Law: Income Tax Act, 1961

Section: 80-j

(a) Income-tax---New industrial undertaking---Special deduction---Condition precedent--¬Manufacture or production of article---Lease of machinery ---Assessee had no control over use of machinery and could not be said to manufacture or produce article---Not entitled to special deduction under S. 80-J---Indian Income Tax Act, 1961, S. 80-J. (b) Income-tax--- ----Development rebate---Lease of machinery-- -Assessee not entitled to development rebate on such machinery--Indian Income Tax Act, 1961, S. 33. (c) Income-tax---- ----Business---Other sources---Business income or income from other sources---Lease---Income from lease was assessable as business income---¬Indian Income Tax Act, 1961, Ss.28 & 56. Held, (i) that the lease money received by the assessee during the assessment year 1974-75 was assessable under section 28 of the Income Tax Act, 1961, and not under section 56; C. I.. T v Northern India Iron and Steel Co. Ltd. (1995) 211 I T R 370 (Delhi) fol.. (ii) that the assessee was not entitled to development rebate; CIT v. Northern India Iron and Steel Co. Ltd. (1995) 211 I T R 370 (Delhi) fol. (iii) that under subsection (4) of section 80-J, one of the conditions which the assessee is required to fulfil for claiming rebate is that it manufactures or produces articles. In view of the fact that the assessee had no control over the machinery, the question of grant of rebate under section 80-J did not arise because it could not be said that the assessee manufactured or produced articles. JUDGMENT In respect of the assessment year 1974-75, at the instance of the Revenue, the following two questions have been referred for the opinion of this Court: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the lease money received by the assessee during the assessment year 1974-75 was assessable under section 28 and not under section 56 of the Income Tax Act, 1961? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the assessee-company was entitled to development rebate and deduction under section 80-J of the Income Tax Act, 1961?" In so far as…

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