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Issues involved: The judgment involves the interpretation of u/s 80J of the Income-tax Act regarding the computation of total income for the purpose of deduction for a new industrial unit.
Summary: The case revolved around whether the assessee's new unit for manufacturing lamp caps qualified for relief u/s 80J of the Income-tax Act. Initially, the claim for relief was rejected on the grounds that the new unit was considered part of the existing business. However, the Appellate Tribunal ruled in favor of the assessee, stating that a new industrial undertaking had been established. The dispute in the current case for the assessment year 1972-73 centered on the submission of separate profit and loss accounts for the new unit. The Department argued that without these accounts, it would be challenging to compute the capital and profits accurately for the purpose of claiming the deduction u/s 80J. The objective of u/s 80J is to incentivize new industrial undertakings by exempting a portion of income from tax for a specified period. The section specifies that a percentage of the capital employed in the industrial undertaking shall be exempt from tax. The crux of the matter was whether the profit and loss of the new unit could be reasonably determined based on the accounts submitted by the assessee for the purpose of claiming benefits u/s 80J. It was established through previous decisions that separate accounts for the new unit were not mandatory under u/s 80J. In this case, the assessee had maintained separate accounts in the ledger for the new unit, which were used to determine profits. The assessee agreed that the benefit of u/s 80J would only apply if the assessing authority could satisfactorily compute the profit and loss of the new unit based on the submitted accounts. The Tribunal acknowledged the assessee's commitment to providing necessary figures for adjustment by the Income-tax Officer. Given the stance of the assessee and the pending assessment by the Income-tax Officer, the court refrained from expressing a final opinion. The question was answered in favor of the assessee, emphasizing the importance of providing sufficient material for the Income-tax Officer to determine the entitlement and quantum of deduction under u/s 80J.
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