1998 (4) TMI 71 - HC - Income Tax

Court rules against changing initial year for tax relief under section 80J

Commissioner Of Income-Tax Versus India Forge And Drop Stampings Ltd.

The High Court held that changing the initial year for claiming relief under section 80J in subsequent years was impermissible. Once the initial ... New Industrial Undertaking, Special Deduction Issues: Interpretation of section 80J(3) of the Income-tax Act, 1961 for assessment year 1980-81Analysis:The case involved a public limited company engaged in the iron and steel forging industry, seeking deduction under section 80J of the Income-tax Act for a new 'press shop' unit installed during the assessment year 1971-72. The company claimed the deduction, which was granted for that year. However, in the subsequent assessment year 1972-73, the relief under section 80J(3) was not granted due to lack of details provided by the company. The Appellate Assistant Commissioner allowed the company's appeal and directed the Income-tax Officer to grant the relief. The deficiency was carried forward up to the assessment year 1978-79, where the company had no positive profit.During the assessment year 1980-81, the company claimed entitlement to carry forward the deficiency of relief under section 80J, stating that the 'initial year' for relief was 1973-74 when commercial production commenced in the new unit. The Income-tax Officer rejected the claim as beyond the prescribed period. The Appellate Assistant Commissioner upheld this decision, but the Income-tax Appellate Tribunal ruled in favor of the company, stating there can be no estoppel against the statute, allowing the claim if entitled under the law. The Tribunal remitted the matter to the Income-tax Officer for further examination.The Tribunal referred questions to the High Court, challenging the direction to re-examine the issue, the remand for finding the initial year, and the Tribunal's jurisdiction to disturb the finality of the assessment year 1971-72. The High Court held that changing the initial year for claiming relief under section 80J in subsequent years was impermissible. The Court emphasized the importance of finality in fixing the initial year and disallowed changing it during subsequent assessments. The Court cited legal principles and held that once the initial assessment year is fixed, it cannot be altered in subsequent years.In conclusion, the High Court found the Tribunal's direction to the Income-tax Officer to re-examine the issue as untenable in law. The Court ruled in favor of the Revenue, stating that changing the initial assessment year was impermissible, and the Tribunal exceeded its jurisdiction. The High Court answered all questions in the negative and in favor of the Revenue, imposing costs on the company.This detailed analysis of the judgment provides a comprehensive understanding of the interpretation of section 80J(3) of the Income-tax Act for the assessment year 1980-81, emphasizing the importance of finality in fixing the initial year for claiming deductions under the Act.