Borrowed capital excluded from capital employed under section 80J; Revenue's position upheld following Supreme Court precedent.

Borrowed capital is not included in the capital employed for relief under section 80J read with rule 19A, because the issue is covered by the Supreme Court ruling in Lohia Machines Ltd. v. Union of India, which rejected such inclusion. The Revenue's question was therefore answered in the negative and in its favour. The assessee's separate question under section 35C was not answered because no one appeared for the assessee at the hearing.

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Issues: Whether borrowed capital could be treated as part of the capital employed for computing relief under section 80J of the Income-tax Act, 1961 read with rule 19A of the Income-tax Rules, 1962.

Analysis: The question stood covered by the decision of the Supreme Court in Lohia Machines Ltd. v. Union of India, which negatived inclusion of borrowed capital in the capital employed for the purpose of section 80J. The assessee's separate question under section 35C was not answered, as no one appeared on its behalf at the hearing.

Conclusion: The answer to the Revenue's question was in the negative and in favour of the Revenue. The question raised by the assessee was declined to be answered.

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