15, 1977, should be treated as advance tax for the purpose of levy of interest under section 139(8) of the Income-tax Act, 1961. The Court referred to a previous decision and held that any payment made before the end of the accounting year should be considered as advance tax if accepted by the Income-tax Officer. As the payment in question was accepted as advance tax and was over and above the tax due, no interest under section 139(8) could be levied. Thus, the Court answered this question in the affirmative against the Department.

2. Regarding the eligibility of relief under section 80J for a new unit engaged in processing work, the Court noted a discrepancy in the assessment orders and the Tribunal's decision. The Tribunal had granted relief for the first year but did not address the issue of whether the unit was engaged in manufacturing or production of articles for subsequent years. The Court emphasized that to qualify for relief under section 80J, all conditions under section 80J(4) must be satisfied. Since the Tribunal did not consider a ground raised by the Department regarding the unit's manufacturing activities, the Court directed the Tribunal to reevaluate the matter and make a decision based on the conditions set out in the law.

3. The Court also highlighted the importance of fulfilling the conditions specified in section 80J(4) of the Income-tax Act as a prerequisite for granting relief under that section. It pointed out that the Tribunal had not adequately addressed whether the unit met the manufacturing criteria, and thus, the matter needed further consideration. The Court instructed the Tribunal to review the case, considering the conditions under section 80J(4) and granting the assessee an opportunity to present their case. Consequently, the Court did not provide a definitive answer to questions 2 and 3, returning them to the Tribunal for reconsideration.