Madhya Pradesh H.C :

Counsel Appeared

Mukati, for the Revenue : G.M. Chaphekar, for the Assessee

N. BHACHAWAT, J.:

This is a consolidated reference under s. 256(1) of the IT Act, 1961, made by the Tribunal, Indore Bench, Indore, at the instance of the Department, whereby it has referred the following two questions of law for our decision:

” 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that borrowed capital should also be taken into account in computing the capital for the purpose of working out the deduction admissible under s. 80J of the IT Act, 1961 ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that for the purpose of allowing deduction under s. 80J, the rate of 6 per cent per annum cannot be stretched any further to curtail the amount of relief admissible and that the deduction at 6 per cent per annum is admissible for the full year even if the undertaking has actually worked during the year for less than 12 months ?”

It is not necessary to burden this judgment by detailing the facts which are detailed in the statement of the case and dilating on the legal position inasmuch as both the questions are covered by a decision of the Supreme Court in Lohia Machines Ltd. vs. Union of India (1985) 152 ITR 308(SC) as also a decision of this Court in CIT vs. Sanghi Beverages (P) Ltd. (1982) 134 ITR 623 (MP) respectively.

According to the decision of the Supreme Court in Lohia Machines Ltd.’s case (supra) , question No. 1 is answered in the negative, i.e., in favour of the Department and against the assessee. Question No. 2, in view of the decision of this Court in Sanghi Beverages (P) Ltd.’s case (supra) , is answered in the affirmative, i.e., in favour of the assessee and against the Department.

The reference is disposed of as indicated hereinabove.

No order as to costs.

[Citation : 169 ITR 220]