COMMISSIONER OF INCOME TAX Vs. ADARSH COLD STORAGE

JUDGEMENT

(1.) The Tribunal, New Delhi, has referred the following question of law under Section 256(1) of the IT Act, 1961 (hereinafter referred to as "the Act"), for opinion of this Court :

(2.) The present reference relates to the asst. yr. 1979-80.

(3.) Briefly stated, the facts giving rise of the present reference are as follows : The applicant is running a cold storage in Budaun. Originally, the cold storage was built in 1967 or 1968. After this, an additional chamber was completed during the period 1977-78 and 1978-79. This chamber had been constructed inside the same boundary wall. The assessee claimed relief under Section 80J on the capital employed in this new chamber. The ITO found that this was merely an expansion of the existing cold storage and it had common potato drying shed, tool room, water tank, etc. He also held that the same employees looked after both the chambers, and no new power connection had been taken for the new chamber. The ITO was of the view that there was no independent viable unit which had come into existence and the assesses would, therefore, not be given benefit under Section 80J. In this connection, the ITO referred to the decision of the Hon'ble Supreme Court in the case of Textile Machinery Corporation Ltd. v. CIT AIR 1977 SC 1134 , [1977] 107 ITR 195 (SC), (1977)2 SCC368 , [1977 ]2 SCR762 and also some instructions of the Board. He also referred to some decision of the Tribunal in the case of G.T. Cold Storage & Ice Factory. He, therefore, denied the claim of the assessee under Section 80J. When the matter came before the CIT(A), he found that additional staff had been engaged in new chamber and additional connection had also been taken when the new chamber was put into operation. Before the CIT(A), reliance was placed on the judgment of the Calcutta High Court in the case of CIT v. Harinkhola Ice & Cold Storage Ltd. The CIT(A) found that the new chamber could be considered as a new industrial unit which was viable. According to him, the fact that both the chambers were situated inside the boundary could not change the position. According to the learned CIT(A), the real test was whether the new unit is capable of functioning by itself or did it require the functioning of the earlier unit before it could function. The CIT(A) gave a finding that the new chamber was in position to function independently even if the older chamber was closed and was not functioning. He, therefore, allowed the benefit under Section 80J to the assessee. Revenue preferred the appeal before the Tribunal. Tribunal has upheld the order passed by the CIT(A) on the following grounds :