Appeal partially allowed; deduction under Section 33B upheld, quantum modified. Section 80J claim remanded for fresh consideration.

The Tribunal partly allowed the appeal, upholding the CIT(A)'s decision to allow a deduction under Section 33B but modifying the quantum to Rs. 37,380. The issue of the Section 80J claim was remanded back to the ITO for fresh consideration.

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Issues Involved:
1. Deduction under Section 33B of the Income-tax Act, 1961.
2. Relief under Section 80J of the Income-tax Act, 1961.

Detailed Analysis:

Issue 1: Deduction under Section 33B of the Income-tax Act, 1961

Facts and Arguments:
- The Commissioner (Appeals) directed the Income Tax Officer (ITO) to allow a deduction under Section 33B of Rs. 2,11,266 by estimating 60% of the Written Down Value (WDV) of assets.
- The ITO initially rejected the claim of Rs. 2,69,230 for rehabilitation allowance under Section 33B, arguing that the conditions of the section were not satisfied. Specifically, the business was only temporarily suspended, not discontinued, and there was no extensive damage to assets.
- The CIT(A) accepted the assessee's claim, referencing comparable cases where similar claims were allowed, and directed the ITO to allow a deduction of Rs. 2,11,266 instead of the claimed Rs. 2,69,230.

Tribunal's Findings:
- The Tribunal acknowledged that extensive damage was indeed caused to the factory premises and machinery due to floods in August 1979, as evidenced by the expenditure on repairs and a certificate from the Gujarat Government assessing the damage at Rs. 12,71,700.
- The term "discontinued" was interpreted to include temporary stoppage of business, which in this case lasted for 7-8 months.
- The Tribunal concluded that the assessee was entitled to the deduction under Section 33B, but disagreed with the CIT(A)'s computation method. The correct amount should be 60% of the terminal allowance under Section 32(1)(iii), which was Rs. 62,300. Therefore, the allowable deduction was Rs. 37,380, not Rs. 2,11,266.

Conclusion:
- The Tribunal upheld the CIT(A)'s decision to allow the deduction under Section 33B but modified the quantum to Rs. 37,380.

Issue 2: Relief under Section 80J of the Income-tax Act, 1961

Facts and Arguments:
- The ITO rejected the claim of Rs. 68,900 under Section 80J, arguing that the business had not commenced during the relevant previous year and the conditions of Section 33B were not met.
- The CIT(A) allowed the claim under Section 80J, stating it was consequential to the allowance under Section 33B and directed the ITO to verify the correctness of the working provided by the assessee.

Tribunal's Findings:
- The Tribunal noted that both the ITO and CIT(A) viewed the Section 80J claim as consequential to the Section 33B claim.
- Since the Tribunal accepted the Section 33B claim with modifications, it restored the issue of the Section 80J claim back to the ITO for de novo consideration. The ITO was instructed to process the claim afresh and verify whether the assessee was entitled to the deduction, providing a reasonable opportunity for the assessee to be heard.

Conclusion:
- The Tribunal remanded the issue of the Section 80J claim back to the ITO for fresh consideration, instructing the ITO to verify the claim on its merits.

Summary:
The appeal was partly allowed. The Tribunal upheld the CIT(A)'s decision to allow the deduction under Section 33B but modified the quantum to Rs. 37,380. The issue of the Section 80J claim was remanded back to the ITO for fresh consideration.

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