C.I.T. PATIALA vs. BAKEMANS HOME PRODUCTS, PATIALA
What did the High Court hold?
The High Court of Punjab and Haryana, following its decision in identical matters (I.T.R. Nos. 21 to 24 of 1990) decided on the same day, answered the referred question of law in favour of the revenue and against the assessee. The Tribunal's earlier finding that the assessee-firm was entitled to deduction under Section 80J on its capital employed in the leased industrial undertaking, including assets like power generators, office equipment, and furniture, was thus overturned. The ratio decidendi is that capital employed in a leased industrial undertaking, particularly assets like generators, office equipment, and furniture, does not qualify for deduction under Section 80J if the assessee does not own the industrial undertaking itself. The reference is disposed of accordingly.
What were the facts?
The assessee is M/s Bakeman's Home Products, Patiala, and the revenue is the Commissioner of Income-tax, Patiala. The assessment year in question is 1981-82. The matter arises from an order of the Income-tax Appellate Tribunal, Chandigarh Bench, in I.T.A. No. 406/Chandi/86. The High Court of Punjab and Haryana is considering a reference of a question of law in I.T.R. No. 532 of 1995, pursuant to directions from this Court in I.T.C. No. 86 of 1991. The dispute concerns the assessee-firm's entitlement to deduction under Section 80J of the Income-tax Act, 1961.
What were the issues?
1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the assessee-firm is entitled to deduction under Section 80J of the Income-tax Act, 1961, on its own capital employed in the industrial undertaking such as the power generator, office equipment, furniture etc., though it does not own the industrial undertaking which has only been taken on lease by it? Assessee's contention: The assessee-firm is entitled to deduction under Section 80J on its capital employed in the industrial undertaking, including assets like power generators, office equipment, and furniture, even though the undertaking itself was taken on lease. Revenue's contention: The judgment does not record specific contentions for the revenue, but it refers to identical questions between the same parties decided in favour of the revenue in other references.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT RAJESH BINDAL, J.
In terms of directions given by this Court in I.T.C. No. 86 of 1991, the following question of law arising out of the order of the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh in I.T.A. No. 406/ Chandi/86, for the assessment year 1981-82, has been referred for opinion of this Court :- “Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the assessee-firm is entitled to deduction u/s 80J of the Income-tax Act, 1961, on its own capital employed in the industrial undertaking such as the power generator, office equipment, furniture etc., though it does not own the industrial undertaking which has only been taken on leave by it?”
I.T.R. No. 532 of 1995 2
For the detailed reasons recorded in I.T.R. Nos.21 to 24 of 1990 decided by our separate order passed today, wherein identical question between the same parties, has been answered in favour of the revenue and against the assessee, the question referred is answered in favour of the revenue and against the assessee. The reference is disposed of accordingly.
(RAJESH BINDAL)
Judge (M.M.KUMAR)
Judge DATE: 19.9.2007 “DK”
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