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TMI Blog1979 (12) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... 1975-76 corresponding to the previous year ended on 31st March, 1975, the assessee claimed deduction under s. 80J in respect of the profit arising out of a priority industry being a hotel run by it. The assessee claimed relief of Rs. 1,24,510 but the ITO computed it at Rs.38,097. In doing so, the ITO deducted the initial depreciation allowed under s. 32(1)(v) for the asst. yr. 1974-75 in taking th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of the computation of relief under s. 80J. Secondly, it was submitted that Rule 19 providing for the reduction of borrowed capital could not be applied in view of the decisions of the Madras Court in the case of Madras Industrial Lining Ltd. vs. ITO (2) and of Calcutta High Court in the case of Century Enka Ltd. vs. ITO (3) which were to be followed in view of the decision of the Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Ahmedabad Manufacturing Calico Printing Co. Ltd. vs. ITO (7), the deduction under s. 80J could be made only if some income remains after setting off carried forward development rebate and depreciation. In reply, it was pointed out on behalf of the assessee that the arguments with reference to s. 32(1)(v) had not been appreciated by the Madras High Court in the case of Lucas T.V. Ltd. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, with regard to the actual deduction of the amount to be computed, the objection of the Revenue had to be sustained. The decision of the Supreme Court in the case of Rajapalayam Mills Ltd and Patiala Flour Mills Co. P. Ltd. related to cases where there was positive income available after setting off depreciation etc. But, in the present case, the ITO has found that, after setting off the depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaving the income from priority industry in fact for deduction under s. 80-J. Such an implication cannot be accepted since the unabsorbed depreciation and development rebate related to the priority business. Therefore, we are unable to accept the assessee's contention. The decision of the ITO to carry forward the deduction under s. 80-J, as not allowable in this assessment year was correct and m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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