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TMI Blog2006 (9) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in upholding the order of Commissioner of Income-tax (Appeals) deleting addition of Rs.7200/- made by the Assessing Officer in view of Section 37(4) for rent paid by the assessee for guest house? (2) Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal erred in directing the Assessing Officer to exclude liabilities on pro rata basis in respect of Tractor Division and Foundry Unit for computing capital employed in the New Unit?" 2. The assessee claimed a sum of Rs.7200/- on account of rent paid to PSIDC for their guest house. The Assessing Officer disallowed the said amount under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature indicated in subsection( 4) of section 37. When the language of a statute is clear and unambiguous, the courts are to interpret the same in its literal sense and not to give it a meaning which would cause violence to the provisions of the statute. If the Legislature had intended that deduction would be allowable in respect of all types of buildings/accommodations used for the purposes of business or profession, then it would not have felt the need to amend the provisions of section 37 so as to make a definite distinction with regard to buildings used as guest houses as defined in sub section (5) of section 37 and the provisions of sections 31 and 32 would have been sufficient for the said purpose. The decisions cited by Dr. Pal cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be computed in accordance with sub-rules( 2) to (4). Sub-rule (2) provides that the aggregate of the amounts representing the values of the assets as on the first day of the computation period of the undertaking shall first be ascertained. Sub-rule (3) provides that from the aggregate of the amount so ascertained under sub-rule (2) shall be deducted the aggregate of the amounts as on the first day of the computation period of borrowed moneys and debts due by the assessee. At first look sub-rules (2) and (3) appear to provide that from the aggregate value of the assets of each undertaking the aggregate of the liabilities of the assessee shall be deducted. The assessee in this case owns 4 industrial undertakings. The result of such interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. It is pointed out that the said judgment was also followed by the Gujarat High Court in CIT v. Cadila Chemicals P. Limited, [2005] 278 ITR 633, wherein it was also noticed that the view of Bombay High Court has been accepted by the department. Circular No.380 dated April 10, 1984 has also been relied upon by the learned counsel for the assessee, which is as under:- "Section 80J of the Income Tax Act, 1961, provides that in computing the taxable income of an assessee from a newly established industrial undertaking ship or business of a hotel, a deduction shall be allowed at the rate of 6 per cent (with effect from April 1, 1976 at the rate of 7.5 per cent in the case of a company) of the capital employed in the industrial undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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