VIJAY UDHYOG Vs. THE COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS Reference on an application under Section 256[1] of the Income Tax Act, 1961 at the instance of assess refers following two questions :

(2.) WHETHER on the facts and in the circumstances of the case and construction of provision of Section 80 -I and 263 the Tribunal is right in sustaining the action of the C.I.T. U/s. 263 -

(3.) FACTS show that the assessee M/s. Vijay Udyog, is admittedly a partnership firm carrying on business in the manufacture of Pulses. It has engaged M/s. Vijay Dal Mills for crushing of the raw material at a fixed rate per quintal. It is not in dispute that the assessee makes payment of all the wages of the labourers, cartage and transportation expenses and has undertaken the liability towards various Labour Act, Factories Act and responsibility to repair machineries. It claimed deduction of Rs. 39,926/ - under Section 80 -I of the Income Tax Act. The Assessing Officer allowed it. C.I.T. invoked Section 263[1], and issued show cause notice to assessee proposing to set it aside on the ground that the assessee was not owner of a new industrial unit, and therefore, not entitled to claim deduction. It was found that the assessee had taken new unit on hire basis. Thereafter, the Commissioner passed order and enhanced the amount of income by Rs. 39,926/ -. Assessee questioned it before ITAT. ITAT considered both the questions raised by the assessee and held that the acceptance of two opinions on any dispute would deny the lower authorities access to Section 154, but, it cannot stop the CIT from invoking the provisions of Section 263 of the Income Tax Act. It is in this background, that the above mentioned two questions have been referred.