High Court allows deduction under section 80J for new industrial undertaking.

The High Court held that the assessee was entitled to a deduction under section 80J of the Income-tax Act for the manufacture of axle shafts, torsion bars, and coil springs. The Court determined that a new industrial undertaking had been established, making the assessee eligible for the deduction despite the common use of premises and staff. The Court ruled in favor of the assessee, allowing the deduction under section 80J without any order as to costs.

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Issues: Interpretation of deduction under section 80J of the Income-tax Act for the manufacture of axle shafts, torsion bars, and coil springs.

Summary:
The case involved the question of whether the assessee was entitled to a deduction under section 80J of the Income-tax Act for the manufacture of axle shafts, torsion bars, and coil springs. The assessee, engaged in the manufacture of springs for the automobile industry, had set up a project for the production of axle shafts and torsion bars, importing machinery and subsequently purchasing additional machines. The issue of deduction under section 80J had not been granted for the previous assessment year due to lack of profits, but was examined on merits for the current year.

The Appellate Assistant Commissioner and the Tribunal both considered whether a new industrial undertaking had been established. The Appellate Assistant Commissioner, relying on the definition provided by the Central Board of Revenue, concluded that a new industrial undertaking had indeed been set up, making the assessee eligible for the deduction under section 80J. The Tribunal concurred with this decision, emphasizing that the use of common premises and staff did not affect the establishment of a new industrial undertaking.

Upon review of the facts presented in the orders of the Appellate Assistant Commissioner and the Tribunal, the High Court found that the assessee had indeed set up a new industrial undertaking, meeting the criteria for deduction under section 80J. The Court held that the common use of premises and staff did not impact the eligibility for the deduction. Therefore, the Court answered the question in the affirmative, in favor of the assessee, with no order as to costs.

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