- (1.) AT the instance of the Revenue, the Tribunal, Allahabad Bench, has referred the following question of law for the opinion of this Court under S. 256(1) of the IT Act (for short 'the Act') : "Whether, on the facts and in the circumstances of the case, the deduction as contemplated under S. 80J of the IT Act, 1961 was rightly allowed to the assessee."
(2.) IN the previous year relevant to the asst. year 1977 78 which is in dispute, the assessee claimed a relief of Rs. 34,820 under S. 80J of the Act by filing a revised return. In the initial return which was filed for that year, no such claim was made. The assessee firm had started its business in the previous year relevant to the asst. year 1974 75, but failed to claim deduction under S. 80J. Even during the two subsequent assessment years i.e., 1975 76 and 1976 77 no such claim was made. The ITO was of the view that the assessee's claim ought to have been allowed in the assessment year relevant to the previous year in which industrial undertaking begins to manufacture or produce articles. Since the assessee had failed to make such a claim, the ITO did not entertain the claim under S. 80J. Feeling aggrieved, the assessee took the matter in appeal, before the Asstt. CIT. The appellate authority relying upon a Division Bench decision of this Court in Addl. CIT vs. Sheetalaya 1979 (1) UPTC 1 : (1979) 117 ITR 658 (All) : TC 25R.1163 held that the claim of the assessee under S. 80J should have been entertained and, therefore, he directed the ITO to compute the relief admissible to the assessee under S. 80J and to allow the necessary deduction. On second appeal at the instance of the Revenue, the order passed by the appellate authority was upheld. It is on these facts that the aforesaid question has been referred to this Court for its opinion. Sub ss. (1) and (2) of S. 80J, which are relevant for the decision of the controversy at the relevant time, provided as under : "80J(1). Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains (reduced by the deduction, if any, admissible to the assessee under S. 80HH) of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the prescribed manner in respect of the previous year relevant to the assessment year (the amount calculated as aforesaid being hereafter, in this section, referred to as the relevant amount of capital employed during the previous year) : provided ..... (2) The deduction specified in sub s. (1) shall be allowed in computing the total income in respect of the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or to operate its cold storage plant or plants or the ship is first brought into use or the business of the hotel starts functioning (such assessment year being hereafter, in this section, referred to as the initial assessment year) and each of the four assessment years immediately succeeding the initial assessment year : provided ....." It would be noticed that sub s. (1) of S. 80J inter alia provides for a deduction at the rate of six per cent per annum of the capital employed from the profits of new industrial undertaking which fulfils the prescribed conditions. What is an industrial undertaking for the purpose of S. 80J, it is not necessary to discuss it, because there is no dispute between the parties that the assessee was an industrial undertaking in the year in dispute within the meaning of that expression as contemplated in S. 80J of the Act. Sub s. (2) of S. 80J provides the period for which the benefit of exemption under sub s. (1) of S. 80J can be availed of. The starting point of such period would be the year in which the manufacture or production of articles begins. This has been described as 'the initial assessment year' under sub s. (2) of S. 80J. The exemption then continues to be available for a total period of five consecutive years including the initial assessment year.
(3.) THE question for consideration is that if the assessee had failed to make a claim in any one of the earlier assessment years comprised in the five years' period, whether the assessee can legally be denied the benefit of S. 80J for the remaining period of five years' term.;