Law:

Section:

Section 80J of the Income-tax Act, 1961 - Deductions - Profits and gains from newly established industrial undertakings, ships or hotels, etc. - Assessment year 1979-80 - Assessee, who was running a cold storage, constructed a new chamber inside boundary wall of said cold storage and claimed relief under section 80J on capital employed in new chamber - Whether since new unit was in a position to function independently with help of separate staff and additional power connection, benefit of section 80J was admissible to assessee - Held, yes FACTS The assessee was running a cold storage. Subsequently, an additional chamber was constructed by the assessee inside the boundary-wall of the said cold storage during the period 1977-78 and 1978-79. The assessee claimed relief under section 80J on the capital employed in the new chamber. The ITO held that the same employees looked after both the chambers and no new power connection was taken for the new chamber and as no independent viable unit came into existence, benefit under section 80J could not be given. On appeal, the Commissioner (Appeals) held that the new chamber was in a position to function independently even if the older chamber was closed and was not functioning and, therefore, allowed the benefit to the assessee. On further appeal, the Tribunal upheld the order passed by the Commissioner (Appeals). On reference : HELD Under the proviso to sub-section (1) of section 80J, deduction is admissible to a cold storage, plant or plants, which started operating after 31-3-1976. Thus, where a new chamber has been completed and it functions independently and has started its operation after 31-3-1976, deduction under section 80J is admissible. In the instant case, the Tribunal had categorically recorded a finding of fact that the new unit was in a position to function independently with the help of separate staff and additional power connection. Therefore, the Tribunal was justified in holding that the benefit under section 80J was admissible. [Para 7] CASES REFERRED TO Textile Machinery Corpn. Ltd. v. CIT [1977] 107 ITR 195 (SC) [Para 3], CIT v. Harinkhola Ice & Cold Storage Ltd. [1981] 23 CTR (Cal.) 233 [Para 4]…

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