1984 (4) TMI 71 - AT - Income Tax

Summary

Issues:
1. Claim of relief under section 80J of the Income Tax Act, 1961 for an Assembly Workshop.
2. Dispute regarding the computation of profit attributable to the industrial undertaking for the purpose of relief under section 80J.
3. Application of section 154 of the Act for rectification of the order limiting the relief under section 80J.

Analysis:

Issue 1: Claim of relief under section 80J
The assessee, a limited company, claimed relief under section 80J of the Income Tax Act, 1961 for its Assembly Workshop. The assessee initially claimed relief based on the capital employed in the industrial undertaking, which was duly allowed by the Income Tax Officer (ITO). Subsequently, the assessee sought further relief, which was granted by the ITO. However, a dispute arose later regarding the computation of profit attributable to the industrial undertaking for the purpose of the relief.

Issue 2: Dispute over computation of profit
The internal audit party highlighted to the ITO that the industrial undertaking had not undertaken any job requiring the withdrawal of the relief granted under section 80J. The ITO, based on this report, restricted the relief to the profit attributable to the assembly of 300 tractors. The CIT(A) accepted the assessee's contention that the entire profit for the year should be considered for the relief and not restricted to a part of the year. The Department challenged this decision, arguing that relief under section 80J should be limited to profits derived from the industrial undertaking only.

Issue 3: Application of section 154 for rectification
The Department contended that the relief could not be allowed based on profits from activities other than the industrial undertaking. The ITO's order limiting the relief was challenged by the assessee, who argued that the profit attributed to the industrial undertaking was incorrectly estimated by the ITO. The Tribunal agreed with the assessee, stating that the proportionate basis used by the ITO lacked legal or accountancy principles. The Tribunal held that the matter involved complex issues requiring a detailed analysis and was beyond the scope of rectification under section 154 of the Act.

In conclusion, the Tribunal dismissed the appeal, upholding the CIT(A)'s decision to cancel the ITO's order limiting the relief under section 80J. The Tribunal emphasized that a mistake apparent on the record must be obvious and patent, not a debatable point of law. The decision highlighted the need for clear evidence to support any withdrawal of relief granted under the Act.