Section 80J capital computation must follow Lohia Machines, with the claimed deduction computation rejected.

Section 80J deduction on capital employed in a branch industrial undertaking had to be computed in line with Lohia Machines Ltd. v. Union of India, which governed the method for determining the capital base. On that authority, the capital figure accepted by the appellate authorities could not be sustained, and the claimed computation of deduction under section 80J was rejected. The reference was answered against the assessee and in favour of the Revenue.

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Issues: Whether the assessee was entitled to deduction under section 80J of the Income-tax Act, 1961 on the capital employed in the branch industrial undertaking as computed by the appellate authorities.

Analysis: The question was covered by the Supreme Court decision in Lohia Machines Ltd. v. Union of India, which governed the computation of capital for deduction under section 80J. Applying that authority, the capital base accepted by the Commissioner (Appeals) and the Tribunal could not be sustained.

Conclusion: The reference was answered in the negative and the assessee was held not entitled to the claimed computation of deduction under section 80J. The answer is in favour of the Revenue and against the assessee.

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