Law: Income Tax Act, 1922

Section: 15,80-J,80-K

Income-tax-----New industrial undertaking---Dividend from new industrial undertaking---Special deduction---Condition precedent---New industrial undertaking should be entitled to deduction under S.80-J---Not necessary that special deduction under S.80-J should have been allowed actually---Indian Income Tax Act, 1961, Ss.80-J & 80-K---[Ahmedabad Manufacturing and Calico Printing Co. Ltd. v. A.V. Joshi, ITO (1979) 118 ITR 544 reversed]. The decision of the Supreme Court in Union of India v. Coromandel Fertilizers Ltd. (1976) 102 ITR 533 related to the interpretation of section 80-K of the Indian Income Tax Act, 1961. Section 80-K allows a deduction from income by way of dividends, an amount equal to such part thereof as is attributable to profits and gains derived by the company from an industrial undertaking or ship or the business of a hotel in respect of which the company is entitled to deduction under section 80-J. It was held that even if the new industrial undertaking had no profits or gains assessable to the income-tax during the assessment years in question the assessee was entitled to the relief under section 80-K. Emphasis was laid on the words "as is attributable to profits and gains derived by the company... " in respect of which the company is entitled to deduction under section 80-J and it was held that even if deduction under section 80-J was not actually allowed but the entitlement was there, then the provisions of section 80-K would be attracted. CIT v. Patiala Flour Mills' case (1978) 115 ITR 640 (SC) was concerned with section 80-J of the Act and Rajapalayam Mills Ltd. v. CIT (1978) 115 ITR 777 was essentially concerned with section 15-C of the Act, 1922, and section 84 of the Act, 1961, which decisions are referred to by the High Court. In neither of these two cases was any reference made to Coromandel Fertilizers' case (1976) 102 ITR 533 for the simple. reason that it was not necessary. Union of India v. Coromandel Fertilizers Ltd. (1976) 102 ITR 533 (SC) fol. Ahmedabad Manufacturing and Calico Printing Co. Ltd. v. A.V. Joshi, ITO (1979) 118 ITR 544 reversed. CIT v. Patiala Flour Mills Co. (P.) Ltd. (1978) 115 ITR 640 (SC) and Rajapalayam…

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