Punjab & Haryana H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that sub-r (3) of r. 19A of IT Rules, 1962, should be ignored for computing the capital employed for the purposes of granting deduction under s. 80J of the IT Act ?

Counsel Appeared

Ashok Bhan with Ajay Mittal, for the Revenue : B.S. Gupta with Sanjay Bansal, for the Assessee

S. S. SODHI J. :

The point in issue in this reference concerns deduction under s. 80J of the IT Act, 1961, r/w r. 19A of the IT Rules, 1962, in respect of the capital employed for machinery under installation. The three questions referred in this behalf being:

“(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that sub-r (3) of r. 19A of IT Rules, 1962, should be ignored for computing the capital employed for the purposes of granting deduction under s. 80J of the IT Act ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the debts and liabilities owned by the assessee are not to be taken into account for computing the capital under s. 80J particularly ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the order of the CIT (A) in respect of the direction that the amount of Rs. 2,10,544 representing the cost of machinery under installation should be taken into account for computing relief under s. 80J of the IT Act, 1961 ?”

The first two questions are covered by the decision of the Supreme Court in Lohia Machines Ltd. vs. Union of India (1985) 44 CTR (SC) 328 : (1985) 152 ITR 308(SC) and they are consequently answered in the negative, in favour of the Revenue and against the assessee. The third question has, however, to be answered in the affirmative, in favour of the assessee and against the Revenue keeping in view the decision of this Court in IT Ref. No. 145 of 1982 (CIT vs. Gopi Chand Textile Mills Ltd. (1990) 82 CTR (P&H) 309 : (1989) 179 ITR 371 (P & H)) decided on February 27, 1989.

This reference is disposed of accordingly. There will, however, be no order as to costs.

[Citation : 179 ITR 519]