1984 (7) TMI 63 - HC - Income Tax

Summary

Issues:
1. Entitlement to deduction under section 80J(3) of the Income-tax Act, 1961 for the assessment year 1970-71.
2. Entitlement to deduction of 8% of profit and gains from the business computed for the assessment year 1970-71 before setting off unabsorbed development rebate relating to the assessment year 1967-68.
3. Validity of the finding regarding the commencement of production in the assessee's case.
4. Entitlement to carry forward deficiency under section 84 relating to the assessment year 1967-68 and set it off against the profit for the year 1970-71.

Analysis:
1. The first issue pertains to the deduction under section 80J(3) for the assessment year 1970-71. The court referred to previous decisions and found that the question was similar to cases where the Revenue was favored. Hence, the court answered this question in the negative and in favor of the Revenue.

2. The second issue involves the deduction of 8% of profit and gains before setting off unabsorbed development rebate from the assessment year 1967-68. The court found this issue covered by a previous decision and ruled in favor of the assessee, allowing the deduction.

3. The third issue concerns the commencement of production by the assessee. The court analyzed various factors, including auditors' letters, depreciation claims, and early sales of goods. The court agreed with the Tribunal's finding that commercial production started in November 1961, not in July 1960 as claimed by the Revenue. Therefore, the court answered this question in the affirmative and against the Revenue.

4. The fourth issue deals with carrying forward deficiency under section 84 and setting it off against the profit for the year 1970-71. The court found that the Tribunal's decision was appropriate based on the facts and circumstances of the case. Consequently, the court answered this question in the affirmative and against the Revenue.