Binding precedent controls section 80J and 80HH computation, including capital items and treatment of current depreciation.

Binding precedent governed the computation of relief under sections 80J and 80HH. The High Court held that work-in-progress, machinery and equipment in transit and under erection were includible in capital for section 80J, and that relief under section 80J was to be computed on profits and gains before current depreciation. It also held that section 80HH exemption was to be allowed on commercial profits after current depreciation. All questions were answered in favour of the assessee and against the Revenue.

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Issues: (i) Whether the value of work-in-progress, machinery and equipment in transit and under erection was includible in the computation of capital for relief under section 80J; (ii) whether relief under section 80J was to be computed on profits and gains before allowing current depreciation; (iii) whether exemption under section 80HH was to be allowed on commercial profits after allowing current depreciation.

Issue (i): Whether the value of work-in-progress, machinery and equipment in transit and under erection was includible in the computation of capital for relief under section 80J.

Analysis: The questions were held to be covered by an earlier decision of the Court on the same point. The computation of capital for the purpose of section 80J was therefore governed by that settled view.

Conclusion: The issue was answered in the affirmative and against the Revenue.

Issue (ii): Whether relief under section 80J was to be computed on profits and gains before allowing current depreciation.

Analysis: The Court applied the earlier binding decision and accepted that the relevant computation had to be made on the basis settled therein.

Conclusion: The issue was answered in the affirmative and against the Revenue.

Issue (iii): Whether exemption under section 80HH was to be allowed on commercial profits after allowing current depreciation.

Analysis: The same prior decision governed the manner of computation for section 80HH as well, and the Court followed that view without departing from it.

Conclusion: The issue was answered in the affirmative and against the Revenue.

Final Conclusion: The reference was decided by following the earlier precedent, and all the referred questions were answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Where the point is already covered by binding precedent, the same rule governs the computation of relief under sections 80J and 80HH, including the treatment of capital components and current depreciation.

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