Commissioner of Income Tax vs Continental Device India Ltd.

Arijit Pasayat, C. J.

Heard.

Accepting a prayer for reference made by the Revenue u/s 256(1) of the Income Tax Act, 1961 (in short "the Act"), the following question has been referred by the Income Tax Appellate Tribunal, Delhi Bench "B" (in short "the Tribunal"), for the opinion of this court ;

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law and facts in allowing the deduction u/s 80J in respect of plant No. 3 when admittedly there was no profit from the said plant?"

3.The dispute relates to the assessment year 1982-83. The factual position in a nutshell is as follows :

The assessed, a company, had several plants. The dispute at hand relates to plant No. 3. In the return of income, the assessed claimed a sum of Rs. 2,28,590 as deduction u/s 80J of the Act. It was claimed that production had commenced in the previous year. The Income Tax Officer (in short "the ITO"), noticed that there was no profit in the profit and loss account and, Therefore, held that Section 80J benefit could not be extended. The Income Tax Officer also considered the fact that the assessed had put some additional machinery in the factory building situated at Naraina Industrial Area, New Delhi, where plant No. 2 was already functioning. It was noted that no evidence was placed on record to show that any independent industrial undertaking had come into existence. That being the situation, the Income Tax Officer disallowed the claim. The matter was carried in appeal before the Commissioner of Income Tax (Appeals) (in short "the CIT (A)"). Before the said authority, reliance was placed on a decision of the Andhra Pradesh High Court in Commissioner of Income Tax Vs. Warner Hindusthan Ltd., Without any discussion on the factual aspects, the Commissioner of Income Tax (Appeals) held that the decision referred to above had no application to the facts of the case. The matter was carried in appeal by the assessed before the Tribunal. Here again the Tribunal did not discuss the factual aspects and merely held that the decision of the Andhra Pradesh High Court was applicable to the facts of the case. On being moved, the question as set out above has been referred for the opinion of this court.

We have heard learned counsel for the parties. It is fairly accepted that the question of deduction u/s 80J would depend upon the question whether there was a new industrial undertaking. We notice that except the Income Tax Officer, no other forum has dealt with the factual aspects. That being the position, in our considered view, the matter has to be adjudicated afresh by the Tribunal. In the circumstances, instead of answering the question, we remit the matter back to the Tribunal for fresh consideration on the merits.

The reference stands disposed of.