Section 80J deduction applies for the full year to a newly set up industrial undertaking, not only the operating period.

Section 80J relief for a newly established industrial undertaking was held to be allowable for the full accounting year, even where commercial operations started late in that year. The earlier view treating the deduction as not confined to the proportionate period of actual operation was followed, and the Board's circular was relied upon as consistent with that interpretation. The assessee was therefore entitled to deduction for the whole year, not merely for the period during which the undertaking actually functioned.

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Issues: Whether relief under section 80J of the Income-tax Act, 1961, in respect of a newly set up industrial undertaking established during the accounting year, is allowable for the whole year or only for the proportionate period of actual operation.

Analysis: The question was treated as covered by the earlier decision holding that section 80J relief is to be granted for the full year and not restricted on a proportionate basis merely because the undertaking commenced operations late in the accounting period. The circular issued by the Board was also relied upon as consistent with that view.

Conclusion: The assessee was entitled to deduction under section 80J for the whole year. The reference was answered in the negative, in favour of the assessee and against the Revenue.

Ratio Decidendi: Relief under section 80J for a newly established industrial undertaking is to be allowed for the entire year and not confined to the period of actual use or operation within the accounting year.

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