Commissioner of Income Tax vs Haryana Tube Manufacturing Company (P.) Ltd.

S.S. Sodhi, J.—The point in issue in this reference concerns deduction u/s 80J of the Income Tax Act, 1961, read with Rule 19A of the Income Tax Rules, 1962, in respect of the capital employed for machinery under installation. The three questions referred in this behalf being :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that Sub-rule (3) of Rule 19A of Income Tax Rules, 1962, should be ignored for computing the capital employed for the purposes of granting deduction u/s 80J of the Income Tax Act ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the debts and liabilities owned by the assessee are not to be taken into account for computing the capital u/s 80J particularly ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the order of the Commissioner of Income Tax (Appeals) in respect of the direction that the amount of Rs. 2,10,544 representing the cost of machinery under installation should be taken into account for computing relief u/s 80J of the Income Tax Act, 1961 ?"

The first two questions are covered by the decision of the Supreme Court in Lohia Machines Ltd. and Another Vs. Union of India (UOI) and Others, and they are consequently answered in the negative, in favour of the Revenue and against the assessee. The third question has, however, to be answered in the affirmative, in favour of the assessee and against the Revenue keeping in view the decision of this court in ITR No. 145 of 1982 ( Commissioner of Income Tax Vs. Gopi Chand Textile Mills Ltd., decided on February 27, 1989.

This reference is disposed of accordingly. There will, however, be no order as to costs.