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TMI Blog1983 (6) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... he rejection of claim of deduction of Rs. 13,83,006 u/s 80J made by the appellant. 2. The assessee is a co-operative society engaged in the manufacture and sale of white sugar from sugarcane. The assessee also derives income from the sale of by-products of sugar, interest income, income from vehicle owned by it and other miscellaneous income. The assessment year is 1974-75 and the relevant previous year ended on 3rd Jun, 1973. 3. In order to better appreciate the rival submissions of the parties, it would be necessary to produce below income of Rs. Nil determined by the ITO: Rs. Rs. Net Profit as per accounts . 14,96,631 Less : Profit on sale of car and jeep treated separately . 7,008 . . 14,89,623 Add: Treated separately : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee cannot be considered as "capital employed" in view of the provisions of s. 80J of the Act and the rules made thereunder. 4. In appeal, the CIT(A) upheld the action of the ITO. 5. Being aggrieved by the order of the CIT(A), the assessee has come up in appeal before the Tribunal. The ld. counsel for the assessee submitted that in view of the decision of the Hon'ble Supreme Court in the case of Cloth Traders (P) Ltd. vs. Addl. CIT (1979) 10 CTR (SC) 393 : (1979) 118 ITR 243 (SC), the IT Authorities were not justified in rejecting the assessee's claim for deduction u/s 80P (2) of the Act. In support of this submission, the ld. counsel for the assessee also relied on the orders of the Tribunal reported in Taxes & Planning 1st J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative for the Department, on the other hand, strongly supported the orders of the IT authorities by relying on the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Amul Transmission Line Hardware (P) Ltd. (1976) 104 ITR 771 (Guj) and CIT vs. Gautam Sarabhai (1981) 129 ITR 133 (Guj) as well as of the Hon'ble Bombay High Court in the case of Asian Cables Corportion Ltd. vs. CIT (1981) 24 CTR (Bom) 158 : (1981) 132 ITR 34 (Bom). He further relied on the decision of the Hon'ble Supreme Court in the case of Electric Supply Industrial Co. Ltd. vs. CIT 1978 CTR (SC) 50 : (1978) 113 ITR 84 (SC) with a view to impress upon us that once the gross total income of the assessee was computed at Nil before giving any deduction under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. It is no doubt true that the decision of the Hon'ble High Court other than the Hon'ble Gujarat High Court is not binding on us however, if there is not direct decision of the Hon'ble Gujarat High Court on the provisions of s. 80P of the Act, and if no other decision of Hon'ble High Court is available taking a contrary view to the one taken by the Hon'ble Madras High Court in the case of Katpadi Co-op. Timber Works, we are of the view that in the fitness of judicial propriety, we should follow the decision in the case of Katpadi Co-op. Timber Works Ltd., even though we may find force in the submissions made on behalf of the Revenue. The Hon'ble Madras High Court itself has found some difficulty in deciding the reference in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osses or other items which would require to be considered. We, therefore, answer the question referred to us in the affirmative and in favour of the assessee. The assessee will be entitled to its costs." Respectfully following the aforesaid decision, we would direct the ITO to accept the assessee's claim made u/s 80P (2) of the Act and modify the assessment accordingly. 8. As regards the assessee's claim for deduction u/s 80G of the Act, both the parties stated that the submissions made in respect of the assessee's claim for deduction u/s 80P (2) of the Act should be considered by us mutatis mutandis. 9. For the reasons stated above, here also we feel that the ITO should accept the assessee's claim for deduction U/s 80G of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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