Commissioner of Income Tax vs East West Linkers (P.) Ltd.

Arijit Pasayat, C.J.—At the instance of the Revenue, the following question has been referred for the opinion of this court u/s 256(1) of the Income Tax Act, 1961 (in short "the Act") by the Income Tax Appellate Tribunal, Delhi Bench-C ("the Tribunal", in short) :

"Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the assessed was an industrial undertaking in terms of section 80J of the Income Tax Act, 1961, and thus entitled to the deduction under that section ?"

The dispute relates to the assessment year 1976-77.

In a nut-shell, the factual position is as follows :

The assessed is a private limited company carrying on business in manufacturing and export of garments, etc. The assessed claimed that it was a newly established industrial undertaking, and that its manufacturing unit had started functioning during the assessment year in question and, Therefore, it was entitled to relief u/s 80J of the Act. The Income Tax Officer, however, was of the view that the business carried on by the assessed could not be held to bo an industrial undertaking and, Therefore, the assessed was not entitled to deduction u/s 80J. The Commissioner of Income Tax (Appeals) ("the CIT(A)", in short), however, held that the assessed was producing garments manufactured from cloth and the unit for producing garments was an industrial undertaking within the meaning of section 80J of the Act. The matter was carried in appeal before the Tribunal by the Revenue. The Tribunal referred to some earlier judgments rendered by it and held that the assessed was an industrial undertaking and was entitled to the benefit of section 80J of the Act. Accordingly, the appeal was dismissed. On being moved for reference, the question as set out above has been referred for the opinion of this court.

We have heard learned counsel for the Revenue. There is no appearance on behalf of the assessed in spite of notice.

Learned counsel for the Revenue submitted that the business carried on by the assessed was not one which could be called an industrial undertaking and, Therefore, it was not entitled to relief u/s 80J of the Act.

A similar question had come up for consideration by this court in Nu-look (P.) Ltd. Vs. Commissioner of Income Tax, Delhi, wherein it was held that the activity undertaken by the assessed came within the definition of "industrial company" in section 2(6)(d) of the Finance Act, 1968. That being the position, we answer the question referred in the affirmative, in favor of the assessed and against the Revenue.

The reference stands disposed of.