Section 80J deduction denied where the unit was treated as an expansion of existing business, with no proportionate year relief.

Relief under section 80J was unavailable where cellulose film plant No. 4 had already been found, in earlier proceedings concerning the same assessee, to be only an expansion of an existing business and not a new industrial undertaking. That prior finding concluded the claim against the assessee, so the deduction failed on the merits. Because the foundational entitlement to section 80J relief was absent, no proportionate relief for part of the year could be granted either. Both questions were answered against the assessee and in favour of the Revenue.

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Issues: (i) Whether the assessee was entitled to relief under section 80J of the Income-tax Act, 1961 in respect of cellulose film plant No. 4. (ii) Whether the relief under section 80J could be restricted proportionately for part of the year.

Issue (i): Whether the assessee was entitled to relief under section 80J of the Income-tax Act, 1961 in respect of cellulose film plant No. 4.

Analysis: The finding in the earlier proceedings that plant No. 4 was not a new industrial undertaking, but only an expansion of an existing business, had already been affirmed in prior litigation concerning the same assessee and the same plant. On that basis, the claim for relief under section 80J stood concluded against the assessee.

Conclusion: The assessee was not entitled to relief under section 80J in respect of cellulose film plant No. 4.

Issue (ii): Whether the relief under section 80J could be restricted proportionately for part of the year.

Analysis: Since the foundational claim to deduction under section 80J itself failed on the ground that the plant was not a new industrial undertaking, the question of allowing any proportionate relief for part of the year did not assist the assessee.

Conclusion: The assessee was not entitled to any proportionate relief under section 80J for part of the year.

Final Conclusion: Both questions were answered against the assessee and in favour of the Revenue, leaving the assessee without relief under section 80J.

Ratio Decidendi: Relief under section 80J is unavailable where the unit is found to be only an expansion of an existing business and not a new industrial undertaking.

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