Law:

Section:

Section 80J of the Income-tax Act, 1961 - Deduction - Profits and gains from newly established industrial undertakings - Assessment year 1969-70 - Assessee-firm was carrying on business of manufacture of katha - It purchased a fresh piece of land, a new factory was established, new machinery was purchased and installed apart from new cold storage rooms, refrigeration units, cold drawing chambers and other infrastructures - All these were installed in a new building and manufacturing process was also different - Whether it could be said that industrial undertaking in question was formed by splitting up and reconstruction of business already in existence - Held, no FACTS The assessee-firm was carrying on the business of manufacture of katha. The assessee purchased a fresh piece of land, a new factory was established and new machinery was installed apart from new cold storage rooms, refrigeration units, cold drawing chambers and other infrastructure. All these were installed in a new building and manufacturing process was also different. For the assessment year 1969-70, the assessee claimed deduction under section 80J in respect of the new unit which was allowed by the ITO. However, the Commissioner invoked the provisions of section 263 and held that the installation of machinery and plant was merely a reconstruction of the business already in existence and, therefore, the assessee was not entitled to deduction under section 80J. On appeal, the Tribunal, however, held that the assessee was entitled to deduction under section 80J in respect of the new unit. On reference: HELD In view of the findings of the Tribunal that a fresh piece of land was purchased, a new factory was established, new machinery was installed apart from new cold storage rooms, refrigeration units, cold drawing chambers, etc., and all these were installed in the new premises and the manufacturing process was also different, it would be idle to say that the industrial undertaking established by the assessee was formed by the reconstruction of a business already in existence or that it was using old machinery or plant. Might be that the partners of the assessee partnership firm (father and sons)…

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