COMMISSIONER OF INCOME TAX Vs. PUNJAB TRACTORS

JUDGEMENT

(1.) THE following questions of law have been referred for the opinion of this Court by the Tribunal, Chandigarh Bench, "(1) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the order of the CIT(A) deleting addition of Rs. 7,200 made by the AO in view of s. 37(4) for rent paid by the assessee for guest - house ? (2) Whether on the facts and in the circumstances of the case, the Tribunal erred in directing the AO to exclude the liabilities on pro rata basis in respect of the tractor division and foundry unit for computing capital employed in the new unit -

(2.) THE assessee claimed a sum of Rs. 7,200 on account of rent paid to PSIDC for their guest -house. The AO disallowed the said amount under s. 37(4) of the IT Act, 1961 (for short, "the Act"). The CIT(A) accepted the assessee's contention, which view has been upheld by the Tribunal.

(3.) THE assessee claimed relief under s. 80J of the Act for the tractor division which was negatived by the AO. The AO did not accept the pro rata liability in computing the capital employed in the tractor division and foundry division nor included the value of work -in -progress in the capital employed. The CIT(A) held that the assessee was entitled to deduct the pro rata liability and to include work -in -progress in the capital employed for allowing deduction under s. 80J of the Act. Reliance was placed on the judgment of this Court in CIT vs. Dalmia Dadri Cement Ltd. (1970) 77 ITR 410 (P&H). It assessee's case for the asst. yr. 1981 -82. Question No. 1 :