COMMISSIONER OF INCOME-TAX Vs. MORRIS ELECTRONICS LTD

JUDGEMENT

(1.) THE Department's application requesting the Tribunal to refer the following two questions to this court as questions of law was rejected by the Tribunal on the ground that no referable questions of law arose out of its order : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assets under erection are entitled for relief under section 80j of the Income-tax Act, 1961 ? Whether, on the facts and circumstances of the case and in law, the Tribunal was right in holding that the assets used for scientific research were used for the purpose of the assessee's business and that, consequently, the cost of such scientific research is to be included for computing the capital employed in the business for the purpose of section 80j of the Act ?"

(2.) WE find that the first question is covered by the decision of our court in the case of CIT v. Alcock Ashdown and Co. , Ltd. (1979) 119 ITR 164. No purpose is, thus, going to be served in directing the Tribunal to refer this question as a question of law to this court.

(3.) THE Department's case appears to be that the assets used for scientific research are not as such used for the business of the industrial undertaking and that the entire cost of such assets was allowed as deduction under section 35 (2) (ia) of the Income-tax Act, 1961. In our judgment, both the contentions are untenable on the face of it. Deduction under section 35 (2) (ia) is, admitted, available in view of section 35 (1) (iv) on the scientific research assets relating to the business carried on by the assessee. The requirement of section 80j is not that the assets must be used for the business of the industrial undertaking as such. The requirement is that such assets should form part of the capital employed in the industrial undertaking. The scientific research assets relating to the business of the assessee obviously form part of the capital employed in the industrial undertaking.