C.S.P. Singh, J. - (1.) THIS reference, which relates to two assessment years, viz., 1967-68 and 1970-71, invites our answers to three questions, viz: "1. Whether, on the facts and" in the circumstances of the case, the assessee is entitled to relief in respect of its new unit for manufacturing lamp caps under section 80 J of the Income-tax Act, 1961, for assessment years 1967-68 and 1970-71 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in its opinion that the benefits in the shape of rent-free quarters and the bonus paid to employees could not be taken into account for the purpose of working out disallowance under section 40(a)(v) of the Income-tax Act, 1961 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the levy of interest under section 217(1A) was not appealable and, therefore, the directions given by the Appellate Assistant Commissioner to the Income-tax Officer to allow certain reliefs as per his order were not proper and could not be acted upon ? "
(2.) THE facts relevant for answering the questions referred are these. The assessee-company was floated in the year 1951 for manufacturing electric lamps and its parts by the following companies : 1. Philips of Netherland. 2. B.T.H. of London. 3. Crompton of York. 4. G.E.C. of London. 5. Siemens of Westminster. 6. Radio Lamp Works (now Bajaj Electricals of Bombay). 7. Kaycee Company of Bombay. An agreement was entered into between these seven concerns and the assessee-company for the production of lamps and their sale. The company used to import lamp-caps for the purpose of manufacturing the electric lamps. During the previous year relevant to the assessment year 1967-68, it was felt that having regard to the assessee's requirements it would be desirable to obtain a separate licence to start a new unit for manufacturing lamp-caps instead of importing. In pursuance of this decision, the assessee took steps to establish a new unit for manufacturing lamp-caps during the previous years relevant to the assessment year 1967-68. The assessee claimed relief under section 80J "before the AAC. The AAC allowed the assessee to make the claim, although it is not clear whether such relief was sought for before the ITO. However, on the view that benefit under section 80J could be granted only in case the assessee had maintained separate accounts for the unit and placed them before the ITO for scrutiny he remanded the matter to the ITO for consideration on the necessary data being supplied by the assessee. In the assessment year 1970-71, the assessee claimed relief under section 80J before the ITO, but that was rejected on the ground that the manufacturing of lamp-caps was part and parcel of the, assessee's existing business of manufacturing lamps and Section 80J was inapplicable. An appeal was filed before the AAC for the assessment year 1970-71, who held that the new unit was nothing but a part and parcel of the assessee's existing business, and, as such, no relief could be granted under section 80J. The assessee appealed against this order to the Appellate Tribunal while the department filed an appeal against the appellate order for the assessment year 1967-68. The Tribunal found that the assessee had established a new undertaking and was entitled to relief under section 80J. So far as the assessment year 1970-71 is concerned, an additional point arose for consideration before the Tribunal, and that was whether the profit bonus and the value of the rent-free accommodation provided to the employees were to be taken into account for computing the income of the assessee. The AAC had held that bonus was a part of the salary of the employees, and further that, as respects rent-free accommodation, only such amount as was spent by the assessee for the repair of the accommodation and its depreciation could be included provided that they did not exceed twenty per cent, of the salary of the employees.
(3.) THE factual position relevant for answering the third question is this. It appears that the ITO in the assessment year 1970-71 had levied interest under section 217(1A). An appeal was filed by the assessee before the AAC, who took the view that the appeal was not maintainable but nevertheless issued certain directions in the matter. THE Tribunal, following a decision of this court in the case of Vidyapat Singhania v. CJT [1977] 107 ITR 533 (All), held that no appeal lay against the order levying interest under section 217(1A). It will be convenient to dispose of the third question at the outset. In ITR No. 41 of 1976--CIT v. Geeta Ram Kali Ram, Bazpur, decided on August 23, 1979 (since reported in [1980] 121 ITR 708 (All) [FB]), a Full Bench of this court has held that no appeal lies against the levy of interest under section 217(1A). This being so, the directions issued by the AAC while disposing of the appeal relating to the levy of interest was not proper as the directions could have been issued only in case the order was appealable. Turning now to the remaining questions in seriatim. It has been seen that the Tribunal has found that the assessee had obtained a new licence for manufacturing caps not only for meeting its own needs but for sale to other customers. Fresh capital had been employed by the assessee in setting up this unit. It was as such held by the Tribunal that it was not a mere extension or expansion of old business. The view of the Tribunal appears to be justified in view of the pronouncement of the Supreme Court in the case of Textile Machinery Corporation Ltd. v. CIT [1977] 107 ITR 195.;