Commissioner of Income Tax vs Bluemount Ceramics Ltd.

P. Venugopal, J.—The assessee is private limited company carrying on business of manufacture and sale of insulators for electrical

industries. The production was commenced in the year 1968. For the assessment year 1972-73, the assessee filed a return disclosing an income of

Rs. 1,55,211. The assessee claimed relief u/s 80J amounting to Rs. 1,38,190. The sum of Rs. 1,38,190 was made up of Rs. 48,783, relatable to

the assessment year 1969-70, Rs. 44,222, relatable to the assessment year 1970-71 and Rs. 50,024, relatable to the assessment year 1971-72.

The ITO allowed a deduction of Rs. 51,389 u/s 80J, relatable to assessment year 1972-73. Section 80J relief claimed for the assessment years

1969-70, 1970-71 and 1971-72 was not allowed by the ITO on the ground that the necessary particulars for claiming the relief u/s 80J were not

furnished by the assessee and as section 80J relief had not been quantified for the assessment years 1969-70 to 1971-72, it cannot be allowed as

a deduction for the assessment year 1972-73. Before the AAC, it was contended that it is not a statutory requirement that the relief u/s 80J should

have been quantified in the relevant assessment years and the relief could be claimed in the year in which the assessee made the profit. This

contention was rejected by the AAC. On further appeal to the Tribunal, it was held that section 80J was intended to encourage the setting up of a

new industrial enterprise and it should, therefore, be liberally construed and there is nothing in section 80J(1) or (3) requiring that the assessee

should get the quantum of deduction quantified in the relevant assessment years and there was no bar if such particulars were made available in the

course of assessment proceeding of the year in which there was enough profit enabling the allowance of deduction for that year and for the earlier

years. The Tribunal, on this finding, accepted the assessee''s claim and directed the ITO to allow the relief after verifying the correctness of the

details furnished by the assessee. On these facts and findings, the Tribunal u/s 256(1) referred the following question for opinion by this court:

Whether, on the facts and in the circumstances of the case, the assessee''s claim for deduction of Rs. 1,38,119 being the aggregate of the amounts

deductible u/s 80J relating to the assessment years 1969-70 to 1971-72, should be allowed for the assessment year 1972-73, even though the

assessee had failed to furnish the relevant particulars in the respective assessment years?

The learned counsel for the revenue contended that section 80J relief can be allowed in respect of profits and gains from newly established

industrial undertaking only if the conditions specified u/s 80J(4) are fulfilled and whether there was compliance of those requirements u/s 80J(4) can

be verified only with the necessary particulars furnished by the assessee for the initial year in which the new industrial undertaking had been set up

and the general scheme of section 80J is such that unless the requisite particulars for claiming the relief u/s 80J are furnished and quantified in the

respective assessment years, the relief u/s 80J cannot be worked out. Section 34(1) provides that the deductions referred to in section 32(1) or

(1A) shall be allowed only if the prescribed particulars have been furnished and similarly the deduction referred to in section 33 shall be allowed

only if the particulars prescribed for the purpose of section 32(1) have been furnished by the assessee. Unlike section 34(1), there is no statutory

obligation on the part of the assessee u/s 80J to furnish the necessary particulars for claiming relief u/s 80J in the initial year in which the industrial

undertaking was set up. Section 80 provides that no loss which has not been determined in pursuance of a return filed u/s 139 shall be carried

forward and set off u/s 72(1) or 73(2) or 74(1) or 74A(3). Unlike section 80, there is no statutory requirement that unless there is determination of

section 80J relief, it cannot be carried forward in the subsequent assessment years. This identical question came to be considered in Addl. CIT v.

Sheetalaya (1979) 117 ITR 658 (All.). It was pointed out that there is no requirement in any part of section80J that the assessee must make a

definite claim and the ITO must determine the amount of deduction before it can be carried forward in a case where, admittedly, the undertaking

had suffered a loss which had been accepted while making the assessment. It was further pointed out that section 80J is a provision intended to

provide incentive to industry by means of relief from tax and provision is also made for carry forward for seven years, the deduction is permissible

even in a case where the formality of making a claim has not been complied with by the assessee in the preceding assessment years where loss has

been sustained and there was no profit or gain against which the deduction could be adjusted. In the present case, admittedly, there was no profit

or gain against which section 80J relief can be adjusted for the assessment years 1969-70, 1970-71 and 1971-72. So, the claim for section 80J

relief is admissible for the assessment year 1972-73, even though the assessee has not made the claim for section 80J relief in the assessment years

1969-70/to 1971-72 when admittedly no profit or gain was derived from the new industrial undertaking. The Tribunal was hence justified in

allowing the assessee''s claim for deduction of Rs. 1,38,119 u/s 80J relating to assessment years 1969-70 to 1971-72 in the assessment year

1972-73, subject to verification of the details furnished by the assessee. The question referred to is answered in the affirmative and in favour of the

assessee. The assessee is entitled to costs. Counsel''s fee Rs. 500.