COMMISSIONER OF INCOME-TAX vs. PANNA KNITTING INDUSTRIES

ITR/28/1987HC GujaratGJHC24011761198712 February 2002Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE K.A.PUJ4 pages
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What did the High Court hold?

The High Court held that the Tribunal was correct in its conclusion. The Court interpreted Section 80J(1) of the Income Tax Act, 1961, which states that where the gross total income of an assessee includes profits and gains from a qualifying industrial undertaking, a deduction shall be allowed in computing the total income. The Court found that the language of the section clearly indicates that the relief is to be allowed from the total income of the assessee and cannot be confined only to the income derived from the new units. Therefore, the question referred to the Court was answered in the affirmative, in favour of the assessee and against the Revenue. The references were disposed of accordingly.

What were the facts?

The assessee, Panna Knitting Industries, claimed relief under Section 80J of the Income Tax Act, 1961, for certain new units. The Income Tax Officer denied this relief, stating that the first assessment year was 1975-76 and relief was already availed up to 1979-80, and that the new units were mere extensions of existing ones without separate books of accounts. The Commissioner of Income Tax (Appeals) granted relief only on profits from the new units. Both the assessee and the Revenue appealed to the Income Tax Appellate Tribunal. The Tribunal rejected the Revenue's appeal, noting no dispute on the cost and profits of new units. It allowed the assessee's appeal, following the Bombay Tribunal's decision in Indo-French Time Industries Ltd., to grant relief from total income, not just income from new units. The Revenue challenged this before the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, and in law, the Tribunal was right in coming to the conclusion that the relief under Section 80J of the Income Tax Act should be allowed from the total income which is not confined to the income of the (new) units? Assessee's Contention: The assessee relied on the Bombay Tribunal's decision in the case of Indo-French Time Industries Ltd. and argued that the relief under Section 80J should be allowed from the total income, not solely from the income of the new units. Revenue's Contention: The Revenue's primary contention, as reflected in the question referred, was that the relief under Section 80J should be confined to the income generated by the new units and not the total income of the assessee. The Revenue did not dispute that the units were new or that their costs and profits were separately shown.

Which sections of the Income-tax Act were involved?

Section 80J

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 28 of 1987

With INCOME TAX REFERENCE No. 164 of 1988

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI

and Hon'ble MR.JUSTICE K.A.PUJ

======================================================== 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to t

The order continues below.

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