KAR MOBILES LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) These Income tax Reference Cases are coming up before us at the instance of the assessee, M/s. Kar Mobiles Ltd., Bangalore. The references relate to the assessment years 1980-'81 and 1981-'82.

(2.) The questions referred to us for decision are as follows:

(3.) The facts leading to the above references can briefly be stated thus: The assessee company was originally engaged in the distribution of electricity in Cochin till 3.12.1980. However, the Company started a new industrial unit for the manufacture and sale of valves and its commercial production started in the year 1975. The first accounting year for the new industrial unit ended on 31.3.1975. The assessee claimed deduction under S.80J for the assessment years 1975-'76 and 1976-'77, the relevant accounting years ended on 31.3.1975 and 31.3 1976 respectively. This claim was allowed by the Income tax Officer. The assessee thereafter changed its accounting year from the financial year to the year ending 30th September 1977 and consequently the first accounting year was from 1.4.1976 to 30.9.1977. Because of this change, there was no previous year for the assessment year 1977-'78; on the other hand for the assessment year 1978-'79 the previous year consisted of eighteen months commencing from 1.4.1976 and ending 30.9.1977. The assessee has voluntarily filed a return showing Nil income on 16.12.1977 in respect of the assessment year 1977-'78 though there was no previous year and claimed carry forward of all allowances from the previous assessment year. According to the Income tax Officer, no claim was made in the Annexure regarding the deduction under S.80J. In view of the return the Officer closed the assessment year 1977-'78 as N. A. on 21.11.1979. The assessee again took up the matter and contended that it was entitled to deduction under S.80J for the assessment year 1977-78 to be notionally determined and carried forward. However, the Income tax Officer did not accede to the above request of the assessee in view of the fact that there was no previous year to the assessment year 1977-'78 and as such there was no computation period for the purpose of S.80J.