TMI Blog2004 (12) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods or articles. Section 80J of the Act talks about "regular production" and not about "trial production" - Tribunal was not correct in holding that the assessee-company was entitled to deduction - - - - - Dated:- 22-12-2004 - Judge(s) : R. K. AGRAWAL., PRAKASH KRISHNA. JUDGMENT The judgment of the court was delivered by Prakash Krishna J.- The Income-tax Appellate Tribunal, Delhi, at the instance of the Revenue has referred the following question of law under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for the opinion of this court: "Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee-company was entitled to deduction unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cles or to operate its cold storage plant or plants or the ship is first brought into use or the business of the hotel starts functioning (such assessment year being hereafter, in this section, referred to as the initial assessment year) and each of the four assessment years immediately succeeding 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." A close reading of the aforesaid provision shows that deduction under section 80J shall be allowed in respect of the assessment year relevant to the previous year in which the industrial under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly in the manufacture of the final article, it does not amount to commencement of manufacture of articles for the purposes of section 15C of the old Income-tax Act. It may be stated that since section 15C of the old Income-tax Act is materially equivalent to section 80J of the present Act. The object of section 80J is to encourage new industrial undertakings. The profits of an industrial undertaking to which this section applies are exempt from tax up to a prescribed limit per annum on the capital employed in the undertaking. Therefore, the intention of the Legislature is to grant incentive to the newly established undertaking which begins to manufacture or produce articles, etc. The aforesaid judgment has been followed by the Madras High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the view that the Tribunal was not correct in holding that the assessee-company was entitled to deduction under section 80J of the Act. The Tribunal in its order has placed reliance upon certain decisions of the apex court on the question of "manufacture". However, those decisions are misplaced and are not applicable to the controversy involved in the case in hand. To avail of the benefit of deduction under section 80J of the Act it is essential that regular production should take place during the previous year, relevant to the assessment year in question. This aspect of the matter was not considered by the Tribunal. It lost sight of the fact that there is a difference between the trial production and the production of goods or artic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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