Section 80J deduction is confined to own capital, excluding borrowed funds after retrospective amendment.

For section 80J, "capital employed" excludes borrowed moneys, so deduction is confined to the assessee's own capital. The retrospective amendment by the Finance (No. 2) Act, 1980 was treated as consistent with the settled Supreme Court position and supported the Revenue's stand. As a result, the claimed relief under section 80J was not available on borrowed capital, and the challenge to the notice under section 263, with the connected writ relief, was rejected.

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Issues: Whether the assessees were entitled to deduction under section 80J of the Income-tax Act, 1961 on the basis of borrowed capital in view of the retrospective amendment made by the Finance (No. 2) Act, 1980, and the consequent challenge to the notice under section 263.

Analysis: The issue was governed by the settled law declared by the Supreme Court, which held that for purposes of section 80J the expression "capital employed" does not include borrowed moneys, and that relief is available only with reference to the assessee's own capital. In light of that authoritative pronouncement, the retrospective amendment supported the Revenue's stand and left no surviving basis for the writ relief sought by the petitioners.

Conclusion: The claim for relief under section 80J failed, and the challenge to the notice and connected writ relief was rejected.

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