TaxTMI 
TaxTMI 
2001 (12) TMI 52
X X X X Extracts X X X X
X X X X Extracts X X X X
....les is in conflict with the provisions of section 80J of the Income-tax Act and is, therefore, to be ignored and that in computing the capital employed in the Mohuda Unit for the purposes of section 80J, the capital borrowed by the assessee should also be included? 3. Whether, on the facts and circumstances of the case, the Tribunal was justified in remitting the case back to the Appellate Assistant Commissioner for consideration, on merits, and for disposal in accordance with law, the question of levy of penal interest under section 215 of the Income-tax Act?" The relevant assessment years are 1969-70 and 1970-71. We may notice that the first and the second questions are common for both the assessment years, whereas the third question relates only to the assessment year 1970-71. Ms. Radha Rangaswamy, learned counsel appearing on behalf of the assessee, submitted that the first question is covered by a decision of the apex court inter-parties in Orissa Cement Ltd. v. CIT [1993] 200 ITR 636. Mr. R. C. Pandey, learned counsel appearing on behalf of the Revenue, however, submitted that the said decision is distinguishable. Mr. Pandey submitted that in the instant cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....from a public sector undertaking, namely, Heavy Engineering Corporation Ltd. Section 80J(1) of the Act, as it stood at the relevant time is as follows: "80J. Deduction in respect of profits and gains from newly established industrial undertakings or ships or hotel business in certain cases.-(1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains (reduced by the deduction, if any, admissible to the assessee under section 80HH) of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent. per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the prescribed manner in respect of the previous year relevant to the assessment year (the amount calculated as aforesaid being hereafter, in this section, referred to as the relevant amount of capital employed during the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 80J." Thus, it is not in dispute that the second-hand machinery had been purchased from Heavy Engineering Corporation, Ranchi, by the assessee for setting up its new Mohuda unit. The assessee, therefore, did not transfer any machinery or plant previously used by it to a new unit set up by him. In relation to claiming the benefit under section 80J of the Act, the Calcutta High Court has clearly held as under: "The scheme of this section is to encourage new industrial undertakings provided they fulfil the conditions mentioned in the various clauses of the sub-section. It is true that in order to be entitled to exemption an assessee must strictly come within the terms of the provision under which such exemption is being claimed, but in construing the provisions of this section one must construe the said section reasonably in the context of the purpose for which the section has been introduced. The expression 'transfer' is used in varying senses in different statutes depending on the context. In a broad sense, it will certainly include an acquisition of an asset by one person from whatever source. But the scheme of the section indicates that what is being aimed at is to prev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....preciation might have been claimed on the machinery, which had been used on the one hand and again the benefit under section 80J would be claimed on the other. A benefit in relation to the second-hand machinery, which are reutilised while setting up a new industrial unit, sub-section (4) Of section 80J of the Act does not prohibit procurement of new or second-hand machinery from outside. The Explanation appended to sub-section (4) of section 80J of the Act also serves as a guide to construction of the statute. The object of an Explanation to a statutory provision is-- (a) to explain the meaning and intendment of the Act itself, (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help o....