Rajasthan H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that since the relief under s. 80J of the IT Act, 1961, in respect of the new industrial undertaking had been allowed to the assessee in the initial assessment year, the ITO was not entitled to refuse the same relief in respect of that undertaking in the subsequent assessment year unless the relief allowed for the initial year is withdrawn by the ITO ?

High Court Of Rajasthan : Jaipur Bench

CIT vs. Mahavir Rubber Works

Section 80J(4)(iv)

Asst. Year 1979-80

Y.R. Meena & A.C. Goyal, JJ.

IT Ref. Appln. No. 40 of 1985

7th February, 2002

Counsel Appeared

J.K. Singhi, for the Applicant : A. Kasliwal, for the Respondent

JUDGMENT

BY THE COURT :

On an application filed under s. 256(1) of the IT, 1961, the Tribunal has referred the following question for the opinion of this Court :

“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that since the relief under s. 80J of the IT Act, 1961, in respect of the new industrial undertaking had been allowed to the assessee in the initial assessment year, the ITO was not entitled to refuse the same relief in respect of that undertaking in the subsequent assessment year unless the relief allowed for the initial year is withdrawn by the ITO ?”

2. The assessee derives income from manufacture and sale of plastic and rubber goods. Relevant assessment year is 1979-80. Year ended on 31st Dec., 1978. The income of the assessee was assessed at Rs. 20,411. The benefit of s. 80J of the IT Act, 1961, has been denied to the assessee on the ground that assessee has not fulfilled the condition for deduction under s. 80J. In appeal before the AAC, the AAC has followed the decision of Tribunal in the case of M.M. Patel & Sons (P) Ltd. vs. ITO reported in (1982) 1 ITD 82 (Nag) and allowed the claim of the assessee. In appeal before the Tribunal, the Tribunal has considered the decision of Gujarat High Court in the case of Saurashtra Cement & Chemicals Industries Ltd. vs. CIT (1979) 11 CTR (Guj) 139 : (1980) 123 ITR 669 (Guj) : TC 25R.1148, wherein the Gujarat High Court has taken the view that ITO was not justified in refusing to continue the benefit of s. 80J in the subsequent year i.e., in the year 1969-70 unless the relief granted in the year 1968-69 is disturbed.

3. None appeared for the assessee. Heard learned counsel for the Revenue. Learned counsel for the Revenue submits that for relief under s. 80J, there are conditions enumerated in sub-s. (4) of s. 80J and admittedly in this case the condition laid down in cl. (iv) of sub-s. (4) of s. 80J has not been fulfilled. He further submits that in this matter even notice for withdrawing the relief under s. 80J for the earlier year i.e., 1978-79 has been issued, therefore, the relief in the year under consideration can be refused even though the relief under s. 80J has been allowed in the preceding year.

4. The relevant provision of cl. (iv) of sub-s. (4) of s. 80J reads as under : “In a case where the industrial undertaking manufactures or produces articles, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power.”

5. A plain reading of provisions of sub-s. (4) of s. 80J reveals that relief under s. 80J can be allowed to the assessee in respect of the industrial undertaking, which fulfil the conditions laid down in sub-s. (4). Learned counsel further submits that assessee has not employed 10 employees as required under cl. (iv) and that has not been disputed by assessee. When the condition has not been fulfilled admittedly in the year under consideration, in our view, the assessee is not entitled for the deduction under s. 80J of the IT Act. In the result we answer in negative i.e. in favour of Revenue and against the assessee. Reference so made stands disposed of accordingly.

[Citation : 256 ITR 667]

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