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Commissioner Of Income-Tax v. Dalmia Bharat Cement Ltd.
Factual and Procedural Background
The Income-tax Appellate Tribunal, Delhi Bench C, referred a question to this Court under section 256(1) of the Income-tax Act, 1961 concerning the assessment year 1973–74. The specific controversy concerned whether relief under section 80J should be allowed for the whole year or only on a pro rata basis for the period during which kiln No. 2 in the Dead Burnt Magnesite Plant at Salem was working. The matter was heard by the Court, which noted the parties' positions and the relevance of an earlier decision of this Court.
Legal Issues Presented
- Whether, for the assessment year 1973–74, relief under section 80J of the Income-tax Act is allowable for the full year as opposed to on a pro rata basis for the period during which the industrial undertaking (kiln No. 2 at the Salem plant) was working.
- Whether any entitlement to relief under section 80J for the year in question is dependent upon the existence of profit attributable to the unit and, if there is no such profit, whether a carry forward for adjustment in future years is available.
Arguments of the Parties
Revenue's Arguments
- Learned counsel for the Revenue accepted that, in view of this Court's decision in CIT v. Delhi Cloth and General Mills Co., [1999] 240 ITR 9, the assessee is entitled to relief under section 80J for the whole year even though the industrial undertaking worked for only part of it.
- However, the Revenue's counsel contended that there was no profit available attributable to the unit; therefore, in the absence of profit under section 80J relief could not be worked out (i.e., no relief could be given in the year if no profit existed).
Assessee's Arguments
- Learned counsel for the assessee submitted that even if there was no profit in the relevant year, any unutilised relief should be carried forward for adjustment in future years.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| CIT v. Delhi Cloth and General Mills Co., [1999] 240 ITR 9 | Establishes that relief under section 80J is allowable for the whole year even though the industrial undertaking worked for only part of the year. | The Court relied on this decision to answer the referred question in the affirmative in favour of the assessee, holding that relief under section 80J is available for the whole year (subject to computation of actual profit and any question of carry forward). |
Court's Reasoning and Analysis
The Court noted the question referred under section 256(1) related to whether relief under section 80J should be for the full year or pro rata for the period the unit worked. It observed that the Revenue's counsel, conceding the legal principle established by this Court in CIT v. Delhi Cloth and General Mills Co., accepted that the assessee is entitled to relief for the whole year. The Court therefore concluded that, on the narrow question referred, the obvious answer is affirmative in favour of the assessee and against the Revenue.
However, the Court qualified that this conclusion is "subject to the working out of the actual figure," meaning the availability of relief depends on whether there was any profit attributable to the unit for the year in question, and on any question of carry forward of unutilised relief. The Court thus separated the legal question of temporal entitlement (full‑year relief) from the arithmetical/quantitative question of whether relief can be given in the absence of profit and whether unused relief may be carried forward.
Finally, the Court disposed of the reference without further elaboration, leaving the computation of actual figures and carry forward issues to be addressed in the assessment process or subsequent proceedings.
Holding and Implications
DISPOSED OF
Holding (core ruling): The Court answered the referred question in the affirmative — relief under section 80J is available for the whole year for the assessment year 1973–74, rather than on a pro rata basis for the period during which the industrial undertaking worked, consistent with the earlier decision in CIT v. Delhi Cloth and General Mills Co., [1999] 240 ITR 9.
Implications:
- Direct effect: The assessee's claim to relief under section 80J for the whole year is accepted in principle.
- Practical limitation: The availability of an actual monetary relief for the year remains dependent on the computation of profit attributable to the unit; if there was no profit, the question of whether relief can be carried forward remains open for determination.
- Broader implications: The opinion relies on an existing precedent and does not purport to create or announce a new legal principle beyond that precedent; no additional broader precedential pronouncement is discussed in the text.
Disposition note in the opinion: "Reference is accordingly disposed of."
1. Heard.
2. The following question has been referred for the opinion of this court under section 256(1) of the Income-tax Act, 1961 (in short “the Act”), by the Income-tax Appellate Tribunal, Delhi Bench C, Delhi (in short “the Tribunal”):
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in directing that in the assessment year 1973–74, relief is allowable under section 80J for the full year and not on pro rata basis for the period during which kiln No. 2 in Dead Burnt Magnesite Plant at Salem was working?”
3. The dispute relates to the assessment year 1973–74.
4. Though it is fairly accepted by learned counsel for the Revenue that, in view of the decision of this court in CIT v. Delhi Cloth and General Mills Co., [1999] 240 ITR 9, the assessee is entitled to relief under section 80J of the Act for the whole year even though the industrial undertaking worked for part of it, according to him there was no profit available, so far as the unit is concerned, and, therefore, in the absence of profit under section 80J relief cannot be worked out. Learned counsel for the assessee, on the other hand, submitted that even it is so, there has to be carry forward for adjustment in the future years.
5. As the question, which has been referred, indicates the controversy related to the issue “whether the relief was available for the whole year or for the part period during which the industrial undertaking worked”, the obvious answer to the question is in the affirmative, in favour of the assessee and against the Revenue. But it shall be subject to the working out of the actual figure, that is, whether there was any profit attributable to the unit in question and the question of carry forward, if any.
6. Reference is accordingly disposed of.
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