1980 (11) TMI 29 - HC - Income Tax

High Court upholds ITO's jurisdiction on deductions under sections 80-I and 80J

Commissioner Of Income-Tax, Assam Versus Buildwell Assam Pvt. Limited

Commissioner Of Income-Tax, Assam Versus Buildwell Assam Pvt. Limited - [1982] 133 ITR 736, 23 CTR 29, 6 TAXMANN 27 Issues Involved:1. Disallowance of deduction u/s 80G.2. Computation of capital employed for deduction u/s 80J.3. Basis for computing deduction u/s 80-I.4. Compliance with appellate authority's directions.Summary:1. Disallowance of Deduction u/s 80G:The Income Tax Officer (ITO) disallowed the deduction claimed by the assessee u/s 80G in its entirety. The Appellate Assistant Commissioner (AAC) concluded that the claim for deduction u/s 80G(1) could not be completely disallowed. The Tribunal upheld the AAC's order, directing the ITO to allow certain deductions u/s 80G(1).2. Computation of Capital Employed for Deduction u/s 80J:The AAC observed that the capital employed for the purpose of deduction u/s 80J had not been properly computed by the ITO. The AAC noted that the ITO incorrectly assumed that the entire income was derived from a newly established undertaking, whereas the appellant-company also executed contract works, which did not fall within the purview of a newly established undertaking u/s 80J. The Tribunal upheld the AAC's direction to the ITO to make a fresh assessment in accordance with the law.3. Basis for Computing Deduction u/s 80-I:The AAC found that the ITO had not provided any basis for computing the quantum of deductions u/s 80-I. The Tribunal agreed with the AAC's observation and upheld the direction to the ITO to reassess the deductions.4. Compliance with Appellate Authority's Directions:The AAC and the Tribunal found that the ITO had disregarded the directions of the previous AAC by wholly disallowing the deductions claimed u/ss 80-I and 80J during the fresh assessment. The Tribunal emphasized that the ITO was not justified in not following the directions of the AAC. The Tribunal upheld the AAC's order setting aside the assessment and directing the ITO to make a fresh assessment in accordance with the previous appellate authority's directions.Final Judgment:The High Court held that the ITO did not disregard any direction of the AAC and had jurisdiction to consider and decide the entitlement of deductions u/ss 80-I and 80J during the fresh assessment. The Court concluded that the question of entitlement of deductions was left open for final determination by the ITO while making the fresh assessment. The High Court answered the question in favor of the revenue, stating that the fresh assessment made by the ITO was in accordance with the law and not violative of any supposed direction given by the AAC. The Court directed the Tribunal to pass necessary orders to dispose of the case conformably to the judgment.