1983 (8) TMI 46

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....l 7 1/2% of the capital employed even though the undertaking worked only for 1 1/2 months ? " The simple facts behind the legal formulation are as follows : The assessee-company claimed relief under s. 80J of the Act for the full assessment year 1977-78, although the company started production only on May 16, 1976. The assessee's accounting year ended on June 30, 1976. The ITO allowed the relief pro rata for 1 1/2 months subsequent to the commencement of the commercial production. The assessee appealed against that order. The Commissioner (Appeals) held that the relief due to the assessee cannot be pro rata reduced for the period of commercial production and the assessee was entitled to full tax rebate for that year. He accordingly di....

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....r the full year in which the capital was employed, though production was only for a couple of months or couple of days? Mr. Srinivasan urged for the former view. Whereas Mr. Sarangan, counsel for the assessee, contended for the latter. Mr. Sarangan submitted that what is relevant to get relief under s. 80J is the employment of the capital and the date of production and if both these conditions are satisfied, then the assessee would be entitled to the relief at the said rate for the first full years, no matter when the production commenced in that year. It seems to us that the contention urged by Sri Sarangan is well founded and must be accepted as correct. Every one is familiar with the terms per diem, per mensem and per annum. They are ....

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....ef under s. 84 is available, the said 6% on the capital employed. The words 'per annum ' cannot be understood as contrasted with any broken period. " The Supreme Court has refused leave to appeal against the aforesaid judgment in S.L.P. (Civil) Nos. 8411 & 8412 of 1980, dated March 31, 1981. The Madhya Pradesh High Court in CIT v. Sanghi Beverages (Pvt.) Ltd. 1982] 134 ITR 623 at 624, has observed : "The provisions of s. 80J of the Act which are intended to encourage the setting up of a new industrial enterprise have to be construed liberally. Even if a new undertaking has functioned for only a part of an accounting year, the deduction has to be allowed to the full extent and the percentage cannot be reduced in proportion to the pa....