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TMI Blog1977 (6) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... account ended on 31st March, 1972 and it claimed relief under s. 80J amounting to Rs. 27,068 on the basis of the capital employed on that date. Rule 19A, however, provides that the capital employed on the first day of the accounting year to be taken which in this case happened to be1st April, 1971. The ITO according allowed relief of 6 per cent on the basis of capital employed on1st April, 1971which worked out to Rs. 23,691. 3. On appeal the AAC confirmed the computation of relief made by the ITO which he said was in conformity with r. 19A. 4. In the appeal before us it was not disputed by the assessee's learned counsel that the ITO had allowed relief according to the provisions of r. 19A. But it was submitted that there is a clear confl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Indian IT Act, 1922, of which s. 15C was the provision allowing such a relief. The purpose of this provision was to encourage the setting up of new industrial enterprises and as such it has to be construed liberally. When IT Act, 1961 was enacted, s. 84 thereof provided for tax holiday to the newly established undertakings. In sub-s. (1) of s. 84 also it was provided that the relief on the capital employed was to be computed in the prescribed manner. Rule 19 then dealt with the question of computation 'of the capital employed'. This rule did not prescribe any date on which the capital employed was to be taken into consideration while computing the relief under s. 84. By the Finance (No. 2) Act, 1967, s. 84 was repealed and in its pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cceeding the initial assessment year : Provided that in the case of an assessee, being a co-operative society, the provisions of this sub-section shall have effect as if for the words "four assessment years", the words "six assessment years" had been substituted." Rule 19A was introduced in 1967 to provide for the manner in which the capital employed was to be computed. Sub-r. (2) of r. 19A prescribed the date on which the capital employed was to be taken into account as 'the first day of the computation period". The contention raised on behalf of the assessee is that sub-r. (2) of r. 19A in so far as it prescribed 'first day of the previous year' goes beyond the scope of s. 80J. This contention was considered by the Gujarat High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words so adopted were intended by the legislature to bear the meaning which had been so put upon them. For the aforesaid proposition reliance may be placed on the Construction of Deeds and Statutes (4th edition) by C.E. Odgers, at page 241. It is true that, in this case, as mentioned hereinbefore, there is no indication of any judicial interpretation. There is only the indication how the rule making authority understood the expression "capital employed" in s. 15C of the IT Act, 1922, and s. 84 of the Act of 1961 before its amendment in 1967". Their Lordships then proceeded to resolve the controversy in the following words : "The main consideration upon which, in my opinion, this question has to be resolved, is whether having regard to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of s. 80J and sub-r. (2) of r. 19A in so far as the date on which the capital employed should be taken for purposes of computation of relief. If we look into the provisions of s. 80J, we find that in the parenthesis it refers to the amount of capital employed during the previous year. Since there is no indication in this section that it contemplates capital employed in a particular period and the provision is to be construed liberally, the capital employed during the whole of the relevant previous year should appropriately be the basis for computation of relief as was allowable in the absence of sub-r. (2) of r. 19A. We direct the ITO to recompute the relief accordingly.
8. In the result the appeal is allowed pro tanto. X X X X Extracts X X X X X X X X Extracts X X X X
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