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Assessment of deductions under sections 80J and 80-I of the Income-tax Act, 1961 based on the assessee's claim in reassessment proceedings. Detailed Analysis: The High Court of Calcutta addressed a question referred by the Commissioner of Income-tax regarding the assessment year 1971-72 under sections 80J and 80-I of the Income-tax Act, 1961. The dispute arose as the original assessment completed in 1974 did not consider the deductions claimed by the assessee. The Commissioner of Income-tax (Appeals) rejected the claim citing an amendment in the Finance Act, 1980, which limited deductions to the income of the new industrial undertaking only. However, the Tribunal directed the Income-tax Officer to allow deductions based on the principles laid down in the case of Rajapalayam Mills Ltd. The High Court reframed the question to focus on the allowance of deduction under section 80J. The Tribunal's decision was based on the assessee's claim made during reassessment proceedings, even though it was not raised initially. In the detailed analysis, the Court examined the history of the new industrial undertaking, the claim for deductions under sections 80J and 80-I, and the computation of profits. The assessee's letter dated February 8, 1979, highlighted the expansion and production details of the new unit and requested computations for the relief under section 80J. The Court emphasized that the assessee's entitlement to claim benefits during reassessment proceedings, even if not initially claimed, is upheld by the law. The Tribunal's direction to consider the assessee's claim for deduction under section 80J was deemed correct, leading to a favorable judgment for the assessee. The Court also addressed the absence of the initial claim before the Income-tax Officer and reiterated that the assessee's subsequent claim during reassessment proceedings should not be considered fatal. The Tribunal's decision to allow deductions based on the assessee's claim in the letter dated February 8, 1979, was upheld. The judgment affirmed the principle that an assessee can claim benefits during reassessment, even if not initially raised, ensuring a fair consideration of deductions under relevant sections of the Income-tax Act. In conclusion, the High Court ruled in favor of the assessee, affirming the Tribunal's decision to allow deductions under section 80J based on the claim made during reassessment proceedings. The judgment emphasized the assessee's right to claim benefits during reassessment, even if not initially raised, ensuring a fair assessment of deductions under the Income-tax Act. The Court reframed the question to focus on the allowance of deduction under section 80J and provided a comprehensive analysis of the facts and legal principles involved in the case.
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