1997 (7) TMI 34

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....allowing deduction under section 80J for whole of the year even though the capital employed in the industrial undertaking remained only for nine months during the year relevant to the assessment year 1978-79 ?" The facts, relevant to the aforesaid question, are : The assessee-company is carrying on the business of manufacturing and sale of powered moped (Atlasolex). The previous year for the assessment year 1978-79 of the assessee-company ended on June 30, 1977. The return of income declaring loss of Rs. 11,63,052 was filed by the assessee on July 27, 1978. The accounting period for the year under consideration is the period from September 27, 1976, to June 30, 1977. The assessee claimed relief under section 80J of the Income-tax Act,....

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....e months on pro-rata basis as was held by the Assessing Officer. On the above facts, the question of law as sought by the Commissioner of Income-tax and reproduced in the earlier part of the judgment has been referred to us for our opinion. Subsequent to the decision in Simpson's case [1980] 122 IT 283 by the Madras High Court, the Karnataka High Court in CIT v. Mysore Petro-Chemical Ltd. [1984] 145 ITR 416, has taken the same view. In both these judgments, it has been held that the assessee would be entitled to the relief under section 80J of the Act for the whole of the year and not on pro-rata basis for the period of productive operation. In Mysore Petro-Chemical Ltd.'s case [1984] 145 ITR 416 (Kar), the assessee-company claimed....

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.... [1980] 122 ITR 283 and Mysore Petro-Chemical Ltd.'s case [1984] 145 ITR 416, respectively, and issued Circular No. 378, dated March 3, 1984, the relevant portion of which is as under : "2. The Karnataka High Court in the case of CIT v. Mysore Petro-Chemical Ltd.'s case [1984] 145 ITR 416, has held that the relief under section 80J is admissible for the entire year irrespective of the period of operation of the new industrial undertaking in that year. A similar view has been expressed by the Madras High Court in the case of CIT v. Simpson and Co. [1980] 122 ITR 283. The Board have accepted the interpretation placed on the phrase 'per annum' by the Karnataka High Court. 3. In view of the foregoing, the deduction under section 80J shoul....