R.K.Agrawal J. - (1.) The Income-tax Appellate Tribunal, Delhi, has referred the following two questions of law under Section 256(1) of the Income-tax Act, 1961, hereinafter referred to as "the Act" for opinion to this court : "1. Whether, on the facts and in law, the Tribunal was right in holding that a new industrial undertaking for manufacture of knives and come into existence and was entitled to Section 80J deduction for the assessment years 1978-79 and 1979-80 ? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was entitled to deduction of Rs. 14,445 and Rs. 20,530 for the assessment years 1978-79 and 1979-80 on account of Central excise duty liability ?"
(2.) Briefly stated, the facts giving rise to the present reference are as follows : The respondent-assessee was manufacturing and selling discs and knives. The present reference relates to the assessment years 1978-79 and 1979-80. The respondent claimed deduction under Section 80J of the Act in respect of the industrial undertaking for manufacture of knives. It may be mentioned here that the respondent had set up a unit for manufacture of discs (used in agricultural implements) in the accounting year relevant to the assessment year 1971-72 and had closed the same unit in the year 1980. It had installed machinery worth Rs. 1,02,519 for manufacture of knives which was an item separate and distinct from the discs already being manufactured by it for which the value of machinery installed was Rs. 4,95,060. According to the respondent after the discs unit was closed machinery worth Rs. 16,336 was sold and the balance machinery including general machines worth Rs. 1,40,224 relating to electric installation and maintenance were actually utilized for manufacture of knives. The Income-tax Officer disallowed the claim under Section 80J of the Act on the ground that no separate trading and profit and loss account for the said unit has been prepared or furnished and that the manufacture of discs and knives were connected process carried on by the same industrial undertaking and further it had never claimed deduction under Section 80J of the Act in the past. During the assessment year 1979-80 the respondent-assessee had claimed a deduction of Rs. 34,975 for the assessment year 1979-80 towards the excise duty. It had debited its books of account but had not actually paid the amount to the Central Excise Department. The Income-tax Officer had disallowed the amount of excise duty claimed by the respondent. In appeal, the Commissioner of Income-tax (Appeals) had confirmed the disallowance under Section 80J of the Act. He, however allowed a sum of Rs. 20,530 towards the excise duty as according to him the sum of Rs. 14,445 related to the assessment year 1978-79. Feeling aggrieved the respondent preferred separate appeals before the Income-tax Appellate Tribunal. In the appeal preferred for the assessment year 1978-79 the respondent raised an additional ground for the allowance of the claim of Rs. 14,445 which was permitted. The Tribunal has reversed the order of the assessing authority on the disallowance of Section 80J of the Act and had also granted relief of Rs. 14,445 to the respondent.
(3.) We have heard Sri A.N. Mahajan, learned standing counsel for the Revenue. Nobody has appeared for the assessee.;