Commissioner of Income Tax vs Asian Marine Products Pvt. Ltd.

N.V. Balasubramanian, J.—The question of law referred at the instance of the Revenue relating to the assessee''s assessment year 1981-82

for our consideration reads as under :

Whether, on the facts and in the circumstances of the case, the Appellate tribunal was correct in law in holding that the assessee is entitled for

relief u/s 80J of the Act in respect of its cold storage plant leased out ?

The assessee is a private limited company which processes marine products and exports them to Japan. The assessee claimed before the

Income Tax Officer a deduction u/s 80J of the Income Tax Act in respect of the profits from cold storage plant. The Income Tax Officer rejected

the claim of the assessee on the ground that the assessee had not done any manufacturing activities but let out the entire machinery on hire during

the relevant previous year. The first appellate authority as well as the Appellate Tribunal held that the assessee was entitled to the relief u/s 80J of

the Act following an order of the Tribunal in the case of First Leasing Company Ltd. [1985] 13 ITD 234, and allowed the claim of the assessee.

On the application filed by the Revenue, the Income Tax Appellate Tribunal has referred the question of law set out earlier for our consideration.

Section 80J of the Act provides for deduction in respect of profits and gains from newly established industrial undertakings or ships and one of

the essential conditions for claiming the necessary deduction is that the profits and gains should be derived from an industrial undertaking. Section

80J(4) of the Act provides for fulfilment of certain conditions and only on the fulfilment of those conditions, the industrial undertaking would be

eligible to get the deduction u/s 80J of the Act. One such condition that is stipulated that the assessee should manufacture or produce articles, or

operate one more cold storage plant or plants, in any part of India. Admittedly, the assessee-company had not done any manufacturing business

and had let out the cold storage plant on hire during the relevant period and the assessee had not operated the com storage an in any part of India

during the previous year relevant to the assessment year. The assessee having not fulfilled the conditions stipulated in Section 80J(4) of the Act for

the grant of the deduction we are of the opinion that the assessee is not eligible to get a relief u/s 80J(4) of the Act On the facts of the case, it

cannot be said that, the assessee had produced any articles in any part of India or established industrial undertakings. The operation of the cold

storage plant by the lessee was done by him in his own independent right as a lessee and it was not done either for or on behalf of the assessee.

Hence, we hold that the Appellate Tribunal was not correct in its view that the assessee was entitled to deduction u/s 80J of the Act and the

reliance placed on its earlier order in the case of First Leasing Co. Ltd. [1985] 13 ITD 234; is misplaced as that case has no application to the

facts of the case, The earlier order of the Appellate Tribunal dealt with the case of grant of development rebate u/s 33 of the Act and the scheme

and structure u/s 80J of the Act are entirely different from those found in Section 33 of the Act. On a plain reading of Section 80J(4) of the Act,

the assessee is ineligible to get the deduction u/s 80J of the Act; Accordingly, we answer the question of law referred to us in the negative, against

the assessee and in favour of the Revenue. Both the parties are directed to bear their own costs.