Kirpal, J. - (1.) In this appeal the only question which arises for consideration is with regard to the scope and interpretation of Section 80-K of the Income Tax Act, 1961 (hereinafter referred to as 'the Act').
(2.) The appellant is a public limited company and is engaged in manufacturing of textiles, chemicals etc. It established a new industrial undertaking by installing a Polyester Fibre Plant at Baroda in the accounting year of 1974-75, relevant to the assessment year 1975-76. In the subsequent accounting year 1975-76, the appellant also installed a new Sulzar plant at Ahmedabad.
(3.) Both the aforesaid plants fulfilled all the conditions for the grant of necessary relief under Section 80-J of the Act. Accordingly, in the course of assessment of the company for the assessment year commencing from the assessment year 1975-76, the relief to which the appellant was entitled under Section 80-J of the Act, was worked out and, to the extent that the profit in respect of the said plant was not sufficient to absolve the said relief, the amounts of the said relief were carried forward to subsequent years as provided by Section 80-J(3) of the Act. For the said assessment years commencing from 1975-76, the company applied for requisite certificate under Section 80-K read with Section 197(3) of the Act for the purpose of enabling its shareholders to claim exemption out of the dividends received by them because the company was entitled to relief under Section 80-J for those years. The Income-Tax Officer, in respect of the assessment years 1975-76 and 1977-78, issued a certificate under Section 80-K of the Act and in this certificate for the purpose of determining the exempted portion of the dividend out of the total dividend amount declared by the appellant company, the relief allowable to the appellant under Section 80-J of the Act was taken as the total relief allowable under the said provision being 6% of the capital employed in the said new undertaking. During th accounting year relevant to the assessment year 1978-79, the appellant company declared a total dividend of Rs.1,11,86,231/- to its shareholders. An application was made to the Income-Tax Officer under Section 80-K of the Act requesting for a certificate under the said Section 80-K. According to the Appellant, the relief claimed was Rs.1,00,35,434/- for Baroda Plant and Rs.24,07,556/- for Sulzer Plant. The respondent, thereupon called for certain information from the appellant with regard to the total income of the appellant for the assessment year 1978-79 as well as the profits of the Polyester Fibre Plant and the Sulzer Plant for the accounting year relevant to the assessment year 1977-78 and 1978-79. The appellant company replied that the total income of the company for the assessment year 1978-79 was nil and there were carried forward losses, depreciation, etc. in respect of the preceding years. It also stated that the profits of the Polyester Fibre Plant for the assessment year 1978-79 were Rs.4,66,159/-. In respect of Sulzer Plant it was pointed out that there was no profit.;