Law:

Section:

Section 256, read with section 80J, of the Income-tax Act, 1961 - Reference - Question of fact - Tribunal held (i) that assessee's assets under erection were entitled to relief under section 80J, and (ii) that assets used for scientific research were used for purposes of assessee's business and that consequently, cost of such scientific research assets was to be included for computing capital employed in business for purposes of section 80J - Whether any question of law arose from order of Tribunal - Held, no FACTS The Tribunal held (i) that the assessee's assets under erection were entitled for relief under section 80J, and (ii) that the assets used for scientific research were used for the purpose of the assessee's business and that consequently, the cost of such scientific research assets was to be included for computing the capital employed in the business for the purposes of section 80J. It also rejected the revenue's reference application under section 256(1). On an application for reference under section 256(2), the revenue contended (i) that the assets used for scientific research were not as such for the business of the industrial undertaking, and (ii) that hundred per cent deduction was allowed on them under section 35(2)(ia) and, therefore, the value of the assets could not have been included in the capital employed as assets. HELD The first question relating to the allowance under section 80J on the assets under erection was covered by the decision of the Bombay High Court in the case of CIT v. Alcock Ashdown & Co. Ltd. [1979] 119 ITR 164 . No purpose was, thus, going to be served in directing the Tribunal to refer this question as a question of law to the High Court. Deduction under section 35(2)(ia ) was admittedly available in view of section 35(1)(iv) on the scientific research relating to the business carried on by the assessee. The requirement of section 80J is not that the assets must be used for the business of the industrial undertaking as such. It is that such assets should form part of capital employed in the industrial undertaking. The scientific research assets relating to the business of the assessee obviously formed part of the…

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