TMI Blog2009 (11) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... om industrial undertaking before setting off such income against loss from a non-industrial unit in terms of section 80AB and section 71 of the Income-tax Act, 1961 ? 2. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the plant and machinery of the menthol unit, Rampur was put to use for purposes of business during the relevant accounting year for the assessment year 1987-88 and was entitled to depreciation in the said assessment year specially relying on the decision reported in [1982] 133 ITR 884 ?" 2. The assessee is a private limited company engaged in the business of manufacture and sale of basic drugs with its factory at Rampur, U. P. It is a closely held company an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order has confirmed the directions issued by the Commis-sioner of Income-tax (Appeals) to the Assessing Officer not to adjust the losses of other unit while computing deduction under section 80HHA of the Act. It may be noted that identical controversy in the case of the assessee was there in respect of the assessment years 1982-83 and 1986-87. The matter relating to the assessment year 1982-83 came up before this court in Income-tax Reference No. 115 of 1992 : Mentha and Allied Products P. Ltd. v. CIT [2007] 293 ITR 49 (All). This court by its judgment dated August 1, 2005 on interpretation of section 80HHA, after distinguishing the judgment of the apex court in the case of CIT v. Kotagiri Industrial Co-operative Tea Factory Ltd. [1997] 224 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sri Piyush Agrawal, learned counsel for the assessee submits that the controversy stands concluded in favour of the assessee in view of the deci-sion aforestated inter parties. 6. However, very fairly the attention of court was invited to another deci-sion in I. T. R. No. 60 of 1996 (Mentha and Allied Products P. Ltd. v. CIT [2007] 293 ITR 49 (All)) inter parties whereby this court for the assessment year 1986-87 has held as follows (page 50) : "2. Whether on the facts and circumstances of the case, the Tri-bunal was right in holding that the deduction allowable under section 80HHA with regard to the income derived from the industrial under-taking after setting off such income against loss from a non-industrial unit in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x court in Synco Industries Ltd. v. Assessing Officer (Income-tax) [2008] 299 ITR 444. 8. In the case of Synco Industries Ltd. v. Assessing Officer (Income-tax) [2008] 299 ITR 444, the Supreme Court interpreted the words "gross total income". Section 80HHA provides for deduction in respect of profits and gains from newly established small scale industries/undertakings in certain areas. In the opening part of its sub-section (1), the expression "gross total income" has been used therein. The said expression also finds place in sec-tion 80B(5). The apex court had an occasion to interpret that expression with reference to section 80B(5) and has held that "gross total income" of the assessee has first got to be determined after adjusting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as the second question is concerned, the Tribunal has found that the machinery was put to use. It was found by the Commissioner of Income-tax (Appeals) that the trial run of the plant constitutes use thereof. It has been held in Asst. CIT v. Ashima Syntex Ltd. [2001] 251 ITR 133 (Guj) a plant and machinery is entitled for depreciation even if used for trial production. This being so, the order of the Tribunal is perfectly justified and calls for no interference. In other words, it rightly allowed the depreciation for the assessment year 1987-88 as it was put to use for the purposes of business during the relevant accounting year. We, therefore, answer the second question in the affirmative, i.e., in favour of the assessee and against th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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