1984 (2) TMI 132 - AT - Income Tax

Summary

Issues:
- Allowability of relief under section 80J of the Income-tax Act
- Determination of initial year for claiming relief under section 80J
- Interpretation of conditions for claiming relief under section 80J
- Reckoning of the period for claiming relief under section 80J

Analysis:

The appeal involved a dispute regarding the allowability of relief under section 80J of the Income-tax Act, specifically concerning the initial year for claiming such relief. The assessee, an electrical engineering company, had set up a new industrial unit in 1970 and claimed deduction under section 80J for the assessment year 1976-77. The issue arose as the assessee did not meet the conditions for relief in the initial years of production, leading to a disagreement between the Income Tax Officer (ITO) and the Commissioner (Appeals).

The ITO contended that since the conditions were not met in the initial years, the assessee was not entitled to relief under section 80J for the assessment year 1976-77. However, the Commissioner (Appeals) disagreed, citing a decision of the Gujarat High Court that allowed relief under section 80J if conditions were met in subsequent years within the stipulated period. The Commissioner (Appeals) held that the initial year for relief should be the assessment year 1973-74, allowing the assessee to claim relief for the assessment year 1976-77.

The Appellate Tribunal referred to the Gujarat High Court decision, which emphasized providing incentives to new industries through provisions like section 80J. The Tribunal concurred with the Gujarat High Court's interpretation that if conditions were met in subsequent years, the assessee could claim relief from the year of fulfillment. In this case, as the conditions were met in the assessment year 1973-74, the relief under section 80J could be claimed from that year onwards, up to and including the assessment year 1975-76.

Ultimately, the Tribunal held that the Commissioner (Appeals) erred in allowing relief under section 80J for the assessment year 1976-77, as the relief period ended in 1975-76. Therefore, the department's appeal was allowed, and the direction of the Commissioner (Appeals) to grant relief for the assessment year 1976-77 was vacated.

In conclusion, the judgment clarified the interpretation of conditions for claiming relief under section 80J, emphasizing the importance of meeting such conditions in determining the initial year for relief eligibility and the subsequent period for claiming such relief.