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Deduction under section 80J of the Income-tax Act, 1961. Detailed Analysis: The case involved a reference made by the Tribunal at the instance of the Revenue regarding the entitlement of the assessee to a deduction under section 80J of the Income-tax Act, 1961. The assessee-company had claimed the deduction for its new unit at Konnagar engaged in the manufacture of pharmaceutical formulations. The Income-tax Officer initially disallowed the claim, stating that the assessee failed to prove the introduction of fresh capital, additional profit from the new unit, requisite labor force, and separation from the existing unit. On appeal before the Commissioner (Appeals), the assessee provided details of fresh capital investment, new products, employment of labor, and separate establishment of the new unit. However, the Commissioner (Appeals) rejected the claim, considering the new unit as a reconstruction of the existing business based on the balance-sheet and plant/machinery details. The assessee further appealed to the Tribunal, explaining the purchase agreement for the new unit's land, building, and machinery from a sister concern. The Tribunal referred to its earlier decision for the assessment year 1979-80, where it recognized the new unit's manufacturing activities. The Tribunal noted that the new unit was engaged in manufacturing pharmaceutical formulations and that the plant and machinery details were available in the company's accounts. It clarified that the machinery purchased from the sister concern was for the aspirin unit, not the pharmaceutical formulations unit. The Tribunal upheld the assessee's claim under section 80J, emphasizing the confusion in the Commissioner (Appeals)'s analysis and the clear engagement of the new unit in pharmaceutical production. The High Court, in its judgment, affirmed the Tribunal's findings of fact, stating that the assessee had indeed established a new industrial unit for manufacturing pharmaceutical products with new plant and machinery. As these findings satisfied the conditions for claiming the deduction under section 80J, the Court ruled in favor of the assessee, rejecting the Revenue's reference. Both questions referred by the Tribunal were answered in the affirmative and in favor of the assessee, with no order as to costs. This detailed analysis highlights the progression of the case from the Income-tax Officer's initial disallowance to the Tribunal's final decision, emphasizing the establishment of a new industrial unit for pharmaceutical production and the fulfillment of conditions for claiming the deduction under section 80J.
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