Law:

Section:

Section 80J of the income-tax act, 1961 read with Rule 19A of the income-tax rules, 1962-Deductions-Profits and gains from newly established industrial undertakings - Whether surplus funds of one unit of assessee utilised in a newly established unit can be treated as a liability constituting 'borrowed moneys' or 'debts owed' in terms of rule 19A(3) of the 1962 rules and hence excludible from the computation of its capital for purposes of granting relief under section 80J-Held, no Section 256(2) of the income-tax act, 1961-Reference-Question of fact-In computation of capital for granting relief under section 80J in respect of one unit of assessee, ITO excluded certain amount being liability of that unit towards other units of assessee-Tribunal set aside such exclusion holding that Rule 19A of the 1962 rules did not apply as no borrowed money or debt owed to third party was involved-Whether any question of law arose from Tribunal's order-Held, on facts, no Facts While computing capital for granting relief under section 80J in respect of a new unit of the assessee, the ITO excluded a certain amount as liability of the said unit towards two other units of the assessee. The Tribunal set aside the exclusion on the ground that there was no borrowed money or debt owed by the assessee in terms of rule 19A of the 1962 Rules, as no amount was payable to a third party and only the surplus funds of some of the assessee's own units had been utilised in the new unit. The Tribunal also dismissed the revenue's reference application under section 256(1). On application under section 256(2) : Held The expressions 'borrowed moneys' and 'debts owed' as used in rule 19A of the 1962 Rules postulate the existence of third parties from whom the moneys were borrowed or debts incurred by the assessee. In the absence of any such third party in the instant case, when the fact that the moneys were drawn from the assessee itself was admitted, there was no scope for excluding the impugned amount under rule 19A(3). The impugned liability was only towards some other units of the assessee. This finding of the Tribunal was essentially one of fact and no referable question of law arose from it.…

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