TMI Blog1985 (11) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... or our opinion : " Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in holding that the provision for gratuity made by the assessee is an allowable deduction while computing the total income for the assessment year 1971-72 ? " The question thus is at the instance of the Revenue. After considering an identical question, a Division Bench of this court has held that the Tribunal was right in law in allowing the claim of an assessee for deduction of the amounts provided towards liability for gratuity, subject to verification of the exact quantum of liability. (Vide CIT v. High Land Produce Co. Ltd. [1976] 102 ITR 803 (Ker) and CIT v. Kerala Nut Food Co. [1978] 111 ITR 252 (Ker) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed relief under section 80J of the Income-tax Act, for short, the Act, calculated at 6% of Rs. 1,12,50,113, the capital employed by the company to establish this undertaking. The assessing authority, however, rejected the above claim. This is what the assessing authority has stated in the assessment order (annexure A): " This is given the nomenclature as C. F. Plant No. IV. Obviously, this is not the first plant erected by the company for the manufacture of cellulose film. There were three such plants already in operation when the fourth plant was commissioned. The assessee company had started manufacture of cellulose film in 1950 when the first plant was erected. From that year onwards, production of cellulose film was going on of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing of rayon and cellophane. In fact, the Appellate Tribunal conducted a local investigation and came to the conclusion that " C. F. Plant No. IV " is integrally connected with the three other plants already in existence. According to the Tribunal, all the four units including " C. F. Plant No. IV " are part and parcel of the same undertaking. The Appellate Tribunal accordingly accepted the case of the Revenue and as a consequence thereof rejected the claim of the assessee for relief under section 80J of the Act. The above findings of fact have not been challenged by the assessee. The said findings have become final. This court cannot disturb or go behind the abovementioned findings of fact given by the final fact-finding body, the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units being dependent upon the production of viscose, establishment of a new unit is more like adding to or replacing existing machineries like Xanthators or caustic soda solution vats. It is no more or no less. Thus, in the rayon business, the continuous process shows-that it has to be considered as one industrial undertaking. Even if it is possible to convert the processes into separate undertakings, the way the assessee company has conducted the business shows that they have treated it as one undertaking. " Under section 80J, an industrial undertaking can be declared eligible for the reliefs provided for thereunder only if the same is not formed by the splitting up, or the reconstruction, of a business already in existence. The othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is view, by the decision of the Bombay High Court in CIT v. Gaekwar Foam and Rubber Co. Ltd. [1959] 35 ITR 662, approved by the Supreme Court in Textile Machinery Corporation Ltd. v. CIT [1977] 107 ITR 195. It is also relevant to note in this connection that the deductions contemplated under section 80J can be claimed only from the profits and gains derived from the new industrial undertaking. In short, the assessee should show that he had claimed the deduction from out of the profits and gains derived from the newly established undertaking. The findings of the Tribunal in this regard, however, disentitle the assessee to get the benefit. The findings are: " No separate accounts are maintained and it becomes necessary to make an allocation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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