1987 (1) TMI 173 - AT - Income Tax

Summary

Issues Involved:

1. Disallowance of claim under section 80J of the Income-tax Act, 1961.
2. Compliance with conditions laid down in section 80J(4)(i) to (iv) and 80J(6A).
3. Relevance of judicial precedents cited by the assessee.
4. Procedural propriety in the assessment and appellate orders.
5. Difference of opinion among Tribunal members on the appropriate resolution.

Detailed Analysis:

1. Disallowance of claim under section 80J of the Income-tax Act, 1961:

The appellant-assessee challenged the disallowance of their claim under section 80J for the assessment years 1977-78 to 1979-80. The Income-tax Officer (ITO) had disallowed the claim on the grounds that the conditions specified in section 80J(4)(i) to (iv) and section 80J(6A) were not met. The Appellate Assistant Commissioner (AAC) upheld this decision, leading to the present appeal before the Tribunal.

2. Compliance with conditions laid down in section 80J(4)(i) to (iv) and 80J(6A):

The ITO found that the conditions prescribed in section 80J(4)(i) to (iv) were not fulfilled by the assessee. Additionally, the ITO noted that the assessee had not complied with the mandatory condition of getting its accounts audited by an accountant as defined in section 288(2), thus rendering the claim inadmissible under section 80J(6A).

3. Relevance of judicial precedents cited by the assessee:

The assessee cited several judicial precedents, including Brij Bhushan Lal Parduman Kumar v. CIT, National Projects Construction Corpn. Ltd. v. CWT, and Ramesh Chandra Chaturvedi v. CIT. However, the AAC found that these cases were either irrelevant or supported the revenue's case, leading to the dismissal of the appeal.

4. Procedural propriety in the assessment and appellate orders:

The Tribunal noted that both the ITO and the AAC had failed to record the relevant facts and reasons for disallowing the claim under section 80J. The Judicial Member observed that the AAC applied the law in a vacuum without bringing the facts on record, thus setting aside the impugned order and restoring the matter to the AAC for a fresh decision in accordance with the law.

5. Difference of opinion among Tribunal members on the appropriate resolution:

The Accountant Member disagreed with the Judicial Member's decision to set aside the orders. He argued that the assessee had failed to satisfy the conditions laid down in section 80J(4) and 80J(6A) at any stage of the proceedings. He also relied on the Full Bench decision in ITO v. Hydle Constructions (P.) Ltd., which held that contractors are not entitled to benefit under section 80J. Consequently, he rejected the appeals.

Resolution of Difference of Opinion:

The Third Member, Senior Vice President, was called upon to resolve the difference of opinion. He agreed with the Accountant Member, stating that it is the duty of the assessee to provide the necessary particulars to claim benefits under section 80J. Since the assessee failed to do so, the appeals deserved to be dismissed. He also noted the relevance of the Full Bench decision in Hydle Constructions (P.) Ltd. and the Delhi High Court's decision in CIT v. Minocha Bros. (P.) Ltd., which held that contractors are not entitled to relief under section 80J.

Conclusion:

The majority opinion, favoring the Accountant Member's view, led to the dismissal of the appeals. The Tribunal concluded that the assessee did not meet the conditions required for the section 80J claim, and therefore, the disallowance by the ITO and AAC was justified.