TMI Blog1976 (4) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... ortion of the assessment order dealing with this question. The said assessment order stated, inter alia, as follows : " (vi) Relief u/s. 80J. The assessee claimed Rs. 49,69,033 under section 80J for the year on the basis of average capital. For reasons discussed in the. preceding year, the assessee's claim is disallowed. The claim is confined to Rs. 21,85,515 as under: Rs. Rs. 21,85,515 1,49,56,675 (a) Assets entitled to depreciation: Written down value of fixed assets as on 3,73,26,323 30-9-1970 as per last asstt. order (b) Assets not entitled to depreciation: Land as per balance-sheet as on 30-9-1970 8,91,979 (c) Current assets : As per balance-sheet as on 30-9-1970 3,08,08,326 --------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons made in the aforesaid judgment. In this case, however, counsel on behalf of the revenue sought to argue that in view of section 296 of the Act the question whether the rule was beyond the purpose of the Act did not really fall for consideration. It was urged that section 296 of the Act enjoined that the rules framed by the Central Government should be placed before Parliament, and the same might be modified by Parliament. This is one of the methods by which the legislative forum maintains supervision over the subordinate authority in respect of delegated legislation. But by this process the rules framed by the delegates do not become legislation of Parliament. In some statutes where it is intended by the legislature that the rules when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own by rule 19A(2), I have held that such rule was beyond the compentency and jurisdiction of the rule-making authority. In England in the case of Institute of Patent Agents v. Lockwood [1894] AC 347 (HL) it was held that where statute provided for laying of the rules before Parliament and Parliament had the authority to annul the rules, such a provision would make the rules beyond challenge on the ground of incompetency of the rule-making authority. But in India the position is different. Subordinate legislation cannot be said to be valid unless it is within the scope of the rule-making authority. See the decision of the Supreme Court in Kerala State Electricity Board v. Indian Aluminium Co. Ltd. AIR 1976 SC 1031. The second aspect, howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (XXXI of 1956); (ii) "tax" means-- (a) income-tax or super-tax (including advance tax), due under any provision of the Act; (b) wealth-tax due under any provision of the Wealth-tax Act, 1957 (27 of 1957); (c) super profits tax due under any provision of the Super Profits Tax Act, 1963 (XIV of 1963); (d) surtax due under any provision of the Companies (Profits) Surtax Act, 1964 (VII of 1964); (iii) any liability in respect of tax shall be deemed to have become due-- (a) in the case of advance tax due under any provision of the Act, on the date on which the payment first became due; and (b) in the case of any other tax, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal employed in the industrial undertaking or a ship or business of the hotel, as the case may be, computed in the prescribed manner in respect of the previous year relevant to the assessment year, the amount calculated as aforesaid being hereafter, in this section, referred to as the relevant amount of capital employed during the previous year." Section. 80J, in my opinion, allows deduction in respect of the profits and gains from the new industrial undertaking in the contingency mentioned in the section, and the relief is granted on the basis of "capital employed in the industrial undertaking". Therefore, the relief is on the capital employed in the industrial undertaking. The authority of the rule-making body is to prescribe rules for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f borrowed capital but it restricts relief in such cases only to the extent the borrowings are by way of debentures or moneys from approved sources as defind in the rule. There is, in my opinion, no warrant for restricting the computation of capital in the manner done and in so far as rule 19A(3) does so, in my opinion, it is violate of the authority given under section 80J and is not carrying out "the purposes of the Act". I, therefore, hold that rule 19A(3) in so far as it directs exclusion of borrowed capital except from the approved sources is ultra vires, being beyond the power of the rule-making authority. The assessment order is, therefore, set aside and the Income-tax Officer is directed to make a fresh assessments making a fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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