Kamani Engineering Corporation Limited vs Commissioner of Income Tax

T.D. Sugla J.

These are cross references by the assessee and the Department. The Tribunal has referred to this court two questions at the instance of each party as questions of law. The questions read as under :

At the instance of the assessee :

"1. Whether, on the facts and circumstances of the case, the loans and the current liabilities relating to the undertaking at Jaipur should be deducted from the assets for both the assessment years for the purpose of arriving at the capital employed for determining the relief u/s 80J of the Income Tax Act, 1961 ?

Whether, on the facts and circumstances of the case, the sum of Rs. 12,06,974 which the assessee received on transfer of import entitlements under the export promotion scheme were taxable income of the assessee ?"

At the instance of the Revenue :

"1. Whether, on the facts and in the circumstances of the case and in law, the Appellate Tribunal was justified in holding that the factory at Jaipur was a separate and independent unit and that it did not involve any splitting up or reconstruction of a business already in existence within the scope of section 80J(4), and in thus holding that the profits of the unit at Jaipur were entitled to relief u/s 80J of the Act ?

Whether, on the facts and in the circumstances of the case and in law, the Appellate Tribunal was justified in holding that the deduction of borrowed monies and debts due by the assessee as provided for in rule 19A(3) should be made only in respect of the liabilities of the unit at Jaipur and in thus directing the Income Tax Officer to recompute the capital employed in the unit after deduction of only such liabilities as are relatable to the unit at Jaipur ?"

The proceedings relate to the assessment year 1970-71. Counsel are agreed that the first question referred to this courts at the instance of the assessee is to be answered in the affirmative and in favour of the Revenue in view of the Supreme Court decision in the case of Lohia Machines Ltd. and Another Vs. Union of India (UOI) and Others, . Counsel are also agreed that, in view of our court''s judgment in the assessee''s own case Commissioner of Income Tax Vs. Kamani Engineering Corporation Ltd., , the second question at the instance of the assessee is also to be answered in the affirmative and in favour of the Revenue. Both the questions are, accordingly, answered in the affirmative and in favour of the Revenue.

As regards the two question referred at the instance of the Revenue also, counsel are agreed that both the questions are to be answered in the affirmative and in favour of the assessee in view of our court''s judgment in the assessee''s own case Commissioner of Income Tax Vs. Kamani Engineering Corporation Ltd., . The above two questions are, accordingly, answered in the affirmative and in favour of the assessee.

On the oral application of counsel for the applicant-assessee, leave to appeal to the Supreme Court is granted as regards question No. 2 in the assessee''s reference.

No order as to costs.