M.A. Bakshi, V.P. - (1.) THESE two appeals-one filed by the assessee for the assessment year 1996-97 and the other filed by the revenue for the assessment year 1997-98, involving common issue, are being disposed of by this consolidated order for the sake of convenience.
(2.) The common issue involved in these appeals is as to whether assessee is entitled to deduction in respect of profits and gains derived from industrial undertaking under section 80-I. The relevant facts briefly stated are that the assessee-company was incorporated in the previous year relevant to assessment year 1990-91 and started its manufacturing operations in the previous year relevant to assessment year 1991-92. The company claimed deduction under section 80-I for the first time in assessment year 1991-92 and the same was allowed. The deduction was claimed in the subsequent assessment years also and up to assessment year 1995-96, the same stands allowed. In assessment year 1996-97, the assessing officer observed that assessee had purchased sonic old machinery which was added to the existing machinery and the total value of the old machinery with the addition of purchases in the previous year relevant to assessment year 1996-97 exceeded 20% of the total value of the machinery. The assessing officer was of the view that one of conditions for grant of deduction under section 80-I is that the value of the old machinery should not excecd 20 per cent of the total value of the machinery. Since that condition is not satisfied in assessment year 1996-97, deduction under section 80-I was denied to the assessee. In assessment vear 1997-98 also, the assessing officer followed his decision for the assessment year 1996-97 and disallowed the claim of the assessee. The CIT (A) decided the issue in favour of the revenue vide order dated 25-3-1999 relying upon the decisions of Delhi High Court Safdarjung Enclave Educational Sociely v. Municipal Corpn. of Delhi (1990) 181 ITR 154 (Del) and. Kerala High Court CIT v. Seevan Plywoods(1991) 190 ITR 564 (Ker). The assessee is in appeal against the decision of the CIT (A).
(3.) FOR the assessment year 1997-98, when the CIT (A) took up the appeal of the assessee, the decision of the Supreme Court in the case of Bajaj Tempo Ltd. v. CIT (1992) 196 ITR 188 (SC), was brought to his notice. It was pleaded before him that the issue was covered in favour of the assessee by the said decision of the Supreme Court. The CIT (A) found that the said decision of the Supreme Court was in regard to section 15C of the Indian Income Tax Act, 1922 but the provisions of section 80IA(2) were also the same as section 15C of the 1922 Act. He accordingly, held that since the industrial undertaking was not formed by transfer to the new business of machinery and plant previously used for any purpose value whereof exceeded 20 per cent, the assessee was entitled to deduction Under section 80-I (wrongly mentioned as 80-IA). He accordingly directed the assessing officer to allow the claim of the assessee. Revenue has filed an appeal against the decision of the CIT (A) for the assessment year 1997-98.;