Law:

Section:

Section 84 of the Income-tax Act, 1961 [now section 80J] - Deductions - Profits and gains from newly established industrial undertakings - Assessee-company had established certain new units and claimed relief under section 84 in respect of them -ITO held that these were only extensions of existing undertakings and not new undertakings - Tribunal, after taking various facts into account, including that there had been a substantial increase in total output of assessee's business and that its total paid up capital increased to Rs. 35 lakhs from 10 lakhs, held that assessee was entitled to said relief claimed - Whether Tribunal was justified - Held, yes Facts The assessee-company established certain new units and claimed relief under section 84 in the relevant assessment years. The ITO, however, rejected the assessee's claim observing that these units were in fact extensions of the existing industrial undertakings involving the installation of a few machineries and could not be called 'newly established undertakings' within the meaning of section 84. On appeal, the Tribunal, however, observed that having regard to the size of the business of the assessee there had been a substantial increase in its total output and that the paid up capital of the assessee was increased to Rs. 35 lakhs from Rs. 10 lakhs. A large number of other facts were also taken into account by the Tribunal and ultimately it held that the impugned units were 'newly established industrial undertakings' within the meaning of section 84 and as such were entitled to the relief claimed. On reference: Held The factors taken into account by the Tribunal could not be said to be irrelevant or extraneous for the purpose of the question before the Tribunal. There was no legal infirmity in the order of the Tribunal. Therefore, having regard to the facts of the present case, the Tribunal was justified in accepting the assessee's claim. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - After statutory liability to pay bonus arose, assessee-company made a provision in its accounts on actuarial valuation for payment of bonus in relevant year - Whether said amount was to be…

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