Jagannatha Shetty, J.
1. These references under Section 256(1) of the I.T. Act, 1961, are at the instance of the Revenue.
2. The common question referred is :
' Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in holding that the assessee is entitled for relief under Section 80J of the Act '
3. The assessee is a registered firm with its head office at Hubli. It established a new industrial undertaking unit at Ponda in Goa and claimed relief under Section 80J for the assessment years 1974-75 to 1976-77. The ITO disallowed the assessee's claim on the ground that borrowed moneys and debts owed by the assessee exceeded the value of the assets of the industrial undertaking as on the first day of the accounting period.
4. On appeal, it was urged on behalf of the assessee that the amounts invested by the head office in the branch unit at Ponda should not be treated as borrowed capital since the head office had enough capital of its own. The Commissioner (Appeals) accepted that contention and held that the amount invested by the head office cannot be taken as borrowed capital and the investment by the assessee must be considered as investment of one's own funds. He directed the ITO to verify the correctness of the amount from the records and then allow relief under Section 80J.
5. The Revenue preferred an appeal to the Tribunal. The Revenue contended before the Tribunal that borrowed capital was utilised in the new unit but the Tribunal found that the firm had sufficient capital of its own which was sent to the branch and that there was no nexus between the money borrowed by the head office and the amount sent to the branch office. The Tribunal, therefore, agreed with the view taken by the Commissioner (Appeals) and dismissed the appeal.
6. Section 80J has undergone amendment by the Finance (No. 2) Act, 1980. Formerly, the computation of taxable income of an assessee from a newly established industrial undertaking, ship or business of a hotel was required to be done under Rule 19A of the I.T. Rules, 1962. Now, after the amendment, the language Section 80J(1A) is the same as in Rule 19A, since the provisions of Rule 19A have been incorporated in Section 80J itself. The amendment came into force retrospectively with effect from April 1, 1972. The section, as it now stands, would, therefore, cover the assessments for the period in question.
7. But the amendment makes little difference on the merits of the matter in view of the finding recorded by the Tribunal that there is no nexus between the money borrowed by the head office and the amount sent to the branch unit. Apart from that, the Bombay High Court in Indian Oil Corporation Ltd. v. Rajagopalan ITO : 92ITR241(Bom) , while interpreting Rule 19A, held that in respect of each undertaking, the liabilities of the assessee in respect of that industrial undertaking only were to be deducted from the aggregate value of the assets of the same industrial undertaking, although Rule 19A(3) provided that from the amount ascertained under Sub-rule (2), the aggregate of the borrowed moneys and debts due by the assessee shall be deducted. The assessee, in other words, was equated with the industrial undertaking only. That view was accepted by the Board of Direct Taxes and it has issued a Circular No. 380 (F. No. 279/186/82-ITJ) dated April 10, 1984 : 149ITR1(Delhi) . The Board has also extended the meaning of the ' assessee ' to ' industrial undertaking only' in the amended provisions of Section 80J(1A). The Board is of the opinion that the view taken by the Bombay High Court would also be applicable for working out the benefits under Section 80J(1A).
8. In view of the finding recorded by the Tribunal and also in view of the Circular of the Board, we answer the question in the affirmative and against the Revenue.
9. In the circumstances, we make no order as to costs.