TaxTMI 
TaxTMI 
2004 (10) TMI 80
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....eduction of Rs. 55,975 under section 80J of the Income-tax Act, 1961 (for short, "the Act") during the assessment year 1985-86. The Assessing Officer by treating Rs. 1,50,000 as deemed transfer from Roller unit to Sawgin unit, restricted the allowance under section 80J to Rs. 44,590. Besides this, he reduced the investment allowance reserve from Rs. 1,17,172 to Rs. 77,405 for computing the capital employed for the purpose of calculating deductions under section 80J of the Act. The Commissioner of Income-tax (Appeals) (for short, "the CIT (Appeals)") confirmed the order of the Assessing Officer. In the second appeal, the Tribunal held that the capital at the beginning of the year should have been taken into account and that there was no justification for the Assessing Officer to treat the capital of Rs. 1,50,000 as attributable to the roller unit. Shri Rajesh Bindal, learned counsel appearing for the Revenue, contended that the assessee had no justification to transfer the capital of the partners standing in the books of the roller unit which had been utilised for the purchase of land, construction of building and purchase of machinery, etc., to the accounts of the sawgin unit fo....
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....pital employed in an industrial undertaking or the business of a hotel shall, except as otherwise expressly provided in this section, be computed in accordance with clauses (II) to (IV) and the capital employed in a ship shall be computed in accordance with clause (V). (II) The aggregate of the amounts representing the values of the assets as on the first day of the computation period of the undertaking or of the business of the hotel to which this section applies shall first be ascertained in the following manner:- (i) in the case of assets entitled to depreciation, their written down value: (ii) in the case of assets acquired by purchase and not entitled to depreciation, their actual cost to the assessee: (iii) in the case of assets acquired otherwise than by purchase and not entitled to depreciation, the value of the assets when they became assets of the business: (iv) in the case of assets, being debts due to the person carrying on the business, the nominal amount of those debts: (v) in the case of assets, being cash in hand or bank, the amount thereof. Explanation 1.- In this clause, 'actual cost' has the same meaning as in clause (1) of section 43. Exp....
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....ness of machinery or plant previously used for any purpose; (iii) it manufactures or produces articles, or operates one or more-cold storage plant or plants, in any part of India, and has begun or begins to manufacture or produce articles or to operate such plant or plants, at any time within the period of thirty-three years next following the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking; (iv) in a case where the industrial undertaking manufactures or produces articles, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power: Provided that the condition in clause (i) shall not apply in respect of any industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section: Provided further that, ....
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....ing is to be computed in accordance with sub-clauses (II) to (IV) of sub-section (1A) of the section. In Kerala State Cashew Development Corporation v. CIT [1994] 205 ITR 19, a Division Bench of the Kerala High Court interpreted section 80J of the Act and after making reference to the decision of the Karnataka High Court in Khoday Industries P. Ltd. v. CIT [1987] 163 ITR 646 held as under: "We may mention at the outset that the object with which section 80J has been enacted is to encourage the establishment of new industries in the country. The heading of the section refers to 'newly established industrial undertakings', and the conditions laid down by sub-section (4) for the applicability of the section emphasise the newly established nature of the undertaking. It is true that the term 'newly established' does not occur in the body of the section, but it is implicit in its very object and purpose. A necessary corollary of this is that the undertaking itself must be a newly established one, and not that it is a new undertaking to the person acquiring the same from another. The emphasis is on the establishment of the undertaking and not on the person who acquires it afterwards. O....