Punjab & Haryana H.C : The proportionate deduction in respect of s. 80G of the IT Act, 1961, amounting to Rs. 1,58,270 given to the assessee-company in its income-tax assessment for the year 1974-75 and to Rs. 4,17,696 in its income-tax assessment for the year 1975-76 could not be taken into consideration for reduction in the capital employed under r. 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964

High Court Of Punjab & Haryana

CIT vs. Avery Cycle Industries (P) Ltd. (No. 1)

Asst. Year 1974-75, 1975-76

Gokal Chand Mital & S. S. Sodhi, JJ.

IT Ref. Nos. 175 &176 of 1979

8th November, 1988

Counsel Appeared

Ashok Bhan, & Ajay Mittal, for the Revenue : S. S. Mahajan, for the Assessee

GOKAL CHAND MITAL, J.:

The Tribunal, Amritsar, has forwarded the following joint question for the asst. yrs. 1974-75 and 1975-76 for the opinion of this Court : “Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the proportionate deduction in respect of s. 80G of the IT Act, 1961, amounting to Rs. 1,58,270 given to the assessee-company in its income-tax assessment for the year 1974-75 and to Rs. 4,17,696 in its income-tax assessment for the year 1975-76 could not be taken into consideration for reduction in the capital employed under r. 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964 ?”

The interpretation and scope of s. 80G of the IT Act, 1961, arose for the purpose of finding out whether the Tribunal was right in allowing proportionate deduction for the two assessment years. The precise question of law came up for consideration before the Kerala High Court in CIT vs. Premier Cotton Spinning Mills Ltd. (1981) 20 CTR (Ker) 357 : (1981) 128 ITR 694 (Ker) and CIT vs. Travancore Electro-Chemical Industries Ltd. (1987) 65 CTR (Ker) 284 : (1987) 167 ITR 359 (Ker). On the basis of interpretation and scope of the provisions of s. 80G of the IT Act, it was held that the assessee was entitled to proportionate deductions.

We have gone through both the aforesaid decisions and are of the opinion that the interpretation and the reasoning given by the High Court is correct. Accordingly, we adopt the reasoning given by the Kerala High Court for the interpretation and scope of s. 80G and answer the question referred in the affirmative, i.e., against the Revenue. However, the parties are left to bear their own costs.

[Citation : 178 ITR 173]

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