ASHOK LEYLAND LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The assessee is a limited company carrying on the business of manufacture and sale of S.G. (presumably superior grade) iron castings. In 1971, when the company was established, initially it had one furnace and two crucibles for manufacturing the castings. In the financial year 1978-79, it had undertaken an expansion scheme called "Project-III". The Government of India, when approached by the company, granted a letter of intent permitting escalation of the capacity from 1,500 M.T. to 5,000 M.T. and the letter of intent was later converted into an industrial licence. On completion of this scheme, the installed capacity was increased from 1,500 M.T. to 3,000 M.T. per annum. Commissioning of the project was done on 29/06/1979. In respect of the assessment year 1981-82, a claim was made by the assessee claiming deduction under section 80J of the Income-tax Act and the same was allowed by the Income-tax Officer. The Commissioner of Income-tax, however, in exercise of his revisional jurisdiction under section 263 withdrew the deduction taking the view that the expansion of the project did not result in any new industrial undertaking coming into existence and that it was merely a part of the existing business.

(2.) Aggrieved by that, the assessee carried the matter in appeal to the Income-tax Appellate Tribunal. In order to ascertain the factual position, the premises of the assessee were inspected by the learned Members of the Income-tax Appellate Tribunal and also the Departmental representative and counsel for the assessee. On inspection, it was found that in "Project-III", the assessee had added one more furnace with crucibles, one of which was a stand-by and that it upgraded electricity power supply. Based on the inspection of the premises and after considering the entire record, the Tribunal expressed the view : "The installation of one additional furnace and two crucibles, one main and one stand-by with its accessories, do not and cannot form a separate, severable, independent, integral industrial undertaking."

(3.) On that view, the plea of the assessee was rejected by the Tribunal.