COMMISSIONER OF INCOME TAX Vs. JAGJIT INDUSTRIES LIMITED

JUDGEMENT

(1.) THESE are three applications by the CIT under S. 256(2) which relate to the asst. yrs. 1973 -74, 1974 -75 and 1975 -76. The question raised which is common to all the three years is:

(2.) WE have heard counsel at some length and we are of the opinion that a question of law does arise out of this aspect of the Tribunal's order. The ITO and the CIT (Appeals) had denied the assessee relief under S. 80J on the ground that the Viva unit was not entitled to the relief as it was formed by the transfer of machinery previously used by the assessee. The Tribunal, however, appears to have allowed the relief on the footing that the Viva unit constituted a mere expansion of the unit previously in existence. On the other hand, the contention of the Revenue is that this unit was formed by the splitting up or reconstruction of the unit already in existence. The facts on the basis of which one can arrive at either conclusion are not fully discussed in the present orders and we are of the opinion that this aspect of the matter does give rise to a question of law. We, therefore, direct the Tribunal to state and refer the following question of law for the decision of this Court :

(3.) HOWEVER , two items of clarification are necessary in respect of the question directed to be referred. It is pointed out by counsel for the respondent that for the asst. yrs. 1971 -72 and 1972 - 73, the Tribunal had already granted relief under S. 80J and that order had become final. Counsel for the petitioner, despite enquiries, has not been able to find out whether any petition under s. 256(2) has been filed in respect of the earlier years. Counsel for the respondent argues that since relief under S. 80J has already been given for the first two years, he is automatically entitled to relief under this section for the subsequentyears in view of the language of S. 80J(2). We wish to make it clear that this aspect is also involved and included in the question which we have directed to be referred above and the Tribunal may state the facts relevant thereto also. Counsel for the petitioner submitted that in coming to its conclusion regarding availability of S. 80J relief, the Tribunal has also granted the relief to the assessee for one of the three assessment years in respect of borrowed capital which is contrary to the decision of the Supreme Court in the case of Lohia Machines (1985) 44 CTR (SC) 328 : (1985) 152 ITR 308 (SC). This question does not appear to have been raised in terms either before the Tribunal or in the applications before the Tribunal and this Court. However, this aspect of the matter is academic because counsel for the respondent states that when the ITO implemented the decision of the Tribunal, he had applied the principles of Lohia Machines (supra) and the assessee has not disputed this. In the circumstances, this aspect of the matter is not covered by the question which we have directed to be referred. For the asst. year 1975 -76, another question has also been raised on behalf of the petitioner which reads as under :