Section 80J relief cannot be cut down proportionately for partial-year production in an industrial undertaking.

Deduction under section 80J of the Income-tax Act is not to be reduced proportionately merely because an industrial undertaking commenced production during the accounting year. The Court followed earlier binding decisions, including the Madras High Court view, that relief under section 80J cannot be confined to the exact number of days the undertaking actually worked in the previous year. It also noted that this position had been accepted by CBDT Circular No. 378 dated 03.03.1984. The result is that the Income-tax Officer was not justified in restricting the deduction on a day-to-day working basis, and the full relief was available to the assessee.

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Issues: Whether the relief under section 80J of the Income-tax Act, 1961 could be cut down proportionately to the number of days worked in the accounting year.

Analysis: The question turned on whether the deduction under section 80J was to be confined to the period for which the industrial undertaking actually worked during the previous year. The Court noted that the issue had already been answered by earlier binding decisions following the Madras High Court view that such relief was not liable to be proportionately reduced on a day-to-day working basis. The Court also noted that the same view had been accepted by the Central Board of Direct Taxes in Circular No. 378 dated 03.03.1984.

Conclusion: The Income-tax Officer was not justified in restricting the section 80J relief proportionately to the number of days worked in the accounting year; the answer was in favour of the assessee and against the Revenue.

Ratio Decidendi: Deduction under section 80J is not to be curtailed proportionately merely because the industrial undertaking commenced production during the accounting year.

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