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TMI Blog1989 (8) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... s under sections 80-I and 80J of the Income tax Act, 1961, on the basis of the assessee's claim for such deductions made in its letter dated February 8, 1979, in the course of the reassessment proceedings pending in terms of the Tribunal's Order in ITA No. 2971 /Cal/74-75 dated June 11, 1976 ?" In our view, the question has to be refrained as follows: "Whether, on the facts and, in the circumstances of the case and having regard to the fact that the original assessment was completed on March 221-974, the Tribunal was justified in law in directing the Income-tax Officer to allow deduction under section 80J of the Income-tax Act, 1961, on the basis of the assessee's claim for such deduction made in its letter dated February 8, 1979, in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount. Considering the assessee's losses up to the year 1969-70 as well the unabsorbed depreciation and unabsorbed development rebate admissible in respect of the new industrial undertaking for which the deduction under section 80J and 80-I were claimed, the Supreme Court decision in the case of Rajapalayam Mills Ltd. v. CIT [1978] 115 ITR 777 (.SC), is no longer applicable because of the amended provision. He, therefore rejected the assessee's contention holding the claim only to be of academic interest inasmuch as no deduction would be available. On second appeal before the Tribunal; the Bench directed that the matter be restored to the Income-tax, Officer for making all necessary deductions in view of the principles laid down in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly rejected this contention because of the Finance (No. 2) Act, 1980; by which a new subsection 80AA had been inserted with effect from April 1, 1968, according to which, for the purpose of computing the deductions under Chapter VI of the Income-tax Act the amount of income has to be computed in accordance with the provisions of the Act and for the purpose of deductions under sections 80J and 80-I, only the income of the new industrial undertaking is to be taken into account for the purpose of deduction under this section. According to him, considering the assessed losses up to the assessment year 1969-70 as well as unabsorbed depreciation and development rebate in respect of the new industrial unit, there would be no income in any of the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate dividends only. In the present case, there is no question of claiming any deduction under section 80M. The reliefs sought to be claimed were under sections 80-I and 80J and section 80AA does not refer to those reliefs. The decision of the Supreme Court in Rajapalayam Mills Ltd.'s case [1978] 115 ITR 777, therefore, remains good law. This ground of appeal is, therefore, entitled to succeed." So far as the absence of claim in the first instance was concerned, the Tribunal referred to the letter dated February 8, 1979, and opined that the same should not be considered to be fatal to the assessee's claim. While dealing with the application under section 256(1) of the Act, the Tribunal held that although the application had been co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The mills, already started production partly since January, 1960.' You will further notice from the directors' report dated May 6, 1966, for the calendar year 1965 that the production was 10,819 tonnes as compared with 6,482 tons in the year 1964. The increase of 66% is evidently due to the commissioning of the second re-rolling mill. It is also mentioned in the report that expansion work (in respect of the second mill) will be completed by May, 1967. In the directors' report dated March 3, 1967, for the calendar year 1966, the following passage occurs: 'The expansion work scheduled to be completed in May, 1967, has already been completed well in advance, affording the required facility for increased production and further prospects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrive at the quantum of profit exempt for purposes of both sections 80J(1) and 80J(3). It may be respectfully submitted that the maintenance of separate accounts for the precise computation of the profit attributable to the new industrial undertaking lose their importance after the Supreme Court's decision in Rajapalayam Mills Ltd. v. CIT [1978] 115 ITR 777, namely, that the deficiency in the new business can be set off against profits from the old business and that no separate recomputation with retrospective effect of the depreciation and development rebate is necessary for ascertaining the profits from the new undertaking. As we have earlier submitted, the profits may be apportioned equally between the new and the old business. We, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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