TMI Blog2002 (7) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... see had created a charge on its plant and machinery by entering into a trust deed with the directors, and also registered the charge with the Registrar of Companies as required under the Companies Act and that would suffice to create a charge over the plant and machinery of the assessee's company. Once there is a valid charge over the properties of the company, the disallowance of the interest payments is not correct - - - - - Dated:- 30-7-2002 - Judge(s) : V. S. SIRPURKAR., N. V. BALASUBRAMANIAN. JUDGMENT The judgment of the court was delivered by N.V. BALASUBRAMANIAN J.-The Income-tax Appellate Tribunal has stated a case, both at the instance of the assessee as well as at the instance of the Revenue and referred the following qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the amount Rs. 1,14,807 mentioned in the second question referred at the instance of the assessee is not the correct amount and the correct figure is Rs. 42,173 and the said figure shall be substituted in the place of a sum of Rs. 1,14,807. Accordingly, the sum of Rs. 42,173 shall be substituted in the second question referred at the instance of the assessee in the place of Rs. 1,14,807. We will take up the reference at the instance of the assessee first. The questions relate to the interpretation of section 40A(8) of the Act. The assessee claimed certain interest payments on deposits received by it as business expenditure. The Income-tax Officer has disallowed a portion of the interest payments on the ground that no charge or mortgag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the Registrar of Assurances, and without registration under the Registration Act, it was of the view that no charge was created on the assets of the assessee's company. The Tribunal further held that the registration under the provisions of the Companies Act would not be sufficient for the creation of charge over the properties of the company and accordingly allowed the appeal preferred by the Revenue. As against the order of the Tribunal, the present reference has been made at the instance of the assessee. Heard Mr. G. Sarangan, learned counsel appearing for the assessee, and Mr. T.C.A. Ramanujam, learned counsel for the Revenue. It is fairly admitted by counsel for both the parties that the issue raised in the questions is cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so far as the assessment year 198081 is concerned, the disallowance of Rs. 42,173 made by the Commissioner of Income-tax has become final and that requires to be sustained. Now, we will take up the reference of the Revenue. The first question arises in relation to the assessment years 1979-80, 1980-81 and 1981-82 and the question deals with the eligibility of the claim of the assessee for the deduction under section 80J of the Act. The assessee claimed that a new industrial undertaking was set up by the assessee at Kirikera, Hindupur District, Andhra Pradesh, and claimed deduction under section 80J of the Act. The Income-tax Officer rejected the claim on the ground that there was only an expansion of the existing industrial unit and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of substantial fresh capital in the industrial undertaking set up, (2) employment of requisite labour therein, (3) manufacture or production of articles in the said undertaking, (4) earning of profits clearly attributable to the said new undertaking, and (5) above all, a separate and distinct identity of the industrial unit set up.". We find that all the requirements under section 80J of the Act are fully satisfied as there was a substantial investment of the fresh capital in the new unit set up by the assessee and there was employment of requisite labourers and the assessee manufactured and produced articles and the assessee has established an industrial undertaking to earn profit. In effect, a separate and distinct industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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