9911796707
TMI Blog1994 (8) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case, the Appellate Tribunal was right in holding that the capital computed by the assessee for the purpose of allowing relief under section 80J in respect of heavy duty radiator division has to be accepted ? (ii) Whether, on the facts and in the circumstances of the case and having regard to the provisions of rule 19A(3) of the Income-tax Rules, 1962, the Appellate Tribunal was right in holding that borrowed capital should also be taken as capital for the purpose of allowing relief under section 80J for the assessment years 1972-73 and 1973-74 ? (iii) Whether, on the facts the Appellate Tribunal's view that since the new unit came into existence after the old unit and as only the main division was borrowing amounts, it canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Assistant Commissioner confirmed the order passed by the Income-tax Officer in these two assessment years under consideration. Aggrieved the Department went on appeal before the Tribunal. The Tribunal relying upon a decision of the Calcutta High Court in the case of Century Enka Ltd. v. ITO [1977] 107 ITR 909 and a decision of the Madras High Court in Madras Industrial Linings Ltd. v. ITO [1977] 110 ITR 256, held that the Income-tax Officer cannot, for grant of relief, compute the capital utilised in the business on the basis of the proportion between the borrowed capital and the assessee's own capital, and that the assessee is entitled to the relief under section 80J as claimed by it. According to the Tribunal, since the new unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see who supported the contention put forward by learned standing counsel for the Department. However, learned counsel submitted that for the purpose of finding out the amount utilised by way of borrowed capital the matter should go back to the assessing authority. It remains to be seen that relief under section 80J was claimed for the assessment years 1972-73 and 1973-74. The Department held that the assessee is not entitled to claim relief under section 80J on the borrowed capital. On the other hand, the Tribunal held that the assessee is entitled to claim relief under section 80J even on the borrowed capital. In order to come to this conclusion, the Tribunal relied upon the earlier decision of the Calcutta High Court in the case of Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 19A did not suffer from any infirmity and was valid in its entirety, the Finance (No. 2) Act, 1980, in so far as it amended section 80J by incorporating the provisions of rule 19A, as sub-section (1A) in section 80J with retrospective effect from April 1, 1972, was merely clarificatory in nature and was accordingly valid. In view of the abovesaid decision of the Supreme Court, the Tribunal was not correct in holding that the relief under section 80J should also be granted on borrowed capital. Accordingly, following the abovesaid decision of the Supreme Court, we are of the opinion that the order passed by the Tribunal in granting relief under section 80J of the Act for the assessment years under consideration is not in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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