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TMI Blog2000 (10) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to relief under section 80J of the Income-tax Act, 1961, on the basis of the assessment year 1978-79 being considered as the fourth assessment year excluding the initial year? 2. Whether, on the facts and in the circumstances of the case, the assessee is entitled to carry forward deficiency under section 80J(3) of the Income-tax Act, 1961, and claim the same in the year in which the assessee had profits?" Both the above questions arise on the provisions of section 80J of the Income-tax Act, 1961. The first question is: "whether the assessee is entitled to relief under section 80J on the basis of the assessment year 1978-79 and can be considered as the fourth assessment year?" The facts leading to the reference of question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the previous year. As a corollary if any relief is due to the assessee in respect of the total income for the given assessment year the said relief has a reference to the profits which are brought to charge for the corresponding previous year. Therefore, viewed from this angle the claim of the assessee is to claim deduction under section 80J of the Act in all for a period of five years including the initial year. The period of five effective assessment years would naturally exclude assessment year 1977-78 as there was no previous year for that year and the income for that year is subjected to tax for the assessment year 1978-79. It is trite to say that the provisions of section 80J are intended to give relief to the assessee and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defines the assessment year to be the period of 12 months commencing on the first day of April every year. It is a standard period of 12 months commencing on April 1 of every year. It does not depend upon one or other assessee and whether or not he had a previous year relevant to a particular assessment year. It is as invariable as the calendar year. The 'assessment years' mentioned in sections 33 and 80J must be read in this light. The unabsorbed development rebate under section 33 and the unabsorbed deduction under section 80J may be carried forward only for the eight and four assessment years, respectively, that follow the assessment year relevant to the previous year in which the said development rebate and deduction were first earned. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iately succeeding years up to the assessment year 1976-77. It was held that the assessee could not claim the carry forward of deficiency which was not computed and determined for the earlier years. The Tribunal in allowing the claim relied on its earlier decision and held that the assessee was entitled to carry forward the deficiency for the assessment year. Two decisions directly covering question No. 2 have been brought to our notice. The first is from the Calcutta High Court in Hind Wire Industries Ltd. v. CIT [1992] 195 ITR 450. The Calcutta High Court answered similar question thus: "The contention of the Revenue that section 80J(3) does not contemplate any contingency like loss for the purpose of carry forward of deficiency cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deficiency in relation to that assessment year is to be taken to be an amount calculated at six per cent. per annum on the capital employed in the undertaking during the relevant previous year." The second decision is from the Bombay High Court in CIT v. T. Maneklal Manufacturing Co. Ltd. [1991] 192 ITR 268. The Bombay High Court has also taken a similar view and held thus: "Section 80J of the Act or the Rules made under the Act do not prescribe any obligation for computation of the section 80J deficiency in the year to which it pertains as a condition precedent to the carry forward of the said deficiency to the subsequent years and such a condition cannot be implied. Section 80J deficiency cannot be equated to computation of loss. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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