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Issues involved: Interpretation of the terms 'industrial undertaking' and 'industrial unit' under section 35D of the Income-tax Act, 1961.
Summary: The assessee, a company engaged in transporting goods, claimed a deduction under section 35D(1)(ii) for expenses incurred on increasing its fleet of trucks. The Income-tax Officer and the Appellate Assistant Commissioner disallowed the deduction, stating it was only allowable for extension of an industrial undertaking. The Appellate Tribunal found that the terms 'industrial undertaking' and 'industrial unit' were not defined in the Act. The assessee argued for a liberal interpretation, citing definitions from other laws, while the Revenue contended that transport undertakings were not covered. The Tribunal held that without a specific provision for transport undertakings, the deduction could not be granted. The Tribunal rejected the claim for the assessment years 1976-77 and 1977-78. In the absence of a definition for 'industrial undertaking,' the court considered the general scheme of the Act and the Finance Act. The court noted that the intention of Parliament was focused on production rather than distribution of goods. The Tribunal's decision was upheld, stating that the assessee failed to establish eligibility for the deduction under section 35D. The court emphasized that for amortization under section 35D, the assessee must meet the conditions specified in sub-sections (1) and (2) of the Act. As the assessee did not provide sufficient evidence to satisfy these conditions, the deduction was not granted. The court affirmed the Tribunal's decision that the assessee was not entitled to amortization under section 35D. The court reframed the question to focus on the correctness of the Tribunal's decision and answered in the affirmative, ruling against the assessee.
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