TMI Blog1988 (8) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... tified in law in directing the Income-tax Officer to allow deduction under section 80J of the Incometax Act, 1961, on the basis of the assessee's claim for such deduction made in its letter dated February 8, 1979, in the course of the reassessment proceedings ?" The dispute in this reference relates to the assessee's claim for relief under sections 80J and 80-I of the Income-tax Act, 1961. There was no specific discussion in the order of the Income-tax Officer but in the appellate order passed by the Commissioner of Income-tax (Appeals), it was noticed that in his instructions under section 144B, the Inspecting Assistant Commissioner had directed that the assessee had not made any claim in the return or in the computation of its income and hence there was no scope for entertaining this ground. Before the Commissioner of Income-tax (Appeals), it was argued that in the reassessment proceedings taken in pursuance of the appellate order passed by the Appellate Assistant Commissioner, the assessee had claimed this relief in its letter dated February 8, 1979. The Commissioner of Income-tax (Appeals), however, rejected this claim on the ground that by the Finance (No. 2) Act, 1980, a ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et off against the profits of the old business and no separate computation with retrospective effect of the depreciation and development rebate was necessary for estimating the profits from the new industrial undertaking. The assessee had further pleaded that the profits should be apportioned between the new and the old business according to the capital employed and turnover. The Commissioner of Income-tax (Appeals), however, summarily rejected this contention because of the Finance (No. 2) Act, 1980, by which a new section 80AA had been inserted with effect from April 1, 1968, according to which, for the purpose of computing the deductions under Chapter VI of the Income-tax Act, the amount of income has to be computed in accordance with the provisions of the Act and for the purpose of deductions under sections 80J and 80-1, only the income of the new industrial undertaking is to be taken into account for the purpose of deduction under this section. According to him, considering the assessed losses up to the assessment year 1969-70 as well as unabsorbed depreciation and development rebate in respect of the new industrial unit, there would be no income in any of the years of the new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -70 are adopted and adjustments are made for relief allowed in appeals for 1970-71 and 1971-72, the deficiency under section 80J(3) would call for set off only in the assessment year 1972-73 regarding which the Commissioner of Income-tax (Appeals) has not contested the Tribunal's direction given in this behalf and, as such, the question mentioned hereinbefore was referred to this court which we have reframed as stated before. The only question which arises for our determination is that although the assessee did not claim the relief under section 80J before the Incometax Officer, whether the assessee is precluded from claiming this benefit in the assessment which has been redone on the basis of the direction of the Tribunal. The assessee, in its letter dated February 8, 1979, informed the Income-tax Officer as follows: "Assessment years 1970-71, 1971-72 and 1972-73-Claims under sections 80J and 80-I. You will notice from the directors' report dated May 11, 1965, in respect of the accounting year ended on December 31, 1964, the following passage: 'We have installed a new re-rolling mill, for which we have acquired additional lands and also constructed new buildings. Most port ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rward of loss under section 80J(3). The benefit of section 80J may be made available to us for the assessment years 1967-68, 1968-69, 1969-70 and 1970-71 both under sections 80J(1) and 80J(3) and necessary carry forward allowances allowed in accordance with law. Necessary computation of the capital employed for each of the said four years is enclosed and it is only a question of arithmetical calculation of 6% of the capital employed to arrive at the quantum of exempted profit for purposes of both the sections 80J(1) and 80J(3). It may be respectfully submitted that the maintenance of separate accounts or the precise computation of the profit attributable to the new industrial undertaking lose their importance after the Supreme Court's decision in Rajapalayam Mills Ltd. v. CIT [1978] 115 ITR 777, namely, that the deficiency in the new business can be set off against profit from the old business and that no separate recomputation with retrospective effect of the depreciation and development rebate is necessary for assessing the profits from the new undertaking. As we have earlier submitted, the profits may be apportioned equally between the new and the old business. We, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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