1984 (8) TMI 8 - HC - Income Tax

Court rules for assessee on deduction, relief, depreciation under Income-tax Act, 1961, but denies relief under section 80J.

The court ruled in favor of the assessee on the issues related to deduction of liabilities, allowance of relief for the entire year, and entitlement to ... Deduction U/S 80J, Depreciation, New Industrial Undertaking Issues involved:The judgment addresses four questions related to the Income-tax Act, 1961:1. Deduction of liabilities of a particular unit for calculating relief under section 80J.2. Allowance of relief under section 80J for the entire year irrespective of the number of days units have worked.3. Entitlement to depreciation on land and building.4. Consideration of borrowed capital for ascertaining capital employed for relief under section 80J.Deduction of liabilities for relief under section 80J:The court interpreted clause (3) of section 80J and rule 19A of the Act, concluding that only the liabilities of each undertaking should be deducted to ascertain the capital employed by an assessee. This interpretation aligns with previous decisions and is deemed the reasonable method. The court referenced a Bombay High Court case to support this conclusion. Therefore, the liabilities of a particular unit alone should be deducted for providing relief under section 80J, favoring the assessee.Allowance of relief under section 80J for the entire year:The court relied on a previous decision to answer this question, stating that the relief under section 80J should be allowed for the entire year and not restricted proportionately to the number of days for which the units have worked. This decision favored the assessee.Entitlement to depreciation on land and building:In a case where land and building were purchased under an agreement of sale, the court considered whether the assessee is entitled to depreciation. Drawing parallels to previous cases involving movable property, the court concluded that depreciation should be permitted for the land and building in question. This decision favored the assessee.Consideration of borrowed capital for relief under section 80J:The court addressed whether borrowed capital should be taken into account for ascertaining the capital employed to work out the relief under section 80J. Referring to a previous decision, the court answered this question against the assessee.In conclusion, the court provided detailed reasoning and decisions on each of the four questions raised under the Income-tax Act, 1961, ultimately favoring the assessee on issues related to deduction of liabilities, allowance of relief for the entire year, and entitlement to depreciation on land and building.