1984 (6) TMI 34 - HC - Income Tax

Summary

Issues:
1. Entitlement to relief under section 80J(3) for a new industry.
2. Claim for deduction under section 80J for previous assessment years.
3. Rectification of assessment orders under section 154.
4. Interpretation of sub-section (3) of section 80J regarding the obligation to claim deduction.

Detailed Analysis:
1. The judgment addressed the issue of whether the assessee, a new industry, was entitled to relief under section 80J(3). The petitioner, a new industry, made a profit for the first time in the assessment year 1972-73 and claimed deduction under section 80J not only for that year but also for the previous four assessment years. The Income Tax Officer (ITO) disallowed the claim for the previous years, stating that no such claim was made earlier. The Appellate Authority Commissioner (AAC) allowed the appeal, but the Commissioner revised the rectified orders for the years 1969-70, 1970-71, and 1971-72. The Tribunal held that the assessee was entitled to the deduction for all previous assessment years, leading to the reference to the High Court.

2. The judgment also delved into the issue of the claim for deduction under section 80J for previous assessment years. The Tribunal opined that since no profit was made by the assessee for the assessment years 1968-69 to 1971-72, there was no obligation for the assessee to claim the deduction under section 80J. However, when the assessee made a profit in 1972-73, the claim for all four previous years was permissible. The Tribunal held that the ITO should grant the benefit for the previous years as well, as the assessee was entitled to it in law.

3. The judgment discussed the matter of rectification of assessment orders under section 154. The ITO rectified the assessment orders for the years 1969-70, 1970-71, and 1971-72 but refused to do so for 1968-69, citing the limitation period under section 154. The Commissioner revised the rectified orders for the mentioned years, leading to an appeal by the assessee before the Tribunal.

4. The interpretation of sub-section (3) of section 80J regarding the obligation to claim deduction was a crucial aspect of the judgment. The High Court referred to decisions by other High Courts, such as Allahabad, Calcutta, and Madras, which held that when no profit was made in certain years, the assessee was not obligated to claim deduction under section 80J. The Court emphasized that sub-section (3) of section 80J does not expressly require the assessee to make a claim when no profit is made, and the deduction can be carried forward to subsequent years. The Tribunal's decision to grant the deduction for all assessment years in 1972-73 was upheld by the High Court based on this interpretation.

In conclusion, the High Court ruled in favor of the assessee, holding that the assessee was entitled to relief under section 80J(3) for all the assessment years, including the previous years, and that the Tribunal's decision was correct.