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Interpretation of deduction u/s 80J of the Income-tax Act, 1961 for a period exceeding 12 months. Analysis: The appeal before the Appellate Tribunal ITAT DELHI-A centered around the interpretation of the deduction under section 80J of the Income-tax Act, 1961 for a period exceeding 12 months. The appellant contested the decision of the Commissioner of Income-tax (Appeals) to allow the deduction at 6 percent for only 12 months, despite the previous year of the appellant firm being accepted by the revenue as consisting of 15 months. The appellant argued for a liberal interpretation of the law to extend the benefit to cover a period exceeding 12 months, relying on the judgment of the Madras High Court in CIT v. Simpson & Co. The appellant contended that the deduction should be allowed for 15 months, supported by the judgment of the Gujarat High Court in CIT v. Sarabhai Sons Ltd. The appellant urged that the deduction should be granted as claimed, and the orders of the authorities below should be set aside. The Departmental Representative (DR) opposed the appellant's argument, emphasizing the uniformity in judicial opinion regarding the deduction under section 80J for industrial undertakings. The DR contended that allowing a proportionate increase in deduction for a period exceeding 12 months would be unjustifiable and unsupported by any authority. The DR supported the decisions of the authorities below and urged the dismissal of the appellant's appeal. Upon careful consideration of the submissions, the Tribunal delved into the relevant provisions of law, particularly section 80J of the Income-tax Act, 1961. The Tribunal noted that the section allows for a deduction at the rate of 6 percent per annum on the capital employed in the industrial undertaking, for a specific period. The Tribunal referenced the judgment of the Madras High Court in the case of Simpson & Co., which emphasized a liberal construction of provisions for exemption or relief in fiscal statutes. The Tribunal highlighted the principle that interpretations favoring the subject should be adopted in case of ambiguity. The Tribunal also referred to the judgment of the Gujarat High Court in Sarabhai Sons Ltd., which acknowledged the liberal interpretation but expressed reservations. The Gujarat High Court noted that the relief under section 80J should be provided for a full 5 assessment years, irrespective of the duration of the previous years. The Tribunal rejected the appellant's argument for a proportionate increase in deduction for a period exceeding 12 months, stating that such an interpretation would defeat the legislative intent behind section 80J. The Tribunal upheld the order of the Commissioner of Income-tax (Appeals) and dismissed the appellant's appeal, emphasizing the lack of legal basis for the appellant's claim. In conclusion, the Tribunal's judgment clarified the interpretation of the deduction u/s 80J of the Income-tax Act, 1961 for industrial undertakings operating for periods exceeding 12 months. The Tribunal underscored the importance of a liberal construction of tax provisions while upholding the consistent application of the law in granting deductions to taxpayers.
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