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TMI Blog1985 (5) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Lohia Machines Ltd. Anr. vs. Union of India Ors. (1985) 44 CTR (SC) 328 : (1985) 152 ITR 308 (SC) upholding r. 19A in respect of manner of computing the amount of capital. 4. The third ground also pertains to quantification of relief under s. 80J of the Act. The assessee is a company wherein the investment is made by the State Government as also by the Central Government. The Company is engaged in various activities comprising trading and manufacturing activities and is also having various subsidiaries. The company claimed relief under s. 80J in respect of the Pesticides Unit for which separate books of accounts in respect of this unit are maintained. Separate balance sheet was extracted for the purpose of considering the claim for computing relief. The ITO observed in para 3 of his order as follows: "On going through the details furnished it is noticed that the head office does have borrowed funds and own funds. All that the assessee has done is that a balance-sheet is drawn (extracted) showing the value of fixed and other assets on the asset side and the figure shown on the asset side is counter-balanced by showing an equivalent amount as funds provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the basis of various computations. It was submitted that the CIT(A) committed an error in taking into account an amount of Rs. 1,05,86,335 in respect of unsecured loan appearing in the balance-sheet because this amount was received from the Gujarat Government for the purpose of handing over the same to Gujarat Agro Service Products Ltd., for certain specific purpose and it was done so. For this purpose necessary note in the Audited statements of accounts was brought to our notice. Reliance was placed on the decision of Madras High Court in the case of CIT vs. South Indian Viscose Ltd. (1983) 33 CTR (Mad) 94 : (1983) 140 ITR 58 (Mad) : 14 Taxmann 259 and also Bombay High Court in the case of CIT vs. Karnataka Cement Pipe Co. Ltd. (1985) 45 CTR (Kar) 207 : (1985) 151 ITR 247 (Kar). 7. The ld. departmental representative supporting the order the CIT(A) stated that since in the accounts, loans were raised by the head office the same were required to be considered. The decision in the case of South Indian Viscose was distinguishable because element of borrowings by Head Office is required to be considered. 8. We have gone through the orders of the authorities below and also ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f submitted and considered by the authorities below, the assessee has deducted the liabilities of Rs. 99 lakhs approximately pertaining to the Pesticides division. Therefore, there is no reason to deduct any further amount only on the basis that the balance in the H.O. account might represent part of the borrowings by H.O. No nexus is proved or even attempted for giving necessary finding by the authorities below. On this point the CIT(A) has cast the burden on the assessee by stating in para-7 that the net assets in respect of the new unit are not proved to have been exclusively financed by the H.O. from own funds. We would only state that in absence of clear case of diversion of borrowings to the new unit it would not be proper to deny the claim of the assessee especially when the funds of the H.O. are sufficient enough to make investments in the new unit. 11. We, therefore, set-aside the decision taken by the CIT(A) and direct the ITO to grant relief to the assessee which is worked out at Rs. 5,73,516 being 7.5 per cent on Rs. 76,46,882. 12. The next ground is in respect of confirming the disallowance made by the ITO in connection with provision in respect of misappropriati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Punjab and Haryana High Court reported in 125 ITR 529 (SC) as also Sarangpur Cotton Co. Ltd. vs. CIT (1982) 31 CTR (Guj) 247 : (1983) 143 ITR 166 (Guj). It was clarified that gratuity was not payable to the employee. Again Controller and Auditor General who audited accounts of this Government Company had also certified the writing off the loss in the current year. 15. The ld. departmental representative supporting the decision of the CIT(A) stated that the amount written off was not finally determined because there could be balances payable under the P.F. Act, Gratuity Act etc. to which recourse be made. Again company could proceed against private assets when decree is obtained in respect of suit filed in the court. In any case fairly agreeing that assessee was entitled to loss, the question was of fixing the year in which the loss is required to be allowed. 16. We have gone through the relevant material placed before us especially the inquiry report submitted by Mr. P.D. Desai, Manager vide report dt. 22nd Aug., 1978 and the charge sheet dt. 12th Jan., 1979. In the charge-sheet it is specifically mentioned that the employee had admitted the shortage in the stock v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons or findings are given. CIT (A) upheld the action of the ITO in charging interest subject to consequential relief on the basis of reduction granted by him in quantum appeal. According to him no illegality was shown in the charge of interest under either of these heads. The plea of the assessee that there was a sufficient cause for the delay in submission of the return and also for low estimate of income was rejected. It was held by CIT(A) that sufficiency of the cause could not be gone into by appellate authorities and the matter was required to be considered by the administrative authorities on the basis of applications for waiver or reduction of interest. 18. The ld. departmental representative submitted that applications for waiver etc. were not filed and therefore, the assessee could not challenge the charge of interest under s. 139. Besides, the Tribunal had no power to consider the ground in respect of charge of interest even if such applications were made under respective rules. 19. After considering the submissions, in our opinion, there is no justification to interfere with the decision taken by the CIT(A). The ITO shall modify the amounts of interests on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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