TMI Blog1990 (11) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the Appellate Tribunal is legally correct in holding that the assessee was entitled to exemption in respect of its alleged new unit under section 80J of the Income-tax Act, 1961 ?" The assessee dealt with production of lamps and for that purpose initially imported lamp caps. Later on, the assessee started manufacturing lamp caps itself for which a new unit was established. In the assessment year 1970-71, the assessee claimed relief under section 80J of the Act before the Income-tax Officer but that was rejected on the ground that the manufacture of lamp caps was part and parcel of the assessee's existing business of manufacturing lamps and section 80J was inapplicable. An appeal was filed before the Appellate Assistant Commissioner f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee's capital and profits of the new unit in accordance with rule 19 and to separate the common expenses of the existing unit and the new unit and to arrive at a correct figure for adjustment of the claim under section 80J of the Act. The object of section 80J is to encourage new industrial undertakings by providing that a certain part of the income should be exempted from tax. This exemption is made available for a certain number of years from the commencement of the working of the new industrial undertaking. The section states that, where any profit and gain is derived from any industrial undertaking, that portion of it to the extent of 6% of the capital employed in the undertaking shall be exempted from tax. The words "profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts Ltd. v. CIT [1989] 177 ITR 111 (Bom). However, in the present case, separate accounts in the ledger had been kept by the assessee in respect of the new unit on the basis of which, according to him, profits have been determined. Learned counsel for the assessee, Sri V. B. Upadhyaya conceded that the assessee would be entitled to the benefit of section 80J only after the assessing authority is fully satisfied that, on the basis of the profit and loss account submitted by the assessee, the profit and loss of the new unit could reasonably be worked out and computed in accordance with the provisions of the Act. A similar concession was made before the Tribunal on behalf of the assessee as is apparent from the following observation made by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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