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Commissioner of Income-tax Vs. Sanghi Brothers Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case Number M.C.C. No. 64 of 1981
Reported in[1988]169ITR220(MP)
AppellantCommissioner of Income-tax
RespondentSanghi Brothers Ltd.
Cases ReferredLohia Machines Ltd. v. Union of India
Excerpt:
.....should not be taken into account in computing the capital for the purpose of working out the deduction admissible under s. 80j. -lohia machines ltd. v. union of india (1985) 152 itr 308 (sc) followed. income tax act 1961 s.80-j deduction under s. 80j--quantification--undertaking working only for a part of the year--relief to be allowed for full year income tax act 1961 s.80-j - madhya pradesh nagar tatha gram nivesh adhiniyam (23 of 1973)section 50(4) proviso (as inserted by act of 2004): [dipak misra, krishna kumar lahoti & rajendra menon, jj] preparation of town development scheme proviso prescribing time limit held, object of amendment is to remove hardship caused to citizens and to provide time limit to consider objections and suggestion and to provide a deeming..........should also be taken into account in computing the capital for the purpose of working out the deduction admissible under section 80j of the income-tax act, 1961 ?2. whether, on the facts and in the circumstances of the case, the tribunal was justified in law in holding that for the purpose of allowing deduction under section 80j, the rate of 6% per annum cannot be stretched any further to curtail the amount of relief admissible and that the deduction at 6% per annum is admissible for the full year even if the undertaking has actually worked during the year for less than 12 months ?'it is not necessary to burden this judgment by detailing the facts which are detailed in the statement of the case and dilating on the legal position inasmuch as both the questions are covered by a.....
Judgment:

U. N. BHACHAWAT J. - This is a consolidated reference under section 256(1) of the Income-tax Act, 1961, made by the Income-tax Appellate Tribunal Indore Bench, Indore, at the instance of the Department, whereby it has referred the following two questions of law for our decision :

'1. Whether, on the facts and in the circumstances of the case the tribunal was right in law in holding that borrowed capital should also be taken into account in computing the capital for the purpose of working out the deduction admissible under section 80J of the Income-tax Act, 1961 ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that for the purpose of allowing deduction under section 80J, the rate of 6% per annum cannot be stretched any further to curtail the amount of relief admissible and that the deduction at 6% per annum is admissible for the full year even if the undertaking has actually worked during the year for less than 12 months ?'

It is not necessary to burden this judgment by detailing the facts which are detailed in the statement of the case and dilating on the legal position inasmuch as both the questions are covered by a decision of the Supreme Court in Lohia Machines Ltd. v. Union of India : [1985]152ITR308(SC) as also a decision of this court in CIT v. Sanghi Beverages (Pvt.) Ltd. : [1982]134ITR623(MP) respectively.

According to the decision of the Supreme Court in Lohia Machines Ltd.s case : [1985]152ITR308(SC) question No. 1 is answered in the negative, i.e. in favour of the Department and against the assessee. Question No. 2, in view of the decision of this court in Sanghi Beverages (Pvt.) Ltd.s case : [1982]134ITR623(MP) is answered in the affirmative, i.e., in favour of the assessee and against the Department.

The reference is disposed of as indicated hereinabove. No order as to costs.


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