Law:

Section:

Section 80J of the Income-tax Act, 1961 - Deductions - Profits and gains from newly established industrial undertakings - Assessee-company had a licence for manufacturing transmission towers, in excess in its actual capacity, in its Bombay factory - Subsequently, with Government's permission, it shifted a part of its capacity to a new building in Jaipur and acquired new plant and machinery - Whether in view of facts (i) that there was no unity of control in regard to Jaipur plant and its Bombay factory, and (ii) that new plant and machinery was set up in a new building constructed for that purpose, it could not be considered as a case of splitting up or reconstruction and, hence, assessee was entitled to deduction under section 80J - Held, on facts, yes Facts The assessee-company was a manufacturer of transmission towers used for the supply of electricity. It had a licence for such manufacture in excess of its actual capacity in its Bombay factory. Later on, it applied to the Government to shift a part of its capacity to the State of Rajasthan. On getting such sanction, the assessee located a plant at Jaipur in a new building and acquired new plant and machinery. The ITO disallowed the claim of the assessee for deduction under section 80J in respect of the new unit on the ground, inter alia, that this was a case of splitting up or reconstruction of an existing business. On appeal, the AAC accepted the assessee's claim. On appeal, the Tribunal also held that the new unit at Jaipur was intended to utilise a part of the capacity for which the assessee had a licence and that there was no shifting of machinery or plant already in existence or splitting up or reconstruction of the business already in existence and, therefore, the assessee was entitled to the benefits of section 80J in respect of the new unit at Jaipur. On reference, the revenue contended that there was a unity of control in regard to the Jaipur plant and that there was shifting of a part of capacity to Rajasthan and, therefore, the provision of section 80J were not attracted to the present case. Held In the instant case, there was not a word to show that there was in fact unity of control. Neither…

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