Orissa H.C : These three writ applications by three limited companies whose profits and gains are derived from their industrial undertakings claim deduction under s. 80J of the IT Act, 1961

High Court Of Orissa

Orissa Industries Ltd. vs. CIT & Ors.

Section 80J

Asst. Year 1973-74, 1974-75, 1975-76, 1976-77,

1977-78, 1978-79, 1979-80, 1980-81, 1981-82

H.L. Agarwal, C.J. & S.C. Mohapatra, J.

OJC Nos. 1031 of 1980 & 2356 & 2855 of 1981

21st August, 1987

Counsel Appeared

B.K. Mohanty & N.C. Patnaik for A. Patnaik, for the Petitioners : None, for the Respondents

S.C. MOHAPATRA, J.:

These three writ applications by three limited companies whose profits and gains are derived from their industrial undertakings claim deduction under s. 80J of the IT Act, 1961, from such profits and gains of a percentage on the capital employed in the said industrial undertakings.

As common questions are involved, the writ applications were heard together and are disposed of by this common judgment. Petitioner in OJC No. 1031 of 1980 got the deduction for the asst. yr. 1976-77 granted by the ITO to the extent of Rs. 7,35,114 under s. 80J. However, after amendment of s. 80J by the Finance (No. 2) Act of 1980 which had retrospective operation, the CIT issued notice under s. 263 of the IT Act to show cause why the order of assessment should not be modified, cancelled or set aside. Petitioner has assailed the said notice.

In OJC No. 2356 of 1981 validity of the retrospective amendment of s. 80J of the Act by the Finance (No. 2) Act of 1980 has been assailed with a prayer for directions to the Tribunal in respect of the asst. yrs. 1976-77 and 1977-78 to interpret s. 80J in favour of the petitioner. Similarly, the petitioner prayed for a direction to the ITO to dispose of the assessments in respect of the four asst. yrs. 1978-79 to 1981-82 by interpreting s. 80J in its favour.

In OJC No. 2855 of 1981, the petitioner has prayed for quashing the assessments in respect of the asst. yrs. 1973-74, 1974-75 and 1975-76.

At the time when the writ applications were filed in the years 1980 and 1981, different High Courts had interpreted s. 80J in favour of the assessees. However, the law has been settled by the Supreme Court in the decision in Lohia Machines Ltd. vs. Union of India (1985) 44 CTR (SC) 328 : (1985) 152 ITR 308, overruling the decisions of the High Courts of Calcutta, Madras Allahabad, Punjab & Haryana and Andhra Pradesh. The dispute was whether the term ” capital employed ” would include short-term borrowings or long-term borrowings for an industrial undertaking. Considering the retrospective amendment by the Finance (No. 2) Act of 1980, it has been held by the majority that the assessees would get relief only with reference to their own capital and not with reference to any moneys which might have been borrowed by them for employment in the undertaking.

In view of the aforesaid pronouncement of the Supreme Court, the petitioners are not entitled to any relief as prayed for in the writ applications. The other questions relating to non- maintainability of the writ applications raised by the Revenue are not required to be considered which would be of academic interest only.

In the result, the writ applications are dismissed. There shall be no order as to costs.

H.L. AGRAWAL, C.J.:

I agree.

[Citation : 171 ITR 222]

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