CHINNAPPA REDDY J. - The Income-tax Appellate Tribunal, Chandigarh, has referred the following question for our decision :
'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing the deduction under section 80J of the Income-tax Act, 1961 ?'
The assessee, a private limited company, carried on several businesses, amongst which is a cold storage business, a new industrial undertaking within the meaning of section 80J of the Income-tax Act, 1961. It was put up in the accounting year corresponding to the assessment year 1967-68. The company did not make any profit in the cold storage business though it did in its other businesses. The losses, the unabsorbed depreciation and the unabsorbed development rebate attributable to the cold storage business during the assessment years 1967-68, 1968-69 and 1969-70 were adjusted against the profits of the other businesses while computing the total income of the assessee for those years. There was no loss, depreciation or development rebate, which had remained unadjusted and which was available for adjustment during the assessment year 1970-71. For the assessment year 1970-71, there was a profit of Rs. 1,51,011 from the cold storage business. The assessee wanted to adjust the profit against this 'deficiency' under section 80J of the Income-tax Act for the year 1970-71 and against the 'deficiency' of the earlier years permitted to be carried forward under section 80J(3). The revenue, notwithstanding the circumstance that the losses, depreciation and development rebate, of earlier years pertaining to the cold storage business had already been adjusted in computing the total income of the assessee for those years, claimed that such losses, depreciation and development rebate of earlier years should once again be adjusted against the profits of the cold storage business for the assessment year 1970-71, not for all purposes but for the very limited purpose of arriving at the conclusion that there were no profits and gains from the cold storage business against which the 'deficiency' under section 80J could be claimed. According to the revenue, for the purpose of computing the total income of the assessee for the year 1970-71, the profits and gains from the cold storage business was to be taken as Rs. 1,51,011 and included in the total income but for the purposes of section 80J, the profits and gains of the cold storage business was to be treated as a loss so as to deprive the assessee of the benefit of the 'deficiency'. In other words, the whole of Rs. 1,51,011 was to be included in computing the total income without any deduction for 'deficiency'. The Tribunal, rightly in our opinion, did not accept the revenues contention. Section 80J, in so far as it is relevant, is as follows :
'80J. (1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains (reduced by the aggregate of the deductions, if any, admissible to the assessee under section 80H and section 80I) of so mush of the amount thereof as does not exceed the amount calculated at the rate of six per cent. per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the prescribed manner in respect of the previous year relevant to the assessment year (the amount calculated as aforesaid being hereafter, in this section, referred to as the relevant amount of capital employed during the previous year)......'
There is nothing in the language of section 80J to warrant the contention of the department. It appears to be opposed to the language of section 80J. Having included a sum of Rs. 1,51,011 from the profits and gains of the cold storage business in the total income of the assessee, we do not see how the revenue can urge that it should not be considered as included in the total income for the purposes of section 80J only. Shri Awasthy invited our attention to two decisions of the Supreme Court : Commissioner of Income-tax v. Sivan Pillai : 77ITR354(SC) and Union of India v. Coromandel Fertilizers Ltd. : 102ITR533(SC) . Neither case is of any assistance. Neither was a case where losses, depreciation and development rebate of earlier years which had already been adjusted was sought to be readjusted a second time in the manner sought to be done. We have no hesitation in answering the reference in the affirmative. No costs.