COMMISSIONER OF INCOME TAX Vs. SANTOSH INDUSTRIES

JUDGEMENT

(1.) THE Tribunal, Jaipur Bench, Jaipur has referred the following question of law to this Court for its opinion :

(2.) THE assessee is a partnership concern operating a factory for cotton ginning and pressing. THE assessment year is 1975-76 . In the return filed by the assessee for the aforesaid year, it claimed relief under s. 80J of the IT Act, 1961 (hereinafter referred to as `the Act') for a sum of Rs. 38,581 on the `capital employed' in the undertaking amounting to Rs. 6,43,025, which included sundry liabilities of the firm. THE ITO granted relief at the rate of 6 per cent only on the self-owned capital. He did not allow the relief on the borrowed capital. THE assessee went in appeal. THE AAC by his order dt. 5th Feb., 1979, allowed the appeal. Following the view taken in Centruy Enka Ltd. vs. ITO & Ors. 1976 CTR (Cal 433 : (1977) 107 ITR 909 (Cal), he allowed the appeal and directed the ITO to recompute the deduction of the borrowed capital under s. 80J. THE Revenue went in appeal, which was dismissed by the Tribunal. THEreafter , the Commissioner moved an application before the Tribunal to make a reference to this Court. THE Tribunal has accordingly made this reference.