1981 (3) TMI 151 - AT - Income Tax

Summary

Issues:
- Disallowance of relief under section 80J and section 80HH for assessment years 1976-77, 1977-78, and 1978-79.
- Rejection of assessee's claim based on conditions not fulfilled.
- Dispute over revising eligibility for relief under sections 80J and 80HH for succeeding years.
- Interpretation of provisions under section 80J and section 80HH.
- Comparison of judicial pronouncements regarding the withdrawal of relief under section 80J.
- Application of High Court decisions to the present case.
- Error in upholding ITO's decision by the Commissioner (Appeals).

Analysis:
The judgment pertains to the disallowance of relief under section 80J and section 80HH for the assessment years 1976-77, 1977-78, and 1978-79. The assessee, a private limited company manufacturing bidis, claimed exemption under these sections, which was initially allowed for the assessment year 1975-76 but rejected for the subsequent years by the Income Tax Officer (ITO) based on unfulfilled conditions. The Appellate Assistant Commissioner (AAC) had previously ruled in favor of the assessee for the initial year, and the revenue did not challenge this decision before the Tribunal, making it final. The Commissioner (Appeals) upheld the ITO's decision for the succeeding years, citing the possibility of revisiting the issue if new facts emerge. The assessee contended that the ITO could not reject the claim based on the previous year's decision and relied on a Gujarat High Court case to support their argument.

The Tribunal analyzed the provisions of section 80J and section 80HH, emphasizing that eligibility for relief must be determined in the initial assessment year and cannot be revised for the succeeding years if the initial finding is final. The Tribunal noted that the High Court decisions provided clarity on the matter, stating that relief granted in the initial year cannot be withdrawn in subsequent years without fresh grounds. The Tribunal distinguished a contrary view from another High Court case cited by the revenue, highlighting the applicability of the law as explained in the Gujarat High Court decision relied upon by the assessee.

Regarding the assessee's claim under section 80HH, the Tribunal reiterated that the method of granting relief is similar to section 80J, and the eligibility must be ascertained in the initial assessment year. The Tribunal concluded that the ITO erred in not allowing the relief under section 80J and section 80HH, and the Commissioner (Appeals) made a mistake in upholding the ITO's decision. Consequently, the Tribunal reversed the Commissioner (Appeals)'s orders and allowed the assessee's appeals, emphasizing the settled issue based on the Gujarat High Court decision.