9911796707
TMI Blog1996 (3) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... see contested the disallowance of its claim upto the Tribunal stage and the Tribunal vide its order dated 6-2-1978 for the assessment year 1972-73 held in para 8 of the order that Rule 19A(3) (dealing with deduction of borrowed moneys and debts owed by the assessee) is repugnant to section 80J and, therefore, the total value of the assessee's assets of the new industrial undertaking should be taken as the capital employed for the purpose of computing the relief under section 80J without deducting any sum by way of liabilities. In para 7 of the order, the Tribunal had mentioned that the next ground of appeal was regarding deduction of liabilities for working out relief under section 80J in respect of capital employed (Nadiad and Baroda Units). That order became final. Thereafter the CIT wanted to initiate action under section 263 of the IT Act but the assessee objected to it that since this matter had already been the subject matter of appeals before the ld. CIT(Appeals), no action under section 263 could be taken and hence the CIT had dropped the proceedings under section 263. 4. For the assessment year 1980-81, i.e., the assessment year under consideration, the assessee filed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and circumstances of the case, imposed the minimum penalty under section 271(1)(c) amounting to Rs. 10,94,050. 5. In the appeal filed by the assessee, the ld. CIT(Appeals) again took all the facts and circumstances of the case into account. While he did not accept many of the arguments advanced on behalf of the assessee, he accepted that assessee had in fact made the claim under section 80J for the assessment year 1973-74, and that since for the assessment year 1972-73 no relief was allowable, for the first time it could be allowed and considered only in the assessment year 1973-74 and hence the explanation of the assessee would be taken as bona fide. He also took the view that merely because the Tribunal had held for the assessment year 1972-73 that it was the first year in which section 80J relief was admissible could not be conclusive because according to him the point of commercial production was not at all before the Tribunal. He also found no substance in the conclusion of the ITO that the assessee had made the claim of Rs. 16,96,203 under section 80J to compensate for the difference between the original figures of profit at Rs. 43,73,795 and the allowable brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ater year and hence only assessment year 1973-74 would be taken as the initial year and there was nothing wrong when the assessee claimed section 80J relief in the assessment year 1980-81 which was the 8th year starting from 1973-74. The ld. counsel for the assessee argued that merely because the assessee had made a claim but it was not actually allowed would not make the assessee liable for penalty. She reiterated that the question in appeal for the assessment year 1972-73 was merely academic as to whether borrowed capital should be allowed as a deduction or not. She further submitted that the appeal for the assessment year 1980-81 was withdrawn not because the assessee conceded that its claim was false but because of the decision in the case of Lohia Machines Ltd. by the Supreme Court. 9. Finally, she argued that even if the penalty were to be imposed, the quantum had to be reduced as mentioned by the ld. CIT(Appeals). The ld. counsel drew our attention to various decision in Impulse India (P.) Ltd v. ITO [1992] 40 ITD 36 (Delhi), Associated Cement Companies Ltd. v .Dy. CIT [1992] 40 ITD 70 (Bom.), and 39 TTJ 212 not available to support her arguments. 10. We have carefully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lised that its returned income would be much higher than originally returned and may result in imposition of various penalties and charging of interests that it thought of the devices to lodge a claim of relief under section 80J with the idea that if the assessee succeeds, it would be saving tax besides penalties and interests to the tune of about Rs. 10,94,000. Alternatively, if at all it is deducted, the assessee may get away by giving various explanations which it had given and may in the process succeeded in establishing its bona fides which may save it from impositions of various penalties and interests leviable under the Income-tax Act. In our opinion, if the ITO was not so vigilant as to verify in great detail the record for the assessment year 1972-73 including the appellate orders and had just gone by the declaration of the assessee, and the return of income held by assessee for that year, the assessee should have really got away by not paying tax of about Rs. 10,96,000 and the penalties and interests, etc., connected with it. In this view of the matter the question is not whether commercial production had really started in the assessment year 1972-73 or not but the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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