Law:

Section:

SECTION 80-I OF THE INCOME-TAX ACT, 1961-DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM PRIORITY INDUSTRIES-ASSESSEE'S BUSINESS OF PRODUCTION AND DISTRIBUTION OF ELEC-TRICITY WAS TAKEN OVER BY STATE ELECTRICITY BOARD-SUBSEQUENTLY ASSESSEE RECEIVED ELECTRICITY CHARGES-WHETHER CLAIM FOR DEDUCTION WAS ALLOWABLE ON SUCH RECEIPT -HELD, YES Facts The assessee was carrying on business of production and distribution of electricity. On 2-12-1970, the business was taken over by the State Electricity Board. In the accounting year ending 31-3-1971, the assessee showed an estimated receipt of Rs. 3,77,308 from the State Electricity Board on account of electricity charges for the period from 31-10-1970 to 2-12-1970. Later it was found that the actual receipt by the State Electricity Board on this account was Rs. 5,21,031. The excess amount of Rs. 1,43,723 was shown as received in the next accounting year ending 31-3-1972. In the assessment year 1972-73, the assessee claimed deduction under section 80-I treating the amount of Rs. 1,43,723 as income "attributable to priority industries". The ITO rejected the claim on the ground that in the accounting year, the assessee was not carrying on any business. The AAC confirmed the ITO's order, but the Tribunal held that the assessee was entitled to the deduction. On reference : Held The assessee was entitled to the deduction because the requirement under section 80-I was that the income must be "attributable to any priority industry" and not that the business must have been in existence in the accounting year. Editor's note Section 80-I was deleted by the Finance Act, 1972 with effect from 1-4-1973. JUDGMENT Gopalan Nambiyar, C.J.-The following question of law has beer referred for our opinion under s. 256(1) of the Income-tax Act, 1961, by the Income-tax Appellate Tribunal, Cochin Bench, viz. : "Whether, on the facts and in the circumstances of the case and in view of the fact that the industry was not in existence during the accounting year, the Income-tax Appellate Tribunal was justified in holding that the assessee is entitled to relief under section 80-1 of the Income-tax Act for the assessment year 1972-73 ?" The assessee is a…

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