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Commissioner of Income-tax Vs. Metal Lamp Caps (P.) Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberITRC No. 52 of 1979
Judge
Reported in[1987]163ITR822(KAR); [1987]163ITR822(Karn)
ActsIncome Tax Act, 1961 - Sections 80J, 80J(4) and 84; Income Tax Act, 1922 - Sections 15C
AppellantCommissioner of Income-tax
RespondentMetal Lamp Caps (P.) Ltd.
Appellant AdvocateK. Srinivasan, Adv.
Respondent AdvocateG. Sarangan, Adv.
Excerpt:
.....a regards this new industrial undertaking also. ' 3. pursuant to the above direction, the income-tax officer reconsidered the matter and found that the assessee had satisfied the requirements for relief under section 80j except to the extent of sub-section (4) thereof. the tribunal was of the opinion that in its earlier order it had observed that if the aforesaid three facts are proved, then section 80j(4) would also be satisfied as regards the new industrial undertaking. if the other necessary facts are proved in favour of the assessee, the tribunal appears to have held that section 80j(4) would also be satisfied and the assessee would be entitled to the relief under section 80j. the language used in the first order might not be precise or unambiguous, but the author of that..........the income-tax act, has been referred : 'whether in view of the earlier order of the tribunal, the income-tax officer having found the facts stated therein to be correct, had no jurisdiction to disallow the relief under section 80j in respect of goliath screw caps manufacturing unit ?' 2. the assesses-company, which had been set up to manufacture metal lamp caps for electric bulbs, had started manufacturing a new type of cap known as 'goliath screw caps' during the accounting year relevant to assessment year 1969-70. the question whether the assesses-company was a new industrial undertaking entitled to the benefit of section 80j came up for consideration before the tribunal in i.t.a. no. 644 (bang)/1972-73 which was disposed of on august 17, 1973, with the following observations : 'as.....
Judgment:

Jagannatha Shetty, J.

1. The following question under section 256(1) of the Income-tax Act, has been referred :

'Whether in view of the earlier order of the Tribunal, the Income-tax Officer having found the facts stated therein to be correct, had no jurisdiction to disallow the relief under section 80J in respect of Goliath Screw Caps manufacturing unit ?'

2. The assesses-company, which had been set up to manufacture metal lamp caps for electric bulbs, had started manufacturing a new type of cap known as 'Goliath Screw Caps' during the accounting year relevant to assessment year 1969-70. The question whether the assesses-company was a new industrial undertaking entitled to the benefit of section 80J came up for consideration before the Tribunal in I.T.A. No. 644 (Bang)/1972-73 which was disposed of on August 17, 1973, with the following observations :

'As regards Goliath Screw Caps manufactured, from the way in which it was explained before us, it appears to be an entirely new item unconnected with the old items, the assessee manufactured and that new machinery had to be purchased and used for that purpose and fresh capital for that manufacture alone employed. If these facts are true, we are of the view that the assessee, as regards the manufacture of Goliath Screw Caps, would be an industrial undertaking different from the industrial undertaking which manufactured the metal lamp caps and which enjoyed the benefits of section 80J. It would appear that the conditions prescribed in sub-section (4) of section 80J will be satisfied a regards this new industrial undertaking also. So the Income-tax Officer will have to examine these facts furnished by the assessee in the light of our observations and redecide the issue.'

3. Pursuant to the above direction, the Income-tax Officer reconsidered the matter and found that the assessee had satisfied the requirements for relief under section 80J except to the extent of sub-section (4) thereof. The Income-tax Officer was of the opinion that there was no separate factory building to locate the new machinery and, therefore, he denied relief under section 80J.

4. The assessee went up in appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner took a different view. He found that the Income-tax Officer had exceeded his jurisdiction in stating that the assessee must have a separate building in order to claim the benefit of section 80J. That question, according to the Appellate Assistant Commissioner, was concluded by the earlier order of the Tribunal and the only facts to be verified by the Income-tax Officer were : (1) whether, Goliath Screw Caps was an entirely new item unconnected with the old item manufactured by the assessee, (2) whether new machinery had been purchased and used for that purpose, and (3) whether fresh capital was employed. The Appellate Assistant Commissioner observed that since these facts are found true, the assessee would be entitled to relief under section 80J.

5. The Revenue took up the matter in appeal before the Tribunal. The Tribunal also agreed with the view taken by the Appellate Assistant Commissioner. The Tribunal was of the opinion that in its earlier order it had observed that if the aforesaid three facts are proved, then section 80J(4) would also be satisfied as regards the new industrial undertaking.

6. We have carefully examined both the orders of the Tribunal. The first order of the Tribunal, gives us an impression that it is not open to the Income-tax Officer to examine the requirement of section 80J(4), if the other necessary facts are found in favour of the assessee. If the other necessary facts are proved in favour of the assessee, the Tribunal appears to have held that section 80J(4) would also be satisfied and the assessee would be entitled to the relief under section 80J. The language used in the first order might not be precise or unambiguous, but the author of that order understands it in that sense and, therefore, it would be better to accept that view. We, therefore, answer the question in the affirmative and against the Revenue.


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