TMI Blog1980 (12) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to relief under the old s. 84 of the I.T. Act, 1961, which has now been omitted and replaced by s. 80J with effect from April 1, 1968. This question arose because the factory which the respondent-company had set up was located in a portion of the building belonging to the Structural Engineering Works Ltd., which the said company had given on a lease to the respondent-company at an annual rent of Rs. 17,520. Under the said s. 84, subject as otherwise provided in the said section, income-tax was not payable by an assessee on so much of the profits or gains, derived from any industrial undertaking or hotel to which the said section applied, as did not exceed 6 per cent. per annum on the capital employed in the undertaking or hotel, comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He further held that the value of the portion of the building taken on lease by the respondent-company from the said Structural Engineering Works Ltd. was more than twenty per cent. of the total value of the respondent-company's assets. The ITO gave no reasons as to why, according to him, the condition contained in the said cl. (ii) had not been complied with. It, however, appears from the order of the AAC that in the course of the hearing of the appeal filed by the respondent-company the ITO had succeeded in showing to the appellate authority that this was " not a new building previously unused by the Structural Engineering Works Ltd., but a building that has been used by them and depreciation claimed by them on that building ". The AAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, on the facts and in the circumstances of the case, the assessee was entitled to relief under section 84 of the Income-tax Act ? " Now, it will be obvious from the facts recited above that the Tribunal decided the appeal really on one ground only, namely, whether the lease by the said Structural Engineering Works Ltd., to the respondent company amounted to a transfer within the meaning of that expression in the said cl. (ii), and that it did not decide any other point which arose in the said appeal. Though it does not appear that any specific finding was given by the ITO on the point whether the said premises were previously used by the said Structural Engineering Works Ltd. prior to leasing them to the respondent-company, the point wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent-company. The Tribunal has also not given any finding as to whether the Explanation to the said s. 84 was applicable to the case of the respondent-company. In dealing with this point it has proceeded upon the basis that the lease was not a transfer and in the alternative, it has held that even if leasehold rights were to be valued, the valuation was excessive and that the method of valuation adopted by the ITO was not correct, But, what the correct method of valuation should be, and what the correct valuation was, have not been determined by the Tribunal. Thus, the only question which arises for determination out of the order of the Tribunal is whether the said lease amounts to transfer. The question which has been referred to us is, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erated the view taken earlier and further held that it was not necessary for the purposes of the said s. 15C(2)(i) of the Indian I.T. Act, 1922, that the building transferred to the newly started undertaking must have been previously used by the assessee himself in any other business and that a building earlier used for business by a stranger was included. In view of these decisions, the question as reframed by us will have to be answered in favour of the department and, accordingly, we answer the question in the affirmative. Even though the lease amounts to a transfer, the respondent-company would still be entitled to the relief under the said s. 84 if it had complied with the other part of the condition laid down in the said cl. (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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