COMMISSIONER OF INCOME TAX Vs. ADONI VANASPATHI MANUFACTURERS

JUDGEMENT

(1.) JUDGEMENT

(2.) THE brief facts relating to this reference are that the assessee is a company which had established a new industrial undertaking and claimed relief under section 80J of the Income-tax Act, 1961. For the assessment year 1975-76, the previous year was the period 27/10/1973, to 13/11/1974. On 27/10/1973, the opening capital was Rs. 4,88,117 and there was a borrowed capital of Rs. 10,36,279 and closing balance on that day was Rs. 14,67,677. Originally, the assessee had been allowed deduction under section 80J in respect of the closing balance as on that date. THE assessment was alter revised to reduce the relief by computing the deduction on the basis of the opening balance on that date. THE assessee appealed without success but in the second appeal, the Appellate Tribunal accepted the claim of the assessee that the deduction under section 80J should be based on the capital employed on the first day which included transactions of that day and reflected as the closing balance of that day. At the instance of the Revenue, the following question has been referred :