TMI Blog1996 (10) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the proviso thereto. It requires the said profits and gains in the context of an industrial undertaking, beginning to manufacture or produce articles or to operate its cold storage plant or plants after March 31, 1976. The deductions specified in sub-section (1) thereof, in accordance with the provisions of sub-section (2) thereof take us to the previous year with reference to which the industrial undertaking began to manufacture or produce articles. It would be seen from the statutory provision that there should be material on record with reference to the concerned industrial undertaking relating to the beginning of the manufacture or production of the article as specified in the said statutory provision and the relevant date is March 31, 1976. In other words, the statutory provision requires a new industrial undertaking with reference to the time specified in the said provision and it is only after satisfaction of the statutory provisions that deduction can be considered in accordance therewith. The assessee is a public limited company carrying on the business of manufacture of formic acid and sodium sulphate. For the purpose of consideration of the statutory provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al expansion. I would, therefore, hold that the assessee is not entitled to section 80J deduction in regard to the new unit." Although unnecessary for the purpose of answering the question, the Income-tax Officer on a consideration of the factual position has held that the concerned unit did not satisfy the statutory conditions regarding commencement of production in the context of the date---March 31, 1976. In this connection, the conclusion is to the following effect: "In the instant case, it is not the assessee's case that the company went into production to manufacture an intermediate product which is a marketable commodity. Thus the first year for section 80J deduction is the assessment year 1977-78 in whose relevant previous year the unit began manufacturing formic acid. The relief, if the bigger issue of admissibility of section 80J relief is decided in the assessee's favour, will be admissible for this year also but as the second year and not as the first year." Since separate orders were passed by the Income-tax Officer with regard to the assessment years in question, four separate appeals were taken before the first appellate authority---Commissioner of Income-tax ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the new unit is housed in a different building. On the contrary the correct factual position is that the so called new unit is also housed in the same building where the old plant is also erected. It is seen that the additional space necessary for installing the machinery of the new unit was made available by removing one longitudinal wall of the old building and enlarging the old building by extending the cross walls and constructing a new wall lengthwise. Of course fresh roofing had to be given to the enlarged area, but the roofing is contiguous with the roofing of the building of the old unit. There are four rows of autoclaves and formate acid sections erected in the common hall. Of these, two rows are stated to belong to the existing unit and the other two to the new unit. There is no partition whatsoever between the rows of the machinery of the two units. Unless somebody specifically points out that there are two units inside the hall, it is improbable that anybody will be struck by such an idea. As a result the overall impression which any viewer is likely to form is that of a single industrial undertaking functioning under a common roof." In addition thereto, the remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking coming down to a closed undertaking, whether the industry in regard to which a claim for deduction under section 80J is sought to be made, could continue to function independently by itself with no effect of closure of the existing establishment in any way whatsoever. Learned counsel submitted that if this is the position on the basis of which it can be ascertained that the industry in regard to which a claim under section 80J of the Act is sought to be made out, it would have to be understood as one being entitled to be considered for the purpose of deduction under section 80J of the Act. In other words, learned counsel submitted that as to whether the installation is an extension of the old building, as to whether the extension appears to be a new building by itself would not be one of the determinative factors going to the rejection of the claim. Undisputedly, learned counsel placed strong reliance on the decision of the apex court in Textile Machinery Corporation Ltd. v. CIT [1977] 107 ITR 195. Taking us through the said decision, learned counsel also invited our attention to its reference in paragraph 12 of the judgment of the Appellate Tribunal. There can hardly be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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