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 while computing relief under section 80J borrowed capital is to be excluded from 'capital employed' - Held, yes Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Whether where relief under section 80J had been granted on borrowed capital, Commissioner was right in revising ITO's order in exercise of his powers under section 263 - Held, yes Facts For the relevant assessment year, the assessee was given relief under section 80J, read with rule 19A of the Income-tax Rules, 1962 on borrowed capital in computation of capital employed. The Commissioner was, however, of the view that the order of assessment was prejudicial to the interests of the revenue and, therefore, he revised the assessment under section 263 and held that the assessee was not entitled to the relief given under section 80J. On appeal, the Tribunal also held that the assessee was not entitled to relief in terms of rule 19A. On reference : Held In the case of Lohia Machines Ltd. v. Union of India [1985] 152 ITR 308, the Supreme Court held that rule 19A insofar as it excluded borrowed monies and debts in computation of the 'capital employed' and provided for computation of the 'capital employed' as on the first day of the computation period was not ultra vires and was perfectly valid rule and was within the rule-making authority conferred upon the CBR. Thus, rule 19A having been found to be a good law, it was obvious that the assessing officer in the instant case had erred in law and that error, on the face of it, was prejudicial to the revenue. In that view the Commissioner had the jurisdiction to revise the order of the ITO. Accordingly, it was to be held that the assessing officer had no jurisdiction to grant relief under section 80J on borrowed capital which could not be excluded in the expression 'capital employed'. Case referred to Lohia Machines Ltd. v. Union of India [1986] 152 ITR 308 (SC). K.N. Jain and Rameshwar Prasad for the Applicant. B.P. Rajgarhia and S.K.…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492