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Issues involved: The judgment addresses two main issues: (1) Whether the Appellate Tribunal was correct in upholding the action of the Appellate Assistant Commissioner allowing relief u/s 80J of the Act, and (2) Whether the Appellate Tribunal was correct in holding that the assessee was entitled to deduction u/s 80J despite non-fulfillment of requirements of section 80J(4) and non-compliance with rule 19A.
Issue 1 - Relief under section 80J: The Income-tax Officer initially rejected the assessee's claim for deduction u/s 80J because it was not claimed in the return. However, the Appellate Assistant Commissioner allowed the claim as it was made during the assessment proceedings. The Income-tax Appellate Tribunal upheld this decision, stating that the claim was made before the assessment was completed. The court affirmed this view, emphasizing that once a claim is made during assessment proceedings, the Income-tax Officer must consider it on merits. Therefore, the first issue was answered in the affirmative in favor of the assessee. Issue 2 - Entitlement to deduction under section 80J: Regarding the second issue, it was agreed by the counsels that the assessee was not entitled to deduction under section 80J due to non-compliance with section 80J(4) requirements and rule 19A. Citing the judgment in Lohia Machines Ltd. v. Union of India, the court concluded that the assessee was not entitled to the deduction under section 80J. Thus, the second issue was resolved in the negative and in favor of the Revenue. Conclusion: The judgment clarified that the Income-tax Officer must consider claims made during assessment proceedings and cannot reject them solely based on not being in the initial return. Additionally, it emphasized the importance of complying with the specific requirements of tax deduction provisions. No costs were awarded in this matter.
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