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TMI Blog1982 (3) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AAC observing that the entire s. 80J deficiency in respect of the A.Y. 1967-68 should have been set off against the income of the A.Y. 1967-68 or, in the alternative, should have been given priority for set-off against the income of the A.Y. 1970-71 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal having generally accepted the legal position that the question of giving deduction u/s. 80J arises only after arriving at the " gross total income " computed in the manner provided under the Act, it was justified in holding that it is a debatable issue not capable of rectification u/s. 154 ? (3) Whether the A.T. was justified in upholding the AAC's order cancelling the order u/s. 154 passed by the ITO ? Q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this new venture. The entire loss in assessment year 1963-64 and a part of the loss in assessment year 1964-65 was set off against the income of the assessee in the assessment year 1965-66. The remaining loss in respect of the assessment year 1964-65 was set off against the income of the assessee for the assessment year 1966-67. For the assessment year 1967-68, the total income of the assessee was finally determined at Rs. 74,333, which was subject to depreciation, relief under s. 80J and development rebate amounting to Rs. 65,116, Rs. 33,329 and Rs. 1,048, respectively. After setting of depreciation of Rs. 65,116 and relief under s. 80J to the extent of Rs. 9,341, the income was reduced to nil. The deficiency under s. 80J to the extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the deficiency relief under s. 80J in respect of 1967-68, could not be carried forward beyond the seventh assessment year commencing from the initial assessment year 1963-64. The ITO held that since the seventh year reckoned from 1963-64 ended with the assessment year 1970-71, the deficiency to the extent of Rs. 23,988 was wrongly set off. Aggrieved by the order passed by the ITO, the assessee preferred an appeal before the AAC. The AAC held that though the assessee had commissioned the steel tube manufacturing plant in March, 1963, yet it was only on trial basis in the assessment year 1963-64. The AAC further held that the issue as to whether the business of manufacture of steel tubes was started in the assessment year 1963-64 or in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the right of the assessee to carry forward the relief under s. 80J against the income of the assessment year 1971-72 and the question as to whether the assessee was entitled to the deduction of the relief under s. 80J after carrying forward the other set-off of losses such as depreciation, etc., were highly debatable and the provisions of s. 154 of the Act were, therefore, not attracted. In this view of the matter, the Tribunal dismissed the appeal. Aggrieved by the order passed by the Tribunal, the department sought a reference and it is at the instance of the department that the aforesaid questions of law have been referred to this court for its opinion. During the course of hearing, learned counsel for the parties conceded that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions Nos. 2 and 3 qua assessment years 1967-68 and 1970-71 and questions Nos. 2 and 3 qua assessment year 1971-72 referred to this court, is that the Tribunal was justified in holding that the issue was debatable, not capable of rectification under s. 154 of the Act and hence the Tribunal was justified in upholding the AAC's order cancelling the order under s. 154 of the Act passed by the ITO. Our answers to these questions are, therefore, in the affirmative and in favour of the assessee. In this view of the matter, we decline to answer question No. 1 qua assessment years 1967-68 and 1970-71 and question No. 1 qua assessment year 1971-72 referred to us. Reference answered accordingly. Parties shall bear their own costs of this refere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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